As Scope 1 and 2 emission reporting is mandatory, they have been integrated into most modern business practices. However, not all forms of Scope reporting are common practice or well-known for many businesses, such as Scope 3 and 4.
Although Scope 3 emissions make up the largest percentage of a business's CO2e and Scope 4 reporting can aid in reducing Scope 3, these carbon reporting methods are often confused and not utilised. Yet, as these Scopes focus on a company's value chain—the largest footprint for businesses - yet with heightened environmental policies, businesses need confidence in advancing with these two distinct styles of carbon reporting.
Definitions
- Scope 3: This measures indirect carbon emissions, offering a comprehensive and wider view of a company's entire value chain. It encompasses aspects like waste disposal, end-of-life disposal, and the supplier chain involved in product manufacturing, making its reach and reduction a vital component in understanding and addressing a company's environmental impact.
- Scope 4: In contrast, Scope 4 serves as a comparative metric, empowering consumers to make informed choices that reduce emissions. For instance, it provides insights into the lifecycle of products like detergents, illustrating how a low-temperature detergent aligns with sustainable practices by minimizing energy consumption. Important to note, Scope 4 measures the entire product/service lifecycle, to provide a holistic view of a product's environmental impact and going beyond its marketing selling point.
By understanding the unique differences between Scope 3 and 4 emissions and how they complement each other, businesses can enhance their environmental policies and make better informed strategic decisions.
How are Scope 3 and 4 different?
While these carbon reporting methods are aligned (explained below), they still have key differences.
1. Scope
Scope 3: Tracks a broad range of indirect CO2e associated with the company through its value chain, including upstream and downstream activities.
Scope 4: Quantifies the emissions avoided due to the use of a direct product/service. Note: It is crucial for businesses using Scope 4 to represent the entire product portfolio, to avoid cherry-picking.
2. Reduction vs avoidance
Scope 3: Guides businesses in reducing their indirect emissions, providing a holistic view of carbon reporting around the wider areas of their business.
Scope 4: Focuses on quantifying emissions that customers could avoid by adopting products/services. Increasing transparency to encourage better-informed decisions on sustainable practices.
3. Who uses it
Scope 3: Encourages direct businesses to broaden their carbon reporting strategy, addressing carbon associated with their entire value chain.
Scope 4: Used by both consumers and businesses. Consumers can identify how to avoid emissions, while businesses showcase their environmental credentials. While many businesses are still navigating accurate Scope 3 reporting across their value chain, Scope 4 reporting adoption remains limited.
4. Measuring
Scope 3: Falls under the GHG Protocol’s Scope framework, providing clear guidance for businesses. However, reporting on Scope 3 is complex due to the comprehensive measurement of various indirect emissions.
Scope 4: Despite efforts from organisations like WBSD and WRI, Scope 4 lacks legislative guidance in the UK. Scope 4 is designed to assist in streamlining decision-making and reducing complexities associated with its measurement.
By understanding these differences, businesses can navigate the intricacies of Scope 3 and 4 reporting, ultimately contributing to more effective and transparent sustainability practices.
Scope 4: Supporting the reduction of Scope 3 emissions
Despite their distinct intentions and characteristics, when used correctly, Scope 4 reporting can lead to a reduction in Scope 3 emissions, benefiting consumers and promoting sustainability throughout the value chain.
As Scope 4 compares emissions between two products or technologies, highlighting the carbon emissions avoided through a shift, these avoided emissions extend to the end consumer, contributing to a reduction in Scope 3 emissions.
Through the integration of new technologies and processes enabled by Scope 4 reporting, consumers can leverage improved Scope 3 metrics to foster innovation. For instance, consider a supplier of ingredients passing on their Scope 3 emissions data to a business.
Example: A metals supplier, using a Scope 4 metric which successfully reduces the Scope 3 emissions for their customer, a car manufacturer. Through innovation, the car manufacturer can amalgamate this data with other carbon-saving measures such as energy-efficient wheels, electric vehicle (EV) power, etc., creating their own Scope 4 savings. These savings can then be passed on to another business (e.g., a taxi company) or directly to the end consumer.
These avoided emissions are not only a means of achieving carbon reduction but are also catalysts for innovation and the adoption of new eco-technologies across various stakeholders in the value chain.
By understanding and leveraging the synergies between Scope 3 and 4, businesses can initiate a cascading effect of emissions reduction, fostering a culture of sustainability and technological advancement throughout the entire supply chain.
Overall
As Scope 3 represents a holistic view of a company's value chain, and Scope 4 empowers consumers to make informed, eco-friendly choices, businesses can enhance environmental policies and strategic decision-making. Despite their differences, the synergy between these scopes promotes sustainability.
By effectively utilising Scope 4, businesses can not only reduce their Scope 3 emissions but also inspire innovation and the adoption of eco-technologies across the entire value chain, fostering a domino effect of sustainability and technological advancement.
