Making avoided emissions count: Unpacking the legitimacy of Scope 4 in emissions accounting
This is a summary of “Making things (that don’t exist) count: A study of Scope 4 emissions accounting claims” published in Accounting, Auditing & Accountability Journal. It investigates the concept of Scope 4 emissions as avoided emissions, highlights inconsistencies in Scope 4 reporting claims and cautions against greenwashing.
AUTHORS

This summary was prepared for practitioners based on Anna Young-Ferris, A. Malik, V Calderman and J Jacob-John (2024) Making things (that don’t exist) count: A study of Scope 4 emissions accounting claims. Accounting, Auditing & Accountability Journal.
The paper “Making Things (That Don’t Exist) Count: a study of Scope 4 emissions accounting claims” (Young-Ferris et al, 2024) investigates the emerging concept of Scope 4 emissions. Unlike the well-established Scope 1, 2, and 3 emissions in greenhouse gas (GHG) accounting, Scope 4 refers to avoided emissions—reductions that occur outside a product’s life cycle due to its use. Despite the absence of formalised standards, these emissions have garnered interest among companies and investors as part of the net-zero future narrative. The paper explores the implications of this assumed legitimacy of Scope 4, questioning its alignment with existing emission scopes.
Defining Scope 4 emissions
Avoided emissions are defined as reductions in GHG emissions resulting from a product’s use compared to a baseline scenario where the product does not exist. Market actors have started referring to these avoided emissions as “Scope 4,” suggesting a natural extension of the established Scope 1, 2, and 3 emissions framework. However, the paper argues that this terminology gives an impression of legitimacy that is not yet warranted due to the lack of standardised methodologies and formalised guidelines for calculating Scope 4 emissions.
Potential for greenwashing
The authors provide an illustrative example of a company’s emissions reporting where Scope 4 emissions are subtracted from the total of Scope 1, 2, 3 emissions in the same framework, to produce a (more favourable negative) net emissions (see Figure 1 below, authors’ adaptation based on graphics in Howard et al., 2021 and DNB, 2020). The potential and implications for greenwashing are rife and this style of reporting may serve as a huge distraction from the much needed and real work to absolute emissions reduction.
Methodology
The authors conducted a desktop review of company reports and interviews to understand how Scope 4 emissions are understood and being reported and calculated. The study also analyses companies’ various accounting methodologies to claim Scope 4 emissions, highlighting the interdependence between quantification, commensuration, and standardisation in emissions accounting.
Findings
- Current reporting practices: Companies report avoided emissions selectively, often highlighting favourable aspects to present a positive environmental impact. Firms such as Apple (2021), IKEA (2021), and Tesla (2020) report avoided emissions to showcase energy savings and environmental benefits, while others like Dialight and PG&E refer to these avoided emissions explicitly as Scope 4 emissions.
- Inconsistencies in methodologies: There is no uniform standard for calculating Scope 4 emissions. Different companies use varied methodologies, leading to inconsistencies and a lack of comparability. For instance, Schroders and DNB Asset Management have developed their methodologies but differ in their approach and assumptions.
- Relationship with Scope 1, 2, and 3 emissions: The paper emphasises that Scope 4 assessments do not fit neatly into the existing Scope-based emissions framework. While Scope 1, 2, and 3 emissions have established boundaries, Scope 4 emissions are not inherently part of this structure. The paper argues that avoided emissions are fundamentally different in nature and ontology.
- Potential risks: Referring to avoided emissions as Scope 4 may distract from the primary goal of reducing absolute emissions. It could lead to greenwashing, where companies claim more significant emissions reductions than are genuinely achieved. The paper calls for caution in using the term Scope 4, as it could mislead stakeholders and mask the need for reducing real emissions.
Theoretical perspective
The paper frames the discussion around the territorialising nature of accounting (Martinez et al. 2022). It argues that the concept of Scope 4 can be seen as an attempt by market actors to extend the boundaries of emissions accounting. By referring to avoided emissions as Scope 4, companies appear to align with the accepted emissions accounting framework, borrowing its legitimacy. This territorialisation serves the interests of market participants, particularly those with large emissions profiles, allowing them to claim greater emissions reductions.
Implications and recommendations
- Need for standardisation: There is a critical need for standardised methodologies to calculate and report avoided emissions. Companies can selectively report Scope 4 emissions without a uniform standard, leading to inconsistencies and potential greenwashing.
- Separate account for avoided emissions: The paper argues that avoided emissions should not be considered a natural extension of Scope 1, 2, and 3 emissions. Instead, they require their own separate account, distinct from the current emissions accounting framework.
- Future research and policy development: The paper encourages further research and discussions on the conceptualisation and measurement of avoided emissions. Policymakers and standard-setting bodies should work towards developing guidelines that ensure transparency, consistency, and credibility in reporting avoided emissions.
“Making Things (That Don’t Exist) Count” highlights the complexities and potential pitfalls of Scope 4 emissions accounting. While avoided emissions present an opportunity to showcase the positive impact of low-carbon products, their current framing as Scope 4 lacks the necessary standardisation and commensurability with established emissions scopes. The paper calls for a more cautious approach to Scope 4 claims and advocates for the development of standardised accounting methodologies to ensure avoided emissions contribute meaningfully to the global climate action agenda.
Full report
Making things (that don’t exist) count: A study of Scope 4 emissions accounting claims
References
Apple, (2021), Environmental Progress Report, <https://www.apple.com/environment/pdf/Apple_Environmental_Progress_Report_2021.pdf>. (Accessed on 04 April 2022)
DNB, (2020), DNB Renewable Energy Assessment of potential avoided emissions and exposure to the UN Sustainable Development Goals, <https://dnb-asset-management.s3.amazonaws.com/Annual-Semiannual-reports/DNB-Renewable-Energy-Assessment-of-potential-avoided-emissions-and-revenue-exposure-to-the-SDGs.pdf>. (Accessed on 13 August 2023)
Howard, A, Tang, M and Yee, L, (2021), A framework for Avoided Emissions analysis Uncovering climate opportunities not captured by conventional metrics, <https://prod.schroders.com/en/sysglobalassets/schroders/sites/australia/unstructured-content/2021_nov_schroders-gic_avoided_emissions_framework.pdf>. (Accessed on 13 August 2023)
IKEA, (2021), Becoming climate positive, <https://gbl-sc9u2-prd-cdn.azureedge.net/-/media/aboutikea/newsroom/publications/documents/ikea-climate-report-fy21.pdf?rev=0444f85efa814cf2841ad681fd00b533&hash=0C0AEC1C90969A4F957E47CB0D2A916>. (Accessed on 24 September 2022)
Martinez, DE, Pflueger, D, and Palermo, T, (2022), ‘Accounting and the territorialization of markets: A field study of the Colorado cannabis market’, Accounting, Organizations and Society, vol. 102, p. 101351. https://doi.org/10.1016/j.aos.2022.101351
Tesla, (2020), Impact Report 2020, <https://www.tesla.com/ns_videos/2020-tesla-impact-report.pdf>. (Accessed on 9 September 2022)
Young-Ferris, A., Malik, A., Calderman, V. and Jacob-John, J. (2024). ‘Making things (that don’t exist) count: a study of Scope 4 emissions accounting claims.’ Accounting, Auditing & Accountability Journal. https://doi.org/10.1108/AAAJ-04-2023-6406