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Making things (that don’t exist) count:
A study of Scope 4 emissions accounting claims
Dr Anna Young-Ferris
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anna.young-ferris@sydney.edu.au
The University of Sydney Business School
The University of Sydney, Australia
Dr Arunima Malik
arunima.malik@sydney.edu.au
The University of Sydney School of Physics and Business School
The University of Sydney, Australia
Ms Victoria Calderbank
The University of Sydney, Australia
Dr Jubin Jacob John
j.jacobjohn@deakin.edu.au
Deakin Business School,
Deakin University, Melbourne, Australia
The authors are enormously grateful for the insightful comments, guidance and suggestions
of Professor Christine Cooper and Professor Jane Andrew. The authors are grateful for the
funding support provided by the Accounting and Finance Association of Australia and New
Zealand (AFAANZ).
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Corresponding author can be contacted at: anna.young-ferris@sydney.edu.au
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ABSTRACT:
Purpose: Avoided emissions refer to greenhouse gas emission reductions that are a result of
using a product or are emission removals due to a decision or an action. Although there is no
uniform standard for calculating avoided emissions, market actors have started referring to
avoided emissions as 'Scope 4' emissions. By default, making a claim about Scope 4 emissions
gives an appearance that this Scope of emissions is a natural extension of the existing and
accepted Scope-based emissions accounting framework. We explore the implications of this
assumed legitimacy.
Design: Via a desktop review and interviews, we analyse extant Scope 4 company reporting,
associated accounting methodologies and the practical implications of Scope 4 claims.
Findings: Upon examination of Scope 4 emissions and their relationship with Scopes 1, 2, and
3 emissions, we highlight a dynamic and interdependent relationship between quantification,
commensuration, and standardisation in emissions accounting. We find that extant Scope 4
assessments do not fit the established framework for Scope-based emissions accounting. In line
with literature on the territorializing nature of accounting, we call for caution about Scope 4
claims that are a distraction from the critical work of reducing absolute emissions.
Originality: We examine the implications of assumed alignment and borrowed legitimacy of
Scope 4 with Scope-based accounting because Scope 4 is not an actual Scope, but a claim to a
Scope. This is as an act of accounting territorialization.
KEYWORDS: Scope 4 emissions; avoided emissions; commensuration; standardisation;
carbon accounting; Scope 3 emissions; greenwashing; SDG 13 Climate Action; net zero
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1. Introduction
The Intergovernmental Panel on Climate Change (IPCC) reports the dire impacts of
human-induced greenhouse gas (GHG) emissions across the globe, from the arctic regions, to
rainforests, cities, and the oceans (IPCC, 2022). In line with Sustainable Development Goal
(SDG) 13, without immediate action being taken to reduce GHG emissions to net zero, these
impacts will continue to accelerate to catastrophic levels, fundamentally changing the world as
we know it today (UN, 2015). Net zero emissions are “when anthropogenic emissions of
greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified
period” (IPCC, 2018, p. 555). In response, market actors including companies, investment
managers, Big 4 accounting firms, and industry standard setters have begun making claims
about a fourth scope of emissions to account for avoided emissions as a part of the net zero
future solution and are referring to these avoided emissions as ‘Scope 4’ (Dialight, 2022; Ker,
2022; Molloy, 2020; PG&E, 2022; PWC, 2022; Tasman Jones, 2022; Umicore, 2022; Weir,
2022). For example, the Weir Group’s Annual Report highlights that there is a “strong shared
interest with customers, investors and other stakeholders to quantify and report Scope 4” and
developing a “Scope 4 value proposition” is a key priority for 2022 (Weir, 2021, p. 55 and 20).
However, these claims are being made ahead of any metrological agreement and the setting of
formalized standards for Scope 4 emissions accounting. Whilst there is a growing body of
literature and methodologies across disciplines for avoided emissions accounting (Arto et al.,
2014; Cuckston, 2013; Gibassier, et al., 2020; Howard et al., 2021; Matthews et al., 2008;
Petersen and Solberg, 2002; Revellino, 2019; Russell, 2019; Siler-Evans et al., 2012; Zhai et
al.,2012) debate in the accounting literature for avoided emissions, specifically as Scope 4 is
virtually non-existent. Furthermore, referring to Scope 4 emissions gives an appearance that
this Scope of emissions is a legitimate extension of the existing Scope-based emissions
accounting framework. We explore the implications of this assumed legitimacy.
Avoided emissions are “the greenhouse gas emissions impact of a product (good or
service), relative to the situation where that product does not exist” (Russell, 2019, p. 1). They
are the "emission reductions that occur outside of a product's life cycle or value chain, but as a
result of the use of that product" (Draucker, 2013) and extending this, they refer to emission
reductions against Business-As-Usual (BAU) emissions baseline. Thus, avoided emissions are
a positive difference or “climate benefit” relative to the situation where the product did not
exist and are of great interest in a bid to promote low-carbon projects and energy efficient
products (Russell and Akopian, 2019). Examples of carbon-avoiding activities that have been
considered in avoided emissions calculations include renewable energy vs. fossil-based energy
(e.g. installing solar panels), waste-to-energy vs. waste to landfill, electric vehicles (run by
renewable electricity) vs. fossil fuel powered vehicles, bus travel vs. car travel,
videoconferencing vs. in-person meetings, solid wall insulation vs. no insulation, cloud
computing vs. hardware storage and alternative meats vs. animal-based meat (Howard et al.,
2021). Claims, especially those like "carbon neutrality," are often tied to "avoided emissions”,
yet there is fervent debate about the accuracy of such claims and the influence on the
decarbonization process (Faria, 2020), highlighting the need for clearer definitions and more
transparent accounting practices, thereby calling for more research in this context (Brander,
2022; Gibassier, et al., 2020).
Currently, calculation methodologies for avoided emissions are not included in global
industry standards and guidelines for emissions reporting, such as the Science Based Targets
Initiative (SBTi), the Task Force for Climate-related Financial Disclosure (TCFD), or the
Carbon Disclosure Project (CDP). However, although lacking in detail, the recently released,
IFRS S2 Climate-related Disclosures proposes that entities disclose avoided emissions (IFRS,
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2023. It notes that commensuration between avoided emissions and Scope 3
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is not required
because “avoided emission approaches in an entity’s climate-related strategy are
complementary to, but fundamentally different from, the entity’s emission-inventory
accounting and emission-reduction transition targets” (IFRS, 2023).
Yet, none of these recognized bodies use the term “Scope 4” when discussing avoided
emissions, despite its emerging and synonymous use by market actors from companies to
accounting and investment practitioners (Ker, 2022; PG&E, 2022; PWC, 2022; Tasman Jones,
2022; Weir, 2022; Molloy, 2020). Although there was a single mention of Scope 4 in a blog
post on the website of World Resources Institute (WRI) back in 2013 (Draucker, 2013), the
GHG Protocol (authored by WRI and World Business Council for Sustainable Development)
also refrains from using the Scope 4 terminology. Noting one of the GHG Protocols’ major
contributions to carbon accounting has been the introduction of three scopes to divide up
emissions at various parts of a company’s value chain (Green, 2010). Instead, WRI uses
avoided emissions in its most recent working papers (Russell, 2019) and blog posts (Russell
and Akopian, 2019) on the subject and proposes two methodologies for calculating avoided
emissions (Russell, 2019).
Against this backdrop, the aim of our study is to address metrological questions about
the calculation of avoided emissions referred to as Scope 4 emissions. Specifically, the viability
(as in the ability to work successfully) and veracity (as in truthfulness) of Scope 4 as a concept;
its commensurability with the accepted emissions accounting “Scope” framework as the Scope
4 terminology implies (Green, 2010); and the commensurability of current and varied metrics
for Scope 4 calculations. To study these metrological questions, we conceptualize two levels
of analysis: the technical subunit, which are the physical measurements and methodologies for
calculating avoided emissions that are used synonymously with Scope 4, and the institutional
setting, which involves the standard-setting organizations and market actors who promulgate
and adopt carbon accounting standards (Sandholtz, 2012). We build on scholarship and
contribute a study with a practical focus about a dynamic and interdependent metrological
relationship between quantification, commensuration, and standardisation in the fascinating
context of the calculation of a thing that does not physically exist (i.e. avoided emissions
referred to as Scope 4 emissions) (Brunsson, et al., 2012; Cooper, 2015; Huault and Rainelli-
Weiss, 2011; Puroila and Mäkelä, 2018; Revellino, 2019; Samiolo, 2012). We theorize this as
an often taken-for granted relationship and ask what the implications are when there are
fractures in this relationship at both the technical subunit and institutional setting levels.
In light of this, we then attend to the implications of the ‘borrowing’ of the legitimacy
of the existing Scope-based emissions accounting framework whereby referring to Scope 4
emissions appears as a natural extension. Speaking lightly to the literature on the territorializing
nature of accounting, we suggest there is no accident to this discourse, but rather a well-thought
strategic intent of market participants - in particular those with large emissions profiles – who
stand to benefit from claims of greater emissions reductions (Martinez et al., 2022; Miller and
Power, 2013). Here, the territorializing function of accounting is about how accounting
facilitates the creation of structured entities, processes, and systems, crucial for managing and
regulating avoided emissions across various sectors (Martinez et al., 2022). Therefore,
territorialization offers a framework whereby differing societal and capital market perspectives
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Scopes 1, 2 and 3 are well-defined with clear boundaries in emissions accounting (GHG Protocol,
2004). Scope 1 emissions are emissions directly linked to an organization's activities from sources it owns and
controls, while Scope 2 emissions are generated through purchased energy. All other emissions are classified as
Scope 3 emissions. We provide a more detailed explanation of emissions Scopes in Section 3.2 of this article.
