A few years ago the GHG Protocol released a survey to scope out the need for a new standard to help companies quantify and report the avoided emissions of goods and services that contribute to a low-carbon economy (e.g. low-temperature detergents, fuel-saving tires, teleconferencing equipment and services, energy-efficient ball-bearings, etc.).
These emissions occur outside of a product’s/service’s life cycle, or value chain, and result from the use that product/service. Avoided emissions include and are sometimes referred to as climate positive emissions, carbon handprint, low carbon products, net-positive accounting and Scope 4. We have covered carbon avoidance in our carbon offsetting webpage, so here we focus on the two main types of “avoided” emissions:
- A product that replaces a more emission-intensive product (e.g. a company providing tele-conferencing services that replaces traditional travel to in-person meetings, resulting in lower GHG emissions);
- A product that enables emissions reductions elsewhere (e.g. a chemical manufacturer that creates a new product which requires lower temperatures for a chemical reaction, allowing their customers to generate less emissions in their own processes as a result of a lower energy consumption).
As Scope 4 emissions are separate from Scopes 1, 2 and 3, they cannot be used to offset or reduce the other Scopes. Hence companies tend to use avoided emissions to reflect impacts that would not be picked up in a traditional GHG inventory. However there are pros and cons in reporting Scope 4 emissions. Surely they can allow a company to disclose positive stories about their environmental impact, which can help strengthen a company’s reputation (to consumers, suppliers, employees, stakeholders, etc.), can provide a competitive advantage in tough sustainability markets and can guide companies in making decisions. But a company that chooses to talk about avoided emissions may discover that their decision actually led to more overall emissions (either within their own supply chain or elsewhere) and this is not something companies typically want to highlight. Moreover, as there is no generally accepted framework for estimating and reporting out on avoided emissions, and since the analysis includes hypothetical scenarios, there is a high degree of uncertainty in the calculation. Combine this with the fact that companies tend to focus mainly (only?) on their positive impacts and it’s not hard to see why accusations of greenwashing are common with avoided emission claims.
Sometimes just changing the timeframe of the Scope 4 emissions calculation can produce a completely different impact and affect the business decision making process: what about a company that temporarily increases GHG emissions in R&D to develop high-efficiency products and may be penalised by disclosing a worse carbon footprint in the short term, even though the (potential) emissions avoided in the long term (should the new technology be effective) could be greater than those generated during the development phase? Would the Board be less inclined to push for innovation with mounting pressure from impatient stakeholders keen to invest in green companies?