Scope 4 Avoided Emissions: What and How

Scope 4 Avoided Emissions refer to the greenhouse gas (GHG) emissions reductions that result indirectly from a company’s products or services, beyond its own operational boundaries. Unlike Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and Scope 3 (other indirect emissions in the value chain), Scope 4 captures the emissions avoided downstream or upstream because of the solutions a company provides—such as renewable energy technologies, energy-efficient products, or carbon removal services. Understanding and quantifying Scope 4 is crucial for companies aiming to demonstrate their broader climate impact and contribution to global decarbonization. It involves estimating the emissions that would have occurred without the company’s product or service, then subtracting the actual emissions associated with its use. This requires robust methodologies, transparent assumptions, and standardized reporting frameworks to prevent double counting and ensure credibility. In practice, Scope 4 accounting helps stakeholders recognize the positive climate benefits companies enable, supports climate-aligned investment decisions, and encourages innovation in sustainable products. However, it remains an emerging concept with ongoing development in guidelines and industry consensus to establish consistent measurement and reporting standards.