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can seemingly converge in terms of the implications for carbon emissions calculation and
reduction (Bebbington et al., 2020; Miller and Power, 2013).
The remainder of the paper is structured as follows. Section 2 lays out our theoretical
anchoring. Section 3 provides contextual background about avoided emissions and the
emergence of Scope 4 terminology. The fourth section provides an analysis of a Scope 4
methodology. Section 5 provides a discussion, and the final section provides some concluding
thoughts about the broader implications and opportunities for future research.
2. Theoretical anchoring
2.1 A metrological endeavour
Multiple studies address the complexities involved in GHG emissions accounting
(Hartmann et al., 2013; He, Luo, and Shamsuddin, 2022; Kolk, Levy, and Pinkse, 2008;
O’Dwyer and Unerman, 2020; Rankin et al., 2011). We suggest the measurement of carbon
emissions is highly complicated due to multiple methods of estimation (MacKenzie, 2009),
issues associated with boundaries and Scope (Young, 2010), and the variety of framings and
connotations of carbon accounting (Ascui and Lovell, 2011; Gibassier, et al., 2020). It has long
been argued that sustainability information, including GHG emissions measurement needs
quantification, commensuration, and standardisation (Ascui and Lovell, 2011; Bebbington and
Larrinaga-González, 2008; Cooper, 2015; Bebbington and Gray, 2001; O'Dwyer and Unerman,
2020; Unerman, 2000); it needs metrology as the science and technology of measurement
(MacKenzie, 2009; Power, 2004). Conceptualization necessarily precedes quantitative
explorations to form the foundation of empirical work that will likely follow. Here, we
contribute to unravelling a dynamic metrological relationship linking quantification,
commensuration and standardisation and further apply this to the concept of Scope 4 emissions.
We seek to contribute to the existing body of knowledge and broader scholarship about carbon
emissions accounting and in our case, measuring avoided emissions that do not exist
(Revellino, 2019).
In the context of GHG emissions, the intention of metrology ensures that a quantity of
gas measured at one place and at one time is sufficiently similar to the same quantity measured
at a different place and time (MacKenzie, 2009). Although this is a “potentially boundless” and
rather exhausting task “given the inherent degree of variability of biological sources and sinks
of emissions that extend the metrological system to cover the entirety of the global atmosphere”
(Cooper, 2015, p. 1798). Simply put, the practices of quantification inform both
commensuration and standardisation, and the process of commensuration informs both
quantification and standardisation. Indeed, there is an interdependent metrological relationship
between these three phenomena that is often presumed and so is important to draw out in the
context of our study and one of our aims.
2.2 The reliance of commensuration on quantification
Carbon emissions measurement is problematic, partly because of the complexity and
systemic and interacting nature of the social, environmental, and economic systems it impacts,
and partly because of the entity-based accounting structures that dominate modern business
organizations (Howard-Grenville, 2021; Young-Ferris and Roberts, 2021). Regardless, the
need to make emissions from various sources within various industries commensurate remains
critical to market actors such as investors (Beunza and Ferraro, 2019). This way, they can make
meaningful “apples-to-apples” comparisons which is an integral part of their core work of
company valuation (Eccles et al., 2012). Analysts can be assured, for example, that a tonne of
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carbon (CO2) emitted by a coal-fired power generator is equivalent to a tonne of carbon (CO2-
e) (i.e., methane) emitted or belched by a herd of cattle. Here, the introduction of Global
Warming Potentials (GWP’s) indicates a process of commensuration that enables this
equivalence between different greenhouse gases to be realized (MacKenzie, 2009, p. 1790).
Espeland and Stevens (1998, p. 315) define such a process of commensuration as
measuring “characteristics normally represented by different units according to a common
metric”. In essence, commensuration converts qualities into quantities (Arjaliès and Bansal,
2018; Espeland and Stevens, 1998; Puroila and Mäkelä, 2018; Samiolo, 2012). It “reduce[s]
and simplif[ies] disparate information into numbers that can easily be compared” (Espeland
and Stevens 1998, p. 316). In our case, the wide array of calculation methodologies for avoided
emissions currently being used in practice (see Table 3) makes comparability across companies
and industries complex. These methodologies differ in Scope, allocation approaches,
assumptions, and underlying data sources. These differences result in insufficient, incomplete,
inconsistent, and unverified calculations that can complicate investment decisions as investors
and other stakeholders may not have visibility and cannot assess and compare the true extent
of companies' avoided emissions impact.
Within the literature, the problematic but powerful perspective that quantification
provides far superior knowledge (Unerman et al., 2018; Espeland and Stevens, 1998, 2008)
and incites a higher degree of trust (Porter, 1996) is well established. Even Lord Kelvin (an
eminent nineteenth century scientist, engineer, and mathematician) is famously quoted as
saying about scientific knowledge that “when you cannot express it in numbers, your
knowledge is of a meagre and unsatisfactory kind” ((Kelvin, 1891) in Unerman et al., 2018).
The process of commensuration in the form of quantification transforms qualitative distinctions
into quantitative differences, thereby allowing outwardly incommensurable practices,
processes, and products to appear the same from a carbon emissions accounting context.
Unerman et al. (2018) suggest the reduction of multiple externalities (in our case, GHG
emissions) into measurable metrics are subjective and negotiable (Puroila and Mäkelä, 2018,
p. 1056) but seemingly reported as objective to users of the information, such as investors. In
the context of avoided emissions, this can result in counterproductive outcomes and potential
greenwashing or now carbonwashing (In and Schumacher, 2021), especially as the
measurement and subsequent commensuration of avoided emissions at the product, process
and entity levels are open to several challenges. Russell and Akopian (2019) point to several
challenges in their review of current approaches to avoided emissions calculation – which for
us, signal a variety of commensuration issues - including the inability to compare like-for-like;
accounting for different stages of the product life cycle across supply chains; accounting for
selected range of products rather than measuring the full impact of all products; and lack of
transparency in the reporting, especially regarding calculation methodologies which is essential
for investors and other stakeholders to understand the true extent of a company’s avoided
emissions.
Although obvious, we want to highlight the critical relationship between quantification
and commensuration. Cooper (2015) explains that though sizable literature exists on the
politics of climate governance, studies exploring explicit engagement with issues associated
with measurement and commensuration are much rarer. Unerman et al. (2018) highlight this
as a critical gap in the literature, “especially in addressing the conceptual difficulties of
commensurating many social and environmental impacts” such as carbon emissions. In similar
vein, Puroila and Mäkelä (2018) point to an “illusion of the measurability and
commensurability of the various complex sustainability issues” that “risk[s] excluding the
issues that are difficult to measure” (p. 1057). Notwithstanding, the academic literature on the
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accounting commensuration of this specific fourth scope of avoided emissions that is being
referred to by market participants as Scope 4 is sparse. For example, Deloitte reports
comparability issues across organisations: “Scope 3 inclusion is limited and inconsistent, and
the nascent Scope 4 of companies’ influence on third parties’ activities is largely missing”
(Deloitte, 2021, p. 12). In addition, there has been no debate until now about the assumed
congruence of Scope 4 emissions with the accepted Scope-based emissions accounting
frameworks, and the implications and impact of this nascent emissions category as part of the
desired net zero carbon future and the achievement of SDG 13 that targets climate action i.e.
“Take urgent action to combat climate change and its impacts” (UN, 2015).
2.3 The reliance of standardisation on commensuration
Although scant, the theme of avoided emissions and their benefits from both
environmental and economic contexts has been explored in the literature (Krishnamurthy and
Ngo, 2020; Lang and Lanz, 2022). However, the measurement of avoided emissions designated
by market actors as Scope 4 emissions and the influence of standardisation is currently
underexplored. Organizational literature has studied standardisation extensively (Arnold and
Loconto, 2020; Brunsson et al., 2012; Sandholtz, 2012). As mechanisms of social order, a
standard can be defined “as a rule for common and voluntary use, decided by one or several
people or organizations” (Brunsson et al., 2012, p. 616). that “incorporate formal directives
and informal norms” (Sandholtz, 2012, p. 656). Brunsson et al. (2012, p. 626) imply that
organization(s) and standardisation are related in three distinctive ways. Firstly, the
standardisation 'of' organizations relates to the implementation of standards within the
organization, while standardisation 'by' organizations is concerned with developing standards
by formal (standard setting) organizations. Third, standardisation pertains to standards as a
governance mechanism.
This study straddles Brunsson et al’s (2012) distinction concerning standardisation ‘of’
organizations and how organizations implement standards within their organization. We are
interested in the developing domain of avoided emissions’ calculation methodologies, and
specifically the more recent Scope 4 discourse where no accepted global standards exist. This
distinction is akin to analysis at the technical subunit level where technical experts perform
specific and highly complex calculations to account for a product's or process's (avoided)
carbon emissions (Sandholtz, 2012). This is the commensuration that standardisation
subsequently relies upon.
