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.
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.
While these carbon reporting methods are aligned (explained below), they still have key differences.
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.
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.
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.
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.
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.
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.