Today is Friday, 30 August 2024.
Have you heard anything about scope 4 emissions?
This was a question that the director of a public information technology company asked us at the Fórum LIDE Paraná de ESG.
We remembered an article we published in 2022, “Scope 4: what is it and how to measure”.
Employee efforts? Special financing lines? Efficiency gains? Better deliveries to customers, especially in the areas of services and technologies? Competitive advantages of products and services? Efforts undertaken to develop new climate-friendly technologies and products? Create a fast track for approval of ESG patents? (About this one we already reported initiative in the United States)
Where do the emissions reductions “potencialized” by the company come in, reduced emissions?
The fact is that - currently - scope 4 is not an official category of the GHG protocol and therefore does not count towards a company's overall scope 1, 2 and 3 emissions reductions.
But why should scope 4 emissions not be considered?
The challenge would be the ability to measure and disseminate them in a credible way, avoiding any risk of being perceived as greenwashing.
Below are 7 references that may be interesting to keep in mind:
(1) “Other terms used to describe avoided emissions include climate positive, net-positive accounting, and scope 4.”
(2013, WRI, World Resources Institute, which established the GHG Protocol, Do We Need a Standard to Calculate “Avoided Emissions”?)
(2) “Similarly, investors may want to reflect that not all relevant GHG emissions worldwide are investable. Some of the worst polluting firms worldwide are (nearly) entirely state financed by sovereigns … Hence, it may be worth reflecting on the notion of a scope 4 for GHG emissions that reflects investee companies’ operations in regions with substantial, non-investable GHG emissions.” (page 65)
(2019, European Commission, Technical Expert Group, TEG Final Report on Climate Benchmarks and Benchmarks’ ESG Disclosures)
(3) “We expect investors to increasingly focus on avoided emissions (also widely referred to as “Scope 4”) as a metric that can help understand the underappreciated role of companies that drive resource and energy efficiency.” (page 14)
(2022, Goldman Sachs, Accelerating the Energy Transition: Metrics and tools to measure progress)
(4) “Scope 4 covers 'avoided emissions' that stem from the creation of more energy-efficient or environmentally friendly products.”
(2022, World Economic Forum, You've probably heard of Scope 1, 2 and 3 emissions, but what are Scope 4 emissions?)
(5) “We have also committed to develop a customer saved and avoided emissions baseline and target, sometimes referred to as Scope 4 (see ‘AVEVA’s ESG framework and goals at a glance’ on page 31).”
(2022 AVEVA, a FTSE 100 tech company, Annual Report)
(6) “Scope 4, has gained in popularity. It covers emission reductions that “occur outside a product’s life cycle or value chain but as a result of the use of that product,” says the World Resources Institute, which established the GHG Protocol.”
(2022, FT Professional, Measuring Scope 4 emissions: what boards need to know)
(7) “A few companies already are reporting some aspects of their Scope 4 emissions.”
(2024, Thomson Reuters, Could “Scope 4” emissions reporting be on the horizon?)