Next, and in line with Brunsson et al’s (2012) second distinction, we are concerned
with developing standards ‘by’ standard setting organizations and, more specifically, how these
standards travel and how market actors promulgate the concepts within standards. If
standardisation enables a number to “represent reality in a universal format which allows it to
circulate and be further calculated and formatted” (Samiolo, 2012 p. 382), then the self-
proclaimed “GHG Protocol: A Corporate Accounting and Reporting Standard” provided the
“universal format” for entity-level carbon accounting when it entered the market in 2004. Since
then it has become the default standard for the measurement and accounting of carbon
emissions adopted by companies, regulators and even underpinning emission trading schemes
(Green, 2010 p. 2). One hallmark of the GHG Protocol’s contributions is the introduction of
dividing emissions into three scopes, with the concept of scopes becoming “pervasive” in the
language and practice of carbon accounting (ibid, p. 5). This is our second level of analysis,
namely, the institutional setting.
Thus, our focus is on the interaction of entity-level accounting as the technical subunit,
with the standard setters in the institutional setting. Against this backdrop, we examine if the
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concept of Scope 4 emissions as a fourth scope of emissions is indeed commensurate with the
GHG Protocol’s concept of emission scopes, given its position as the “standards developing
organization that promulgate[s] rational myths in the form of general principles and
techniques” (Sandholtz, 2012, p. 670). As its name implies, market actors assume there is a
logical ordering and sequencing to Scope 4 emissions and their relationship with Scope 1, 2
and 3. This might take form in graphics that depict Scopes 1, 2 and 3 emissions (which cover
direct and indirect emissions of a company) alongside avoided emissions (see Figure 1);
prompting companies to make claims that its Scope 4 emissions “outweigh[s] its Scope 1, 2
and 3 combined” and claiming that a company’s net emissions are negative, thus highlighting
“company’s contribution to decarbonization” (Howard et al., 2021, p. 16). Indeed, this could
be an unwelcome distraction and delay companies from the critical work of reducing real and
absolute emissions.
Figure 1: Reporting of Scope 1, 2, 3 emissions alongside Scope 4 in the same framework, with net
emissions (Source: authors’ adaptation based on graphics in Howard et al., 2016 and DNB, 2020)
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2.4 A taken for granted metrological relationship
Metrology, in common terms, is the science of measurement. As a practice, it involves
determining how things are defined through their attributes and qualities, setting out practices
and routines of measurement, establishing commensuration of both biophysical material and
social practices, and applying these metrics to induce standardisation (Cooper, 2015, p.1787).
In this study, we anchor ourselves within Cooper’s (2015) eloquent delineation of
metrology as somewhat of an ‘umbrella’ term that encapsulates measurement as quantification,
commensuration, and standardisation, each with their own, but not entirely independent nor
mutually exclusive, position. But more than an umbrella term, and by drawing on prior
scholarship (Brunsson et al., 2012; MacKenzie, 2009; Sandholtz, 2012; Huault and Rainelli-
Weiss, 2011), we theorize this as largely taken for granted relationship and seek to understand
the consequences when there are fractures in the relationship at the technical subunit and
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We provide an illustrative emissions profile for a company where the direct (Scope 1) emissions are
greater than Scope 2 and Scope 3 emissions. Though note it has been shown in some cases that Scope 3 emissions
from a company’s upstream and downstream value chain form the majority portion of a company’s emissions
profile. This is a debate for another paper (see also Hansen et al., 2022; Schmidt et al., 2022).
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institutional setting levels. Especially because commensuration relies on quantification, and
standardisation relies on commensuration.
Samiolo (2012) develops the relationship between commensuration and standardisation
by illustrating how the object of calculation, but simultaneously the subject, is represented and
conceived. By highlighting Latour (1987), Samiolo (2012) suggests the interdependencies
further by citing that “commensuration requires a standardising subject”. By focussing on
calculations, the study underscores that the success of measurement, standardisation, and
commensuration are interdependent. Although quantification and economic calculations allow
incommensurable practices to appear the same, these are bound by some preconditions such as
institutional structures, legislations and governmental guidelines, stakeholder interests and
demands (Samiolo, 2012). This is indicative of the interactions at the institutional setting we
explicate, which are as important as the interactions at the technical subunit of analysis and the
specific metrics and calculation methodologies.
Further, in the context of avoided emissions as the “standardising subject” this is a
peculiar and interesting challenge because in addition the complexity of the physical measuring
of emissions (Ascui and Lovell, 2011; Hartmann et al., 2013), and the complexity of
commensuration at both the technical subunit and the institutional setting, here the metrological
relationship is between qualities that in fact do not exist in the physical sense of measurement
we are used to (Revellino, 2019). Market actors are leaping ahead, making all sorts of claims
about Scope 4 emissions as synonymous with avoided emissions when agreed metrological
processes for commensuration are lacking and when standardisation of this unique category of
Scope 4 emissions is merely implied and legitimized by the association with the accepted
Scope-based accounting framework (Freidberg, 2013).
2.4 The territorializing nature of accounting
This leads us to consider accounting as a form of territorializing, which is the process
of defining and organizing spaces, both physically and abstractly (Mennicken and Miller,
2012), and geographically (Free et al., 2020), for specific purposes. In the context of Scopes
of emissions, territorialization through accounting can help in defining the boundaries of
emissions, whether they arise directly from an organization's activities (like in a factory) i.e.
Scope 1 emissions or indirectly from other entities associated with the organization (like
suppliers or consumers) i.e. Scope 3 emissions. By expanding and setting these boundaries, the
accounting claim is that organizations can more effectively measure, manage, and report their
emissions. The territorialization of accounting can be particularly advantageous for Scope 4
emissions reporting. This ability to lean into the existing Scope-based accounting framework
provides a legitimate structure to measure the often-nebulous avoided emissions that occur
outside a product's life cycle or value chain. Through the expanded territory a systematic
approach is rendered visible and even avoided emissions, which might otherwise be
overlooked, seem to be accounted for, and integrated into an organization's climate reduction
strategies. However, what is apparent is the deliberate and intentional strategy to borrow the
accepted the Scope-based accounting framework so market participants referring to avoided
emissions as Scope 4 can politically and commercially benefit from the existing legitimacy
attributed to the GHG Protocol accounting framework. Even though we know these
calculations, particularly for Scope 3 emissions, are not necessarily stabilized either, which we
explore in the remainder of the article. Here we suggest that market actors should not be
referring to Scope 4 as an actual Scope, but as a claim to a Scope and this is as an act of
accounting territorialization.
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3. The setting and research method
To provide context for our research endeavour, during 2022-2023, we conducted a desktop
review of company reporting of extant avoided emissions and Scope 4 emissions and the
methodologies for calculating avoided emissions currently available in the public domain.
Commencing with an examination of sustainability reports, diverse sources were surveyed,
encompassing academic journals, industry reports, and company annual reports. Our approach
deviated from exclusive emphasis on sustainability reports, as influenced by Boiral (2013),
whose findings substantiated that such reports often exhibit a disconnection from adverse
business impacts due to their non-transparent nature, deliberate manipulation of disclosed
information to project a favourable image of the company, and the exercise of narrative control.
Our selection criteria focused on the comprehensiveness of reporting on avoided emissions as
Scope 4 emissions, and we only reviewed company and industry reports that specifically
articulated avoided emissions and avoided emissions as Scope 4 emissions. After a quality
assessment of the extracted literature, we prioritized peer-reviewed academic articles or reports
from recognized companies and industry bodies. Data extraction was standardised using a
secure shared database reviewed by the four authors, and we cross-validated our findings with
supplementary interviews (n=8) to enhance the robustness of our insights (see Table 4).
3.1 Extant company reporting of avoided emissions and Scope 4 emissions
From our desktop review, we found, firms report avoided emissions to highlight energy savings
and subsequent environmental benefits and increasingly, investors are rewarding companies
for doing so, even without an agreed metrological frame. Examples of public company
reporting on avoided emissions include Apple, 2021; Aveva, 2022; IKEA, 2021; ReNew
Power, 2022; Telefonica, 2022; Tesla, 2020; Vestas, 2021 and examples of public company
reporting of avoided emissions referred to as Scope 4 emissions include Dialight, 2022; PG&E,
2022; Umicore, 2022; Weir, 2022 – see Table 3. This reporting is typically done in a selective,
positive light. Across varying industries, companies unilaterally only report avoided emissions
and Scope 4 emissions when the analysis is favourable, showing an increase in avoided
emissions for certain products and promoting calculable environmental benefits (Russell and
Akopian, 2019). They also report to build brand and product differentiation, and guide research
and development on environmental impact (Eriksson et al., 2016; WRI, 2019). In addition to
the sustainability-centric marketing implications for companies, reporting of avoided emissions
can benefit sustainability-centric investors by serving as a factor to appraise firms'
sustainability orientation. As “emission reductions that the financed project produces versus
what would have been emitted in the absence of the project” (PCAF, 2020), it is argued by
investors that reporting of avoided emissions “demonstrates a quantifiable positive contribution
to decarbonization”, therefore quantifying this effect is relevant (ibid, 2020, p. 13). In addition,
it is argued this calculation is “critical to society achieving net-zero” (SBTi, 2020, p. 33).
