Behind The Sustainability Terminology: Scope 4 And Carbon Shadows

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As the sustainability landscape continues to evolve, new topics, guidance, and standards come out each year. Terms like ‘Circular Economy’, ‘Net Zero’, and ‘Sustainable Investing’ have only fairly recently been added to the growing sustainability glossary. Now, two new concepts are on the rise – Scope 4 emissions and Carbon Shadows. As Cority’s sustainability experts support our customers with navigating new terms, we unpack the latest on these concepts in this blog. 

Scope 4: Reporting On ‘Avoided’ Emissions

Most sustainability professionals should be familiar with Scope 1-3 greenhouse gas (GHG) emissions – the direct and indirect emissions that come from organizations. Now, the concept of Scope 4 emissions has started rising in popularity, commonly known as the category for ‘avoided emissions.’  

As the category name of ‘avoided emissions’ suggests, Scope 4 emissions covers the “emissions reductions that occur outside of a product’s life cycle or value chain, but as a result of the use of that product,” according to the World Resource Institute. Examples here include energy efficient light bulbs, green vehicles, and compostable cutlery. Reporting on Scope 4 can emphasize positive stories on a company’s sustainability reporting efforts, moving beyond the traditional Scope 1-3 direct/indirect emissions reporting. 

However, Scope 4 is a complex category to capture data and report on. Companies and organizations need to ensure data is being collected beyond their direct value chain to accurately report on how products are being used by consumers. This is not an easy task and can lead to instances of greenwashing where assumptions and overestimations are made. Scope 4 has also not formally been integrated into the Greenhouse Gas Protocol, so limited established standards, guidelines, or best practices are currently available for organizations.  

Still, Scope 4 is a useful category to provide a full overview of an organization’s emissions. For companies, it can shed light on areas of strength and where to double down on for emissions reductions. For investors, it can highlight new sustainable investment opportunities and provide clarity on what the emissions of a company would have been if they had taken a different investment or route. In a climate of increasing pressure on scenario analysis reporting, it is not surprising that avoided emissions have become of more interest in telling a comprehensive climate strategy story.  

Interested in exploring your Scope 4 emissions and not sure where to begin?

We recommend starting with a baseline measurement. This could be a materiality assessment to understand your organization’s full environmental impact as it is today and create a reference point as you work on your reduction strategy. Utilizing an external third-party consultant and advisory service can also be helpful in bringing in expertise and knowledge of the market. The relevance and value of reporting Scope 4 emissions is likely to vary based on the industry and maturity of an organization. Keeping an up-to-date data management tool – like a software solution – can help ensure you are accurately reporting on your metrics and creating an audit trail. 

Carbon Shadows: Measuring Your Impact Beyond A Footprint

“Carbon footprint” has been a term used by climate change and sustainability experts for over 20 years. First used by BP in 2004, carbon footprint was a measure of an individual’s daily life impacts on the planet. We have all become familiar with it; you may have even looked to calculate your own personal footprint at one point. But a newer term has surfaced that switches the dialog to one that speaks to the greater climate emergency happening – your carbon shadow 

Coined by Emma Pattee, the term carbon shadow moves us beyond thinking about just the numbers-based, calculable emissions right under our feet. Your climate shadow encompasses bigger life choices that you make – from what you consume, to what you choose to buy or participate in, and what you pay attention to. It can include donating money towards climate action causes, staying informed on the climate crisis, eating a plant-based meal more often, and avoiding non-essential plane travel – all actions that can have additional carbon impacts as well as put strain on planetary resources.  

While it may seem like an ominous term – a shadow being something that follows you around wherever you go – it is a hopeful call for action that looks to broaden the mind. We have been accustomed to calculating emissions on a smaller, lifestyle basis, changing our daily habits like taking shorter showers or turning lights off. Switching our mindsets towards understanding our climate shadows makes us understand those larger, impactful choices and decisions we can make in our lives to bring about powerful, collective action. The term can help individuals connect with “my environment” and the impacts of more of their actions – hence, better understanding the connected ecosystem of planetary challenges that we face today.  

What about carbon shadows in business?

From a corporate and investor perspective, companies can look to understand those strategic business yearly decisions they make and how it grows their shadows, moving towards a culture of responsibility and accountability. For organizations looking to make bold moves towards their sustainability efforts, a good place to start is by creating transparency within your company on sustainability strategies – providing a view of how you are tracking towards your goals. 

A related concept to this is Shadow Carbon Pricing – a term that has a similar naming convention but has a different scope. This methodology is used in internal financial and economic reviews to fully assess the true price of carbon emissions by considering all external factors (economic cost, applicable taxes, market trends, and trends in societal habits). Using this, companies can get a full picture of the cost of emissions and instead, invest in those projects that have low-carbon emissions or look to find sustainable alternatives. 

The world of sustainability reporting changes constantly. As new terminology, guidelines, tools, and mandates launch each year, it is helpful to have services and support from a trusted advisor. Cority’s Sustainability Cloud solution, along with our team of ESG and sustainability experts, support organizations to advance their sustainability strategies across their value chain and beyond. Interested in learning more? Connect with our experts today.