Other terms used to describe Scope 4 emissions include being "climate positive" and "net-positive" Image: Unsplash/Chris LeBoutillier
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- Greenhouse gas emissions are divided into four categories for businesses and organizations – Scope 1, Scope 2, Scope 3 and the voluntary category of Scope 4.
- Companies will need to cut emissions across all Scopes 1-3 to meet internationally agreed targets on global warming.
- Scope 4 covers 'avoided emissions' that stem from the creation of more energy-efficient or environmentally friendly products.
We’ve all heard of greenhouse gas emissions, and you've probably heard of Scope 1, Scope 2 and Scope 3 emissions? But what about Scope 4?
The various scopes indicate different categories of greenhouse gas emissions, and businesses and organizations are under pressure to explain how they address all elements.
Dividing emissions into groups is intended to help measure progress in making the huge reductions needed to limit global temperature rises to well below 2°C – the central aim of the Paris Agreement.
What’s the difference between Scope 1, 2 and 3 emissions?
Scope 1 emissions
These are “direct” emissions – those that a company causes by operating the things that it owns or controls. These can be a result of running machinery to make products, driving vehicles, or just heating buildings and powering computers.
Scope 2 emissions
These are “indirect” emissions created by the production of the energy that an organization buys. Installing solar panels or sourcing renewable energy rather than using electricity generated using fossil fuels would cut a company’s Scope 2 emissions.
What's the World Economic Forum doing about the transition to clean energy?
Scope 3 emissions
These are also indirect emissions – meaning those not produced by the company itself – but they differ from Scope 2 as they cover those produced by customers using the company’s products or those produced by suppliers making products that the company uses.
No prizes for guessing which of the three scopes is the hardest to tackle – and it is often the most significant.
“Scope 3 emissions are nearly always the big one,” says Deloitte, adding that it often accounts for more than 70% of a business’ carbon footprint.
Companies can normally easily measure their Scope 1 and 2 emissions, and can control them by taking steps like switching to renewable energy or electric vehicles.
But Scope 3 emissions are under the control of suppliers or customers, so they are affected by decisions made outside the company.
That means measuring Scope 3 emissions involves tracking activities across the entire business model – or value chain – from suppliers to end users.
What are Scope 4 emissions?
Scope 4 is commonly described as covering "avoided emissions". It is a voluntary metric devised by the World Resources Institute in 2013 and has since been taken up by a number of companies.
Avoided emissions are a tricky concept. PwC defines it as any reduction in emissions "that occur outside of a product’s life cycle or value chain but as a result of the use of that product".
An example is an energy-saving battery in a phone or other product. It reduces electricity use and therefore prevents emissions from being generated compared with a traditional battery.
Low-temperature detergents and teleconferencing services also fall into the Scope 4 category – the latter because they enable remote work and remove the need for travel.
Other terms used to describe Scope 4 emissions include being "climate positive" and "net-positive", the World Resources Institute says.
Scope 3 emissions are hardest to control
While Scope 3 emissions are outside an organization’s direct control, it is still possible to do something about them, says the United States Environmental Protection Agency (EPA).
“The organization may be able to influence its suppliers or choose which vendors to contract with based on their practices,” the EPA says.
Despite the complexity of cutting Scope 3 emissions, more companies are promising to do so.
Nearly 240 companies have signed up to the Science Based Targets initiative – an independent organization promoting climate action in the private sector. And 94% of these firms say they will reduce emissions linked to their customers and suppliers, according to McKinsey.
One company with ambitious plans to decarbonize its value chain is French multinational Schneider Electric.
The firm’s Zero Carbon Project aims to achieve a 50% cut in emissions from its suppliers’ operations by 2025. It has even provided decarbonization training to 1,000 companies in its value chain to help them make the emissions cuts.
“Our big focus right now is on our suppliers because it represents an opportunity to cut 6 million tonnes of CO2 emissions – 20 times more than we can cut alone,” says Schneider’s Chief Strategy and Sustainability Officer, Olivier Blum.
Targeting Scope 3 emissions
For other companies, the focus is less on suppliers and more on what happens when customers use their products.
Swedish carmaker Volvo says Scope 3 emissions linked to driving its vehicles account for more than 95% of the company’s total.
Its goal is to reach net zero emissions by 2040. To achieve that, it has targets for Scope 1,2 and 3 emissions for different parts of its business.
GHG emissions from the products Volvo sold were 11% lower in 2021 than in 2019, the company says.
That has been achieved partly through improvements in energy and fuel efficiency, and partly because the firm sold fewer trucks.
The rewards for cutting emissions across all Scope 1, 2 and 3 are huge, as consumers, investors and business groups including the Alliance of CEO Climate Leaders push for action to deliver a net zero economy.
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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