[INSERT HERE: Table 1: Sample of company reporting on avoided emissions and Scope 4
emissions]
3.2 Methodologies for calculating avoided emissions
To enable the delineation and calculation of direct and indirect emission sources,
enhance transparency, and deliver utility for different organizations with varying climate
policies and prioritization, the GHG Protocol Corporate Accounting and Reporting Standard
(2004) defined multiple Scopes of emissions (Mytton, 2020; Green, 2010; Patchell, 2018).
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Carbon and ‘carbon equivalent’ GHG emissions are divided into three groups called Scope 1,
2 and 3, to provide guidance for organizations to quantify and track emissions reductions across
various sources. Scope 1: refers to direct GHG emissions resulting from sources or activities
owned, or controlled by, the organization. This includes the burning of fossil fuels for heating
or transportation, emissions from manufacturing processes, or onsite waste disposal. Scope 2:
refers to indirect GHG emissions generated by a third party for the production of energy, heat,
or steam that the organization purchases and consumes. These emissions are generated by
sources owned or controlled by another entity, but are used to provide electricity, heat, or steam
to the organization. Scope 3: refers to indirect GHG emissions generated from sources that are
not owned or controlled by the organization but are associated with its operations or value
chain, such as purchased goods and services. Scope 3 emissions often represent a significant
portion of an organization’s overall GHG footprint. They include emissions from activities
such as the production of raw materials, transportation of goods and services, use of sold
products throughout their lifecycle, and the disposal of waste (GHG Protocol, 2004).
Most large companies have been using established standards to calculate and report on
Scope 1 and 2 emissions for years (refer to Green, 2010; Patchell, 2018; Kaplan and Ramanna,
2021 for a more comprehensive review). However, measuring Scope 3 emissions is less
established and much more complicated and onerous because it requires reporting emissions
across an organization’s value chain, to capture as many activities as possible including
upstream and downstream vendors (Patchell, 2018). Yet, methodologies for Scope 3 emissions
accounting do exist and are based on standards set by the United Nations (UN Stats Division,
nd) and the GHG Protocol (GHG Protocol, 2011).
Guidance provided by the GHG Corporate Value Chain (Scope 3) Standard (GHG
Protocol, 2011) outlines an iterative process for companies to collect, refine, evaluate, and
report data on their value chain including prioritization of data collection efforts on activities
that have the most potential to reduce emissions or those that present the most risk in supply
chains. This is done with the view that it is not feasible, and it is too time-consuming for
companies to collect data for every supplier in their supply chain. Techniques exist for
estimating and enhancing methodologies for Scope 3 assessments for companies, which rely
on hybrid input-output based life cycle assessments (Malik et al., 2021), by coupling specific
bottom-up process data on companies’ suppliers and top-down data on economic interactions
between sectors. Scope 3 assessments undertaken using input-output data offer opportunities
for benchmarking a company’s impacts with those of the company's sector (Wiedmann et al.,
2009). For example, Scope 3 impacts of the Commonwealth Bank of Australia (CBA) can be
compared with the impacts of the entire Banking sector in Australia to make meaningful
comparisons about CBA's sustainability performance. This has been demonstrated for energy
production (Malik et al., 2015).
Because avoided emissions are not widely recognized, and a standard methodology is
not established, it is unknown how they are commensurate with Scopes 1, 2 and particularly
Scope 3. This is because avoided emissions - and referred to as Scope 4 emissions - do not
follow an established standard (in terms of coverage of emission sources and types) as outlined
in the GHG Protocol for Scopes 1-3. Particularly in comparison to Scope 3 (which covers
emissions embodied in supply chains), an agreed methodology does not exist for allocation of
avoided emissions among interconnected supply chain actors. Despite obvious inconsistencies,
as we have highlighted, companies increasingly report avoided emissions and sometimes as
Scope 4 emissions in annual and sustainability reports (see Table 1) attempting to show real-
world (and positive) impact of their emission avoiding products and services (WRI, 2019).
12
Table 2 provides a summary of early work developing guidelines for accounting for
avoided emissions which focusses on exploring the terminology and definition of avoided
emissions. This early work highlights the importance of developing a framework for comparing
emission reductions with baseline scenarios; and identifying principles and guidelines
underlying the concept of avoided emissions. We return to this analysis of the Scope-based
emissions frameworks in Section 4.
[INSERT HERE: Table 2: Summary of early work developing guidelines for avoided emissions
accounting]
The academic studies about calculating avoided emissions, primarily focus on
developing techniques for analysing specific research topics or scenarios, for example,
quantification of avoided emissions in international trade (Arto et al., 2014), or assess the
impact of vehicle purchase subsidies (Clinton and Steinberg, 2019), or avoided emissions in
the energy (Breyer, Koskinen, and Blechinger, 2015; Petersen Raymer, 2006; Siler-Evans et
al., 2012) or construction sectors (Petersen and Solberg, 2002). These studies, and others,
specifically use the term “avoided emissions”, albeit not in the context of a firm or an
organization but do not make any reference to Scope 4. However, Matthews et al., (2008) focus
on tiers of emissions with the Tier 4 involving total life-cycle emissions for production,
delivery, use, and end-of-life. While this has some overlap with Scope 4 emissions, the
definitions are not identical. Although Tiers 1-3 appear to closely match Scopes 1-3 in terms
of emissions, Tier 4 and Scope 4 have distinct differences, especially in the context of domains
and nature of emissions; so, they are not directly comparable. For example, Tier 4's focus is
largely on the product — how it's made, delivered, used, and disposed of. Avoided emissions
as Scope 4 don't necessarily tie to a specific product but can be broader, capturing impacts of
practices or technologies outside of a specific product lifecycle (Matthews et al., 2008).
Another study focused on a national park’s emissions details Scopes 1 - 3 emissions and
suggests that there is a potential in influencing visitor behaviour to reduce Scope 4 emissions
(Steuer, 2010). However, this study fails to clearly explicate and calculate the Scope 4
emissions associated with these activities (Steuer, 2010).
A study by the GHG Protocol highlighted that 58% of businesses were already
calculating and reporting on avoided emissions, with 38% more reporting they would if there
was a standardised methodology (GHG Protocol, 2004). A further survey by WRI revealed that
79% of businesses believed that “there was a strong need for standardisation” (Russell, 2019).
Since then, the WRI has developed two leading methods for such calculations (WRI, 2019),
based on the attributional estimation approach and consequential estimation approach. Both
methods compare a baseline with an assessed product using life cycle analysis (LCA) or total
emissions. In particular, the attribution approach is static and considers an inventory of
emissions and removals to undertake a comparison of the assessed product with the reference
product. The consequential approach estimates change in emissions due to implementation of
a decision or an action. Both have some distinct features with shortcomings. We examine these
calculation methodologies in Table 3 – highlighting calculations, key features, and
shortcomings/limitations.
Financial actors, Schroders and DNB Asset Management, and a forestry and paper
company have also developed specific methodologies for calculating avoided emissions that
are examined in Table 3. Noting that only Schroders makes explicit reference to the Scope 4
terminology. Whilst DNB Asset Management do not make explicit reference to Scope 4, they
do (as does Schroders) visually present Scope 1, 2 and 3 emissions alongside avoided emissions
13
to demonstrate potential reductions, and project a company’s net emissions as overall resulting
in positive emission reductions (see Figure 1 in DNB, 2020). Each approach presents a unique
set of assumptions and equations for calculating avoided emissions; some approaches are
specific to industry sectors (for example, the substitution method focuses on the forestry
sector). Interestingly, almost all approaches use similar terms, such as “baseline scenario” to
refer to emissions resulting from existing operations/scenarios; however, there is
incommensurability in the interpretation and use of terms such as “policy scenario”, “new
scenario” and “products’ scenario” relating to avoided emissions. As highlighted above,
interestingly, two methodologies quantitatively represent avoided emissions alongside Scope
1-3 emissions, claiming alignment between avoided emissions and the Scope-based accounting
framework (DNB, 2020; Howard et al., 2021). An analysis of methodologies in Table 3 with
the lens of the metrological relationship reveals several insights, which we explore in detail in
the following sections. Briefly, the shortcomings/limitations of the calculation methodologies
primarily result from fractures in the metrological relationship at points of quantification,
commensuration, and standardisation. This is because none of the approaches comprehensively
consider entire supply chain-related impacts, verified by published research (i.e. fractures in
‘quantification’ processes), neither do they align with the Scope-concept (i.e. fractures in
‘commensuration’ processes), and they are all proposed in the absence of a standard for Scope
4 emissions accounting methodology (i.e. fractures in ‘standardisation’ processes).
