Plenty of Scope for reducing CO2 emissions – but why is Scope 4 gaining popularity?

24 January 2024 by Tiana Thomas
blog author

​While UK businesses strive for greater transparency and continue to include Scope 1, 2 and 3 emissions data in their annual reports, there is a newer scope on the block.

Scope 1, 2 and 3 form a comprehensive set of accounting standards set by Greenhouse Gas Protocol (established by the World Resources Institute) back in 2001. All were developed to help measure emission reduction progress and to limit global temperatures rising to well below 2 °C.

Scope 1 refers to emissions that a company makes directly, 2 covers indirect emissions and Scope 3 is what the company is indirectly responsible for across its supply chain.

Scope 4 was introduced over a decade ago, and despite its complexity, has been incorporated and calculated by some firms. More recently, there has been a heavier focus on this voluntary standard as businesses have seen a direct commercial advantage with reporting their ‘avoided carbon emissions’.

Why is Scope 4 reporting such a challenge for businesses? Why should we be cautious?

This climate-positive accounting standard is used to report on the benefits of a product once it is in use (so, outside of the company’s value chain) to estimate the levels of carbon saved - not emitted - and is catching the eye of savvy ESG-focused investors and shareholders. However, it is important to note it is an additional standard and cannot be used to offset emissions within the other three Scopes. 

It may look at the positives of a product or technology which makes a refreshing change from reporting negative impact on the planet and people, but it comes with a heavier price due to the complexity of calculating it but also the competitive advantage may incite greenwashing if there is a heightened focus on this number.

I would be interested to hear your views surrounding the implementation of this in your organisation. Has your business incorporated Scope 4 ‘avoided carbon emission’ reporting yet and if so, how are you overcoming any potential greenwashing/data gathering hurdles? 

If you have not yet embedded this into your reporting structure, is it something you would consider in the near future? If so, we have a strong track record of working with businesses with specialists supporting them with their journey in their carbon and emissions reporting. I look forward to a conversation about this.