[INSERT HERE: Table 3: Avoided emissions and Scope 4 emissions calculation methodologies]
3.3 Company reflections on avoided emissions and Scope 4 reporting
We supplement our review with brief reflections from a small set of eight interviews
with six companies in various industries (see Table 4 for interview insights on Scope 4
calculation issues and commercial benefits of such calculations). Noting the difficulty of
accessing companies who report on Scope 4 emissions due to the nascent and sensitive nature
of the field. Two companies (Company A and B) report on Scope 4 emissions and both agreed
to a follow up interview. One company (Company C) internally reports on Scope 4 emissions
but was not willing to disclose any information and three companies (Company D-F) do not
report on Scope 4 emissions at all. In line with the aims of our study, we found that the
interviewees used the terms avoided emissions and Scope 4 interchangeably. The veracity of
the Scope 4 terminology was never questioned. Access to these companies was arranged by a
fund manager interested in understanding avoided emissions and the viability of the claim of
Scope 4 emissions as they established a listed “Net Zero” Exchange Traded Fund (ETF) fund
4
.
All three companies reporting on avoided emissions and referring to them
synonymously as Scope 4 highlighted that illustrating these benefits to investors and
policymakers was pivotal to their sustainability and funding strategies. For ESG-minded
investors, a critical benefit of avoided emissions reporting is identifying companies and
products that are 'more sustainable' to ensure investment in companies aligned with a net zero
aligned future. Company A wants to demonstrate the benefits of the emissions avoided by the
sustainable forestry and paper industry to policymakers for more favourable policy decisions,
particularly considering the EU Taxonomy Climate Delegated Act (“EU Taxonomy”)
4
Note the antecedents for this study emerged as part of a Master of Sustainability Capstone project by
one author. The project has since expanded beyond the original scope of the capstone to focus on the calculation
methodologies and conceptual contribution, with additional expert authors now part of the study. University ethics
approval was obtained prior to commencing the data collection.
14
(Pettingale et al., 2022). Company B explains how one of its methane-reducing agriculture
products (a cattle feedstock additive enzyme), was explicitly mentioned in the first draft of the
EU Taxonomy as a recognized method of reducing emissions (CEMA, 2021). These companies
continue to illustrate these benefits as vital to give them license to operate under the EU
Taxonomy to influence the final policy decisions.
Company B highlighted the opportunity and the potential of leveraging a global stable
carbon market to diversify income streams, noting even the International Sustainability
Standards Board (ISSB) currently references avoided emissions as a credible way to address
emission targets and analyse performance against those standards (IFRS, 2023). In the event
of a stable carbon market, Company B could give its methane-reducing enzyme away for free
to farmers worldwide and generate an income from the carbon credits the avoided emissions
generate. Furthermore, Company A suggested a potential revenue stream from carbon storage
in trees, but the concept of monetizing this was less mature than Company B.
Companies A and B explained Scope 4 emissions are used internally as an
environmental key performance indicator (KPI) to inform internal product improvement
strategies. Company B used Scope 4 to measure where products actively contribute to avoiding
future emissions, both internally and externally, as a key component of its growth strategy.
Scope 4 reporting allowed it to charge a premium for its products which would otherwise be
harder to justify. Company C uses avoided emissions as a KPI in its climate aims because it is
part of its core business strategy as a hydrogen producer. At the same time, renewable energy
supports a movement away from highly polluting fossil fuels.
As noted earlier, a key concern is that firms only publish avoided emissions and Scope
4 analysis in a selective, positive light, making the analysis difficult to compare across
companies and products over time. Company A and Company B both conduct their analysis at
a product level as the product range is too large and complex to feasibly analyze all products
every year, mainly due to time constraints (Company B) and the regularity at which baselines
of emissions need updating (Company A and Company C). This means they select the products
most likely to have the most significant avoided emissions and, report on these alone. They
then total the avoided emissions from the products they have calculated it for and publish this
as their Scope 4, and this can impair the accuracy of emissions from a company level. This
could be problematic as the overall avoided emissions could be negative, but they do not avoid
any emissions at a company level. However, it is not possible to know without more transparent
accounting standards. Therefore, without undertaking an avoided emissions analysis on all
products, it cannot be confirmed that the company does indeed avoid emissions, which
Company B recognized.
Unsurprisingly, companies pointed to the need for standardisation of avoided emissions
calculations:
…it would be good to agree on a standard on this. I’m all for that. I’m not sure if other
industries like the chemical or plastic industries would be interested in this. It would be good
to standardise it because you get confused as a stakeholder when you are forced to see the
different types of methodologies being developed.. (Company A).
However, the difficulty of modelling, the time-consuming nature of underlying LCA,
and the expense involved in developing these methodologies was not lost:
Each of these steps becomes increasingly expensive, as you can imagine. Where possible then,
if we do have one of these full life cycle assessments, often it’s possible to extrapolate the
15
impact of life cycle assessment to comparable products or product groups and rather than doing
a full calculation and coming to a numerical answer (Company B).
A common and time-consuming challenge reported by the companies was the regularity
at which baselines need updating to ensure the analysis is up-to-date and reflective of the true
alternative baseline to which companies' products are compared (Howard et al., 2021; WRI,
2019). Company C built on this issue of baselines, stating how assumptions are made, as it is
not always possible to get an accurate view of alternatives or how their products are used
downstream. Indeed, these difficulties point to the lacking metrological framework and the
complexity of the commensuration required at both the technical subunit and the institutional
setting levels. Notwithstanding, probably the most peculiar aspect of avoided emissions and
Scope 4 “is you’re trying to come up with an accounting method to measure something that
doesn’t exist” (Company B).
So it’s calculating what didn’t happen. It requires significant study because of course you can’t
measure something that doesn’t happen. It will always be an estimate largely... I mean, it’s
impossible to model every single factor at play (Company B).
[INSERT HERE: Table 4: Interview insights on Scope 4 calculation issues and commercial
benefits]
4. Analysing a Scope 4 calculation methodology
As we have delineated some companies, investors, accounting firms are using the term
Scope 4 interchangeably and synonymously with avoided emissions. However, we believe
Scope 4 assessments, touted as “avoided emissions” do not fit the established and standardised
framework for Scope-based emissions accounting. To explain this assertion, we explore the
Schroders framework
5
for calculating Scope 4 emissions. The terminology of Scopes 1 – 3
follows a logical sequence in emissions accounting, from accounting for emissions within a
company’s boundaries (Scope 1), emissions from powering company’s operations (Scope 2)
to emissions in a company’s value chain (Scope 3). The concept of Scope has a strong
resonance with the concept of responsibility (Bastianoni et al., 2004) and production-based and
consumption-based accounting of emissions (Peters, 2008; Godar et al., 2015; Wiedmann,
2009) where production-based accounting covers direct emissions (Scope 1), for example as
reported by countries as part of their national emission inventories to the United Nations
Framework Convention on Climate Change (noting our study largely focusses on company
level assessments). Consumption-based accounting could be considered akin to Scope 3
calculations measuring impacts in supply chains. At a global level, the total of production-
based emissions is the same as consumption-based emissions, as it is primarily a matter of
responsibility or allocation (Deloitte, 2015). At the entity level, there is value in quantifying
Scope 1, 2 and 3 emissions for a holistic overview of impacts from a company’s operations.
This all fits within traditional carbon accounting as first designated by the GHG Protocol
standard. The input-output life cycle assessment approach (as mentioned above) for calculating
Scope 1-3 emissions relies on national and global input-output tables that are widely used for
country-level assessments (Wiedmann and Lenzen, 2018); these tables can be coupled with
company/entity-level data for hybrid life cycle assessment-based quantification of Scope 1-3
impacts of companies. Product-level assessments can be undertaken using conventional life
cycle assessment approaches.
5
We selected the Schroders Approach, because at the time of writing, it is the framework that makes
explicit reference to “Scope 4” terminology in its avoided emissions calculation methodology.
16
However, avoided emissions are a separate (mutually exclusive) concept and do not fit
the traditional Scope-based emissions accounting framework. They are of a different nature
and ontology. This concept itself has multiple interpretations and methodologies in Economics
and Business (Rocchi et al., 2018; Arto et al., 2014) and Science and Engineering (dos Santos
et al., 2016; Zhai et al., 2012; Siler-Evans et al., 2012) disciplines, when applied at a product,
company, or national level. In addition, most widely used guidelines on methodologies for
avoided emissions do not refer to these emissions as Scope 4, for example the guidance
provided by the WRI on estimating and reporting the comparative emissions impacts of
products (Russell, 2019). Yet, as we have illustrated, market actors are increasingly referring
to the concept of Scope 4, and the framework for avoided emissions analysis by Schroders
(Howard et al. (2021) states explicitly in reference to Scope 4 emissions:
Avoided Emissions represent a 4th scope; one that helps provide a more complete picture of
companies’ and portfolios’ contributions to decarbonization.
The Schroders methodology for Scope 4 calculation is not commensurate with
traditional carbon accounting for Scopes 1-3 in the following ways. Scope 3 covers the entire
supply chain in carbon accounting as made possible by methodologies such as input-output
analysis (Wiedmann et al., 2009) that are boundary-free (Lenzen, 2000). Assessments that
require selecting a boundary, i.e., where selected supply chains are considered and the rest
ignored, can often result in so-called truncation errors of up to 50% (Lenzen, 2000). Schroders’
approach of Scope 4 assessments does not consider the entire upstream supply chain’s
individual stages but instead focuses on an aggregated selection of a few primary, secondary,
and tertiary industries. Industry categorization used in Schroders approach misaligns with the
Scope 3 framework of emissions quantification, where primary industries are considered those
that are involved in raw material extraction, followed by secondary industries as those
processing raw materials into useful products, and finally tertiary industries, further
highlighting a lack of commensurability across Scopes 1-3 and Scope 4. In Schroders’
approach, manufacturing sectors are considered primary, and raw material-extracting sectors
as secondary (Howard et al., 2021). The process of allocation of avoided emissions across a
limited value chain coverage is based on crude assumptions (ibid, 2021), which can
significantly overshadow a company’s real environmental impact, especially when the
proportion of avoided emissions is higher than the total Scope 1, 2 and 3 emissions (ibid, 2021).
Furthermore, the concept of avoided emissions in the context of Scope 4 does no justice
to established emissions accounting frameworks, as it does not consider rebound effects (e.g.,
‘take-back’ effects caused by energy efficiency improvements, leading to greater consumption,
and hence a rise in emissions (Herring and Roy, 2007). It has been shown that affluence is
outpacing improvements in technologies when it comes to emission reductions (Malik, et al.,
2016). As an example, the rebound effects of energy-efficient air conditioners translate to more
and bigger air conditioners, ultimately increasing energy consumption (Su, 2022). Current
methodologies for quantifying avoided emissions and references to Scope 4 follow a silo-ed
approach of cherry-picking technologies or pathways that result in emission reductions;
without considering rebound or unintended effects resulting in a rise in emissions, indicating
quantification without commensuration.
5. Discussion
5.1 Fractures in the metrological relationship
17
In the context of accounting for avoided emissions, we unpack how quantification,
commensuration and standardisation are linked in a dynamic relationship, that is often
presumed rather than fully understood. Specifically, in the context of Scope 4 emissions
calculation, many implications emerge that warrant discussion. Respondents from companies
A, D, and E cited the lack of or inconsistencies in standardisation of calculation methodologies
as a critical issue. Company A mitigates this risk by having its methodology and analysis
verified and published by a third party. However, Companies D and E use it as a justification
to refrain from reporting on avoided emissions altogether. In line with emerging literature
(Cooper, 2015; Huault and Rainelli-Weiss, 2011; MacKenzie, 2009 and others), it is apparent
that the metrological relationship is not a simplified one-way linear sequence involving the
developing metrics for Scope 4 emissions through commensuration and applying these metrics
to induce standardisation as a common rule for ‘all’ to use (Cooper, 2015).
Sometimes standardisation is implied at the technical subunit when commensuration
does not exist at the institutional setting level, as is the case for Scope 3 emissions. Whilst
commensurate in terminology with Scope 1 and 2 emissions; “due to the complex nature of
estimating [Scope 3] emissions, these are typically not reported, or are reported, but not in their
entirety” (DNB, 2020, p. 16). One reason for underreporting Scope 3 emissions is truncation
error (i.e., underestimation of Scope 3 impacts) that results from boundary selection in
conventional life cycle assessments (Lenzen, 2000). This makes commensuration of Scope 3
reporting across sustainability reports difficult. Market actors who adopt carbon accounting
standards for Scope 3 might be oblivious to the differences in Scope 3 quantification from
various quantification methodologies (Malik et al., 2021). With Scope 3 accounting still
requiring significant commensuration attention and undertakings; the concept of Scope 4 is
even more underdeveloped, hence the concern about the growing use of this concept in the
absence of a standardised approach for measurement. Notwithstanding, the incongruencies
revealed suggest that avoided emissions and moreover Scope 4 emissions are of a
fundamentally different nature and need their own separate (non- Scope) account.
The weaknesses of Scope 4 accounting that our study has uncovered might be
understood as fractures in the metrological relationship between quantification,
commensuration, and standardisation, for example, apportioning or favouring of certain
products and product lines; selective value chain boundaries; possible truncation errors;
rebound effects; amongst others. However, ours is not necessarily a study of failed
commensuration like Huault and Rainelli-Weiss (2011), who studied the attempt and failure to
develop a weather derivatives market in Europe. They noted an inability to reconcile
“conflicting cognitive worldviews” that seemed to “cause the same kind of difficulties as
differing moral attitudes when it comes to the construction of new markets” (ibid, p. 1413).
Rather, whilst witnessing the construction of a new market in avoided emissions and the
increasing uptake of Scope 4 terminology, we encounter a curious case of quantification
without commensuration at the technical subunit level (which we return to below). In addition,
at the institutional setting level, we encounter assumed or implied standardisation even though
there is no commensuration (which we return to below). The metrological relationship is
weakened, even broken, but there is no “failure” (i.e., halting) nor “conflicting cognitive
worldviews” because the concept of Scope 4 is travelling and performing (Dambrin and
Robson, 2011) in that market actors are making Scope 4 claims. Despite the technical
shortcomings there are commercial and strategic benefits to overlooking the fractures in the
metrological relationship that speaks to the territorializing nature of accounting. Hence, the
role of academic research is to investigate, interrogate, and surface the stark implications of
emerging concepts and their uptake to dissolve any “illusion” of commensuration (Puroila and
Mäkelä, 2018).
18
5.2 Quantification without commensuration
At the technical subunit level of analysis, we interrogated a Scope 4 methodology for
calculating avoided emissions. We discussed the viability of the Scope 4 being used
synonymously with the avoided emissions concept. In addition to Scope 4 emissions being
incommensurable to established Scope 1-3 terminology, within Scope 4, the methodologies
(see Table 3) for quantification of avoided emissions at a company and product level are
incommensurable. As explained above, Schroders’ approach follows a process of quantifying
and allocating avoided emissions using assumptions on value chains (Howard et al., 2021). In
contrast, the Paper and Forestry company uses the concept of “substitution factors” that
describe the amount of GHG emissions that wood-based products substitute, thus resulting in
avoided emissions (Hammar, et al., 2020). The approach is specific to forestry sector and
incommensurable with the methodology for avoided emissions presented by Schroders. On the
other hand, DNB Asset Management describes avoided emissions as “emissions that would
have been released if a particular action or intervention had not taken place” (DNB, 2020).
Their methodology is the same as the WRI’s Comparative GHG Impact approach (Russell,
2019). However, they call these emissions savings “Potential Avoided Emissions, " calculated
by subtracting the emissions in a baseline scenario from emissions in a new scenario. The term
“Potential Avoided Emissions” considers that these emissions are not “assured or verified” and
depend on “consumer and market behaviour” (DNB, 2020).
These are three examples of varying calculation methodologies and varying
terminologies (“Avoided Emissions”; “Potential Avoided Emissions”; “Scope 4”) that
highlight a clear fracture in the metrological relationship between quantification and
commensuration. As Vinent et al. (2019) show, commensuration across theories is crucial for
developing new models and mathematical frameworks. There are metrics to quantify avoided
emissions, but they are incommensurable across specific products and processes, hence
questioning the veracity and viability of quantification of Scope 4 emissions. The companies
reporting on avoided emissions explained that even if companies employ a similar
methodology (i.e., comparison of emissions to a baseline), internally, there is an inconsistent
methodology used across products.
Furthermore, as with most carbon reporting methodologies, there are issues with double
counting (The GHG Protocol, 2004), which extends to avoided emissions and Scope 4
reporting (Howard et al., 2021; WRI, 2019; Russell, 2019). When using a more
environmentally friendly alternative, it is not uncommon for the company that uses the product
and the manufacturing company to claim 'ownership' of avoided emissions (Vestas, 2021).
Company C highlighted that this 'ownership' of avoided emissions and double counting issues
is a challenge contributing to the accuracy issues.
5.3 Implied standardisation without commensuration and implications
By its very nature, the term Scope 4 implies standardisation with the existing Scope
based accounting framework, even if commensuration is not present. This leads us to the
institutional setting level of analysis, where we discuss the concept of Scope 4 and its
commensurability (or not) with existing scholarship and practice on Scopes 1, 2, and 3
emissions calculation as the globally accepted standard. If standardisation is the process of
organization wherein standards are designed to enable comparable measurement and ordering
of commensurate things, underlying any process of standardisation is the reliance on a process
of commensuration. Here we see a false sense of standardisation because commensuration is
implied, and actors inadvertently perceive Scope 4 emissions as a logical extension of Scope
1-3. Yet, as we have illustrated issues of commensuration including boundary selection and
19
industry categorization persist, as well how to adequately ‘standardise’ for rebound effects and
truncation errors. As such, companies can present Scope 4 emissions alongside and as visually
outweighing the overall Scope 1-3 emissions - recall Figure 1. In other words, in some cases
companies are reporting a higher avoided emissions as Scope 4 total than their Scope 1, 2 and
3 emissions total.
The implications for real-world emissions reductions are grave, particularly as
affluence is out-pacing technological improvements. Here, we suggest the legitimacy cast onto
the enunciation of Scope 4 claims is not by accident but rather a deliberate fashioning that large
emitters stand to gain commercially from. We do not believe referring to avoided emissions as
Scope 4 is by accident but a convenient new opportunity to masquerade a company’s absolute
emissions and relax the GHG emissions reduction work so drastically needed. The calculation
of avoided emissions is still useful but from our research to date it would seem the calculation
of avoided emissions is of a different nature and ontology to the existing Scope-based accounts
and avoided emissions need their own account. Notwithstanding, the term Scope 4 is
misleading and a misconception and should not be used in the context of avoided emissions.
Put simply, our article has demonstrated how Scope 4 emissions are not an actual Scope
commensurate with the existing Scope-based accounting framework, rather this ability to make
the Scope 4 claim signifies an act of accounting territorialization.
5.4 Current state of Scope 4 and beyond
As we highlight in this article, Scope 1-3 are now officially recognised in academic
literature and by standard-setting organisations, however Scope 4, whilst starting to be used by
organisations in the context of avoided emissions, is not an official term, nor part of the GHG
Protocol.
One of the methodological issues on the use of the term Scope 4 concerns the
quantification of avoided emissions at a product level or corporate level. The calculation
methodologies presented in Table 3 are mostly product-based, except Schroders Approach that
quantifies avoided emissions in value chains. Given that this is a nascent field lacking research,
there is no clear guidance for companies seeking to quantify avoided emissions in their
operations or value chains. For product-level quantification, as seen in Table 3, the general
approach varies across sector-level assessments. This disparate quantification of avoided
emissions across sectors (and organisations) can result in inconsistencies, should companies
choose to undertake comparative assessments. This underscores the necessity to evaluate the
feasibility of Scope 4 as a concept at product and corporate level, and development of
guidelines for transparent implementation. Standards set by the GHG Protocol such as the
Corporate Standard (GHG Protocol, 2004), Corporate Value Chain (Scope 3) standard (GHG
Protocol, 2011) and Product Standard (GHG Protocol, 2011) highlight that product and
corporate level assessments vary in scope. The GHG Protocol sets guidance on the relationship
between the three standards, explicitly mentioning “The Scope 3 Standard builds on the GHG
Protocol Corporate Standard and accounts for value chain emissions at the corporate level,
while the Product Standard accounts for life cycle emissions at the individual product level.”
(GHG Protocol, 2011, p. 6) The Protocol also lays out guidance on the independent and
integrated use of these standards, laying out clear principles and approaches. Such clear
guidance includes steps on defining the scope, setting boundaries, collecting and assessing
relevant data and undertaking analysis to determine impacts. Such guidance does not exist for
Scope 4 accounting.
For officially integrating Scope 4 into emissions accounting frameworks, standard-
setting organisations would need to convene to develop the accounting standard for Scope 4
20
and associated technical guidance document that offers guidance to companies for calculating
their Scope 4 emissions. Prior to its realization, it is crucial to delve into the feasibility of 'Scope
4' as a concept. Standard-setting organizations should take leadership in initiating discussions
on this matter. Scope 3, as we know, is now an established concept. The GHG Protocol
assembled governing bodies, including Advisory Groups, Technical Working Groups, Review
Groups, Pilot Testing Group and the Secretariat, to guide the development of the GHG Protocol
Corporate Value Chain (Scope 3) Accounting and Reporting Standard as a parent document
and an associated supplement Technical Guidance for Calculating Scope 3 Emissions (GHG
Protocol, 2013). Together, these two documents offer an internationally accepted approach to
enable GHG quantification and management in companies’ supply chains, including
information on methods for calculating GHG emissions. Such guidance is non-existent for
Scope 4 emissions calculation.
Any official guidance on Scope 4 would need to cover implications for product-based
and corporate-based quantification, including, among others, establishing system boundaries,
identifying technologies for comparison, estimating lifetime of technologies, rebound effects
and devising methods for allocation of emission savings across the value chain. As an example,
transitioning from a recently developed technology to a more energy-efficient system would
yield fewer savings compared to switching from an old technology to the new one – this
distinction should be reflected in quantitative methodologies for Scope 4. All these aspects,
among others, are effectively tackled through collaborative discussions involving academic
experts from multiple fields (such as engineering, science and business) and governing bodies.
Standard-setting organisations can play a role in bringing together academic bodies, industry
groups and policy makers for discussing the viability of ‘Scope 4’ as a concept if viable, to
develop guidelines for transparently quantifying emissions. At the same time, more rigorous
guidance is needed for the broader domain of avoided emissions, more generally (Russell,
2019) .
6. Conclusion
In our view, there is much at stake if the concept of Scope 4 emissions is taken prime
facie to indicate positive climate change impact. We caution against referring to avoided
emissions as Scope 4 emissions but market actors are rallying to make Scope 4 claims. This
has broader implications for greenwashing or what In and Schumacher (2021) define as
"carbonwashing"; an adequate taxonomical framing of carbon-related greenwashing practice
that due to reputational and financial values attached to corporate carbon performance can be
a significant threat. Our study identifies concerns associated with carbonwashing, and even our
interviewees explicate that Scope 4 emissions reporting can distract firms from calculating,
establishing reporting, and ultimately reducing Scope 1, 2 and 3 emissions. The broad
implication of this borrowed legitimacy points to the territorializing ability of accounting to
define and organize both physical and abstract space for specific purposes, in our case, the
calculation of avoided emission referred to as Scope 4 emissions, despite them not being an
actual Scope. As such, further scholarly enquiry into accounting’s territorializing ability is well
justified here.
We suggest future research should also focus on analyzing various disparate
methodologies for quantifying avoided emissions in and of themselves (and apart from our
specific focus on Scope 4) to devise a cohesive methodology or at least a standard set of guiding
principles that can inform the development and accounting of future carbon-saving products
and technologies. This, rather than reasoning that companies have reduced emissions or
spending time and resources calculating emissions that do not exist! Future research could
undertake a more systematic review of the broader set of avoided emissions studies and
21
methodologies enacted across academic scholarship to examine the circumstances that
strengthen the metrological relationship between quantification, commensuration, and
standardisation and the implications of fractures in the relationship. Like the Scope 4 concept,
the veracity and viability of avoided emissions claims must be scrutinized more fully.
Particularly, how investors use this information in their valuation processes and treat (ignore)
issues of non-commensuration and lacking standards for nascent market objects such as
avoided emissions. As well, accounting territorialization in the context of avoided emissions is
an area that warrants further research.
Equally, much more scholarly attention needs to be paid to Scope 3 emissions
accounting and the underlying metrological relationship between quantification,
commensuration, and standardisation.
Notwithstanding, it is evident we need swift action on climate if SDG 13 Climate
Action and the net zero future are to be achieved. If accounting for avoided emissions (though
not as synonymous with Scope 4 as our study has made clear) is to provide a plausible pathway
to realizing a decarbonized future, we need strong metrological relationships to circumvent any
possibility of carbonwashing. At the same time, we must be cognisant of assumed legitimacy
due to accounting territorialization and not get distracted from the critical agenda of reducing
actual GHG emissions.
22
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29
Table 1: Sample of company reporting on avoided emissions and Scope 4 emissions
Company report
Year
Key focus
Calculation method for
avoided emissions
Avoided emissions disclosure
Apple
Environmental
Progress Report
2021
Technology
GHG market-based emissions:
Activity data x emission factor
x global warming potential =
CO2 equivalent emissions
“Avoided more than 15 million metric tons of
emissions through initiatives to use low-carbon
materials, drive energy efficiency, and switch to
clean energy—carbon reduction efforts that
separated a rise in sales from increases in our
carbon footprint.” (p.13)
Aveva
Sustainability
Progress Report
2022
2022
Technology
Not disclosed
“Decarbonization is a key driver for many of our
customers and we are working towards measuring
their saved and avoided GHG emissions more
systematically. In FY22, we leveraged available
customer references and industry experiences to
evaluate potential sustainability use cases and
started to develop a methodology to measure the
decarbonization impact of one of our main
product suites”. (p. 6)
IKEA
Climate Report
2021
Retail
Furniture
WRI method
(does not disclose which
method – see Table 3).
“In FY21, the total avoided emissions for the
SOLSTRÅLE home solar offer was
approximately 187,000 tonnes CO2eq. This is
calculated as the effect of the electricity in the
national grid, which the renewable electricity
from home solar replaces.” (p. 8)
ReNew Power
Sustainability
Report
2022
Energy
Not disclosed
“Avoided 11 million tCO2 carbon emissions
equivalent to GHG emissions from ~2.2 million
gasoline-powered passenger vehicles.” (p. 1)
“11.26 Mn tCO2 carbon emissions avoided
through renewable energy operation.” (p. 55)
Telefonica
Consolidated
Annual Report
2022
Telco
“Since 2019, with support
from the Carbon Trust, we
have developed a calculation
methodology that converts the
efficiencies (energy,
operational or material
consumption), produced by
our services when
implemented for a customer,
into avoided CO2 emissions.”
(p. 120)
“We also drive connectivity and digitalisation as
key levers to help our customers run their
business more efficiently and sustainably. Thanks
to the efficiencies generated by our products and
services, 81.7 million tonnes of CO2 emissions
were avoided in 2022.” (p. 55)
Tesla
Impact Report
2020
Consumer
discretionary
Adapted from WRI
Consequential Approach (see
Table 3): estimated emissions
from Tesla vehicles - real-
world fuel efficiency rating for
an internal combustion engine.
(p.90)
“The 3.5 million metric tons of vehicle CO2e
savings estimate is based on the net CO2e savings
during the use phase of a Tesla vehicle compared
to an ICE vehicle with a real-world fuel economy
of ~25 mpg. The 1.5 million metric tons of solar
CO2e savings estimate is based on CO2e avoided
30
through generation of zero-emission electricity
from Tesla solar panels.” (p.90)
Vestas
Sustainability
Report
2021
Energy
Not disclosed
“In 2021, the turbines produced and shipped in the
year are expected to avoid 532 million tonnes of
CO2e over their lifetime, the equivalent of carbon
avoided by a forest five times the size of Spain in
a year.” (p.6)
Company report
Year
Key focus
Calculation method for
avoided emissions
Scope 4 emissions disclosure
Dialight
Annual Report
2022
Lighting
solutions
Not disclosed
The emissions that are avoided by customers
(Scope 4 emissions) are 2.1m tonnes but, using
the GHG protocol, these are not eligible to be
included within our net zero calculations. (p. 13)
Pacific Gas and
Electric Company
(PG&E)
Climate Strategy
Report
2022
Energy
Not disclosed
“PG&E is taking a strategic, collaborative
approach to reduce our Scope 3 and “Scope 4”
customer emissions” (p. 10)
Umicore
Annual Report
2022
Materials
technology
Not disclosed
In terms of avoided emissions (sometimes
referred to as "Scope 4"), Umicore examined in
2022 the activities linked to catalyst
materials for fuel cell vehicles, next to the
activities already assessed in 2021, i.e., cathode
materials for electric mobility and to recycling
key raw materials. The relevant avoided emissions
for these activities are the GHG emissions. We
also analyzed the avoided NOx emissions linked
to automotive catalysts. Based on those activities,
we have estimated the total avoided GHG and
NOx emissions for 2022. In our calculations, a
portion of our estimation was not allocated
specifically to Umicore, to reflect the estimated
shared contribution of the complete value chain.
(p. 112)
Approximately 7.7 million tons of GHG were
avoided, taking into account the production of the
cathode materials, their processing into batteries,
the use of batteries in full electric vehicles and
end-of-life recycling.
Weir Group
Annual Report
2022
Mining
Not disclosed
“We are analysing our product footprint to help
quantify the difference in emissions between our
most efficient technologies and their business-as-
usual alternatives using a comparative
sustainability impact measure known as scope 4 –
avoided emissions. Our Enduron® high pressure
grinding rolls (HPGR) is the first technology in
which we have done this. We previously
31
identified energy savings up to 40%, relative to
tumbling mills – a scope 4 avoided emissions
benefit. HPGR also doesn’t use grinding media,
which have significant embodied emissions,
leading to a further CO2e saving.” (p. 49
“Total scope 4 emissions savings of up to
16,000tCO2e per HPGR installation.” (p. 45)
32
Table 2: Summary of early work developing guidelines avoided emissions accounting
Institution
Year
Report
Reference to
Scope 4
Key contribution
Global e-Sustainability
Initiative and Boston Consulting
Group (BCG)
2010
Evaluating the carbon-reducing impacts
of ICT
No
- Developed a methodological framework for
assessing the enabling effects of ICT
- ICT Enablement Methodology
World Business Council for
Sustainable Development
(WBCSD)
2013
Addressing the avoided emissions
challenge
No
- Definition of ‘avoided emissions’
- Calculation and communication methodologies
World Resources Institute
(WRI)
2014
Policy and action standard
No
- Developed an accounting and reporting standard
for estimating and reporting the change in GHG
emissions and removals resulting from policies
and actions
International
Telecommunication Union
(ITU)
2014
Methodology for environmental life
cycle assessments of information and
communication technology goods,
networks and services
No
- LCAs of goods, networks and services in ICT
industry
- Framework and guidance and comparative
analyses with baseline scenarios
The Institute of Life Cycle
Assessment (ILCA)
2015
Guidelines for assessing the
contribution of products to avoided
greenhouse gas Emissions
No
- Identifies general principles of methodologies and
develop guidelines for assessing the contribution
to reduce GHG emissions
33
Table 3: Avoided emissions and Scope 4 emissions calculation methodologies
Name
Year
General approach
Quantitative
representation
of Scopes 1 – 3
with avoided
emissions
Referred
to as
Scope 4
Calculation
Key features
Shortcomings/Limitations
World
Resources
Institute
Attributional
estimation
Approach
2019
Use the concept of ‘comparative GHG
impacts’, which are defined as impacts
of a company’s product, relative to the
case where the product did not exist.
Positive impacts are termed as ‘avoided
emissions’. These can be estimated
using an attributional or consequential
estimation approach.
Attribution approach considers absolute
emissions and removals, where avoided
emissions are estimated by undertaking
a like-to-like comparison of the
reference product with the assessed
product
No
No
Comparative GHG Impact =
Life-Cycle Emissions of
Reference Product – Life-Cycle
Emissions of Assessed Product
If the comparative GHG impact
is positive, then the assessed
product emits less than the
reference product.
- Simple estimation
approach
- Scalable to large
products
- Strong assumption of
perfect substitution
between products
- Assumption of linearity
with product quantity
- Ignores market-mediated
effects and rebound effects
- Decision making based on
this approach can
unintentionally increase
rather than decrease
emissions
Consequential
estimation
Approach
2019
Estimates system-wide change in
emissions and removals due to a
specific decision or action.
Consequential approach considers how
emissions are expected to change due to
the assessed product
No
No
Comparative GHG Impact =
Emissions in baseline scenario
– Emissions in policy scenario
A baseline scenario considers
events that occur in the absence
of the policy scenario.
A zero result signifies no
system-wide change in
emissions.
- Considers market-
mediated effects
- More appropriate for
informing decision-
making
- Challenging –data
availability and labour
intensive
- Greater uncertainty than
attributional estimates
Holmgren and Kolar
Substitution Effect
2019
Use the concept of ‘Product
Substitution Effect’ to represent
avoided fossil emissions when forest
products are used in industry. This is
used to calculate total climate benefit of
forestry
No
No
Climate benefit (CO2e) ≈ Forest
carbon stock change (CO2e) –
Value chain emissions (CO2e) +
Product substitution effect
(CO2e)
- Quantifies the
avoided fossil CO2e
emissions when
renewable materials
made from wood
replace fossil-based
products
- Varies between different
forest sector products
- Broadly accepted
substitution factors not
currently available.
- Builds on multiple
assumption of using
bioenergy
- Varies across geographic
regions
34
DNB Approach
2020
Use the concept of ‘potential avoided
emissions’ (PAE) to assess avoided
emissions of DNB’s Renewable Energy
Fund by comparing baseline (business
as usual) with investment scenario.
Yes
No
Potential Avoided Emissions =
Emissions in baseline scenario
– Emissions in new scenario
Net Potential Avoided
Emissions (Net PAE) =
Avoided Emissions – Scope 1-3
emissions
Baseline scenario is the
business as usual case where a
product or service is not made
available. New scenario is the
investment scenario where the
product or service is available.
Net PAE are presented as
positive and offsetting the
Fund’s scope 1-3 emissions.
- Limited to single
product or service
category leading to
conservative
calculation of PAE
- Avoided emissions
are defined as
“emissions that
would have been
released if a
particular action or
intervention had not
taken place.”
-
- Operational limitations –
result in double counting
across companies
- Data quality dependency
and greater approximations
and assumptions
- Analysis of backward-
looking data - cannot be
used to forecast future
potential avoided
emissions
Schroders Approach
2021
Develop Avoided Emissions framework
based on a systematic value chain
approach to capture savings, calculated
relative to a baseline
Yes
Yes
Stage 1:
(Emissions in baseline scenario
– Emissions in products’
scenario) x % value added
Stage 2:
Cost of emissions avoiding
product ($) * Emissions
Avoided (tCO2e)
= Emissions Avoided / of
expenditure on the product
(tCO2e/$)
Stage 3:
Emissions Avoided per
expenditure on the product
(tCO2e/$) x annual spend on the
product
= Annual Avoided Emissions
intensity (tCO2e/$
- Attribution of
avoided emissions
across industries in
value chain
- Derivation of
avoided emissions
intensity at company
level
- Advantageous in
highlighting gaps
due to conventional
measures
- Focusses on
identifying carbon-
avoiding activities
- Assumes benefit in
companies offsetting
emissions with the avoided
emissions
- List of carbon-avoiding
activities considered in the
calculation is not
exhaustive
- Labour intensive
- Uses assumptions to
apportion emissions
35
Table 4: Interview insights on Scope 4 calculation issues and commercial benefits
Company
Name
Industry
Report on
avoided
emissions and
Scope 4
No. of
interviews
Key insights
Calculation issues
Commercial benefits
Company A
Forestry and
Paper
Yes
2
- Baseline calculation is
time consuming and
complex
- Need for
standardization
- Potential revenue
stream from carbon
storage in trees
Company B
Chemicals
Yes
2
- Baseline calculation is
time consuming and
complex
- Product range is too
large and complex to
feasibly analyze all
products
- Need a method to
account for something
that does not exist
- Potential revenue
stream from
generation of carbon
credits
- Charges premium for
products that avoid
emissions
Company C
Hydrogen
Yes – but
would not
disclose
specific details
1
- Baseline calculation is
time consuming and
complex
- Scope 4 emissions
contributes to climate
strategy
- Need to highlight
benefits to investors
Company D
Dairy
No
1
NA
NA
Company E
Paper
Recycling
No
1
NA
NA
Company F
Mining and
Metals
No
1
NA
NA
