What are the scopes of emissions under the GHGP?
The Greenhouse Gas Protocol (GHGP) sets the standards to measure and manage scope 1, scope 2, and scope 3 emissions for companies and countries around the world. However in recent years, the so-called fourth scope of emissions or the scope 4 emissions concept has emerged as a way for companies to quantify the emissions their products, services, and innovations help to avoid.
The emission scopes help companies identify which emissions they need to measure, how to measure them, and how to report on them for sustainability regulations like the Corporate Sustainability Reporting Directive (CSRD) or voluntary standards like the VSME.
We’ll now walk through each of the scopes and give relevant examples for each type.
Definition of Scope 1 emissions
Scope 1 emissions are direct emissions from sources that the company owns or controls. Examples of scope 1 emissions include emissions from fuel used by their transport fleet and gases released from refrigerants in commercial cooling equipment like air conditioners and refrigerators.
Definition of Scope 2 emissions
Scope 2 emissions are indirect emissions from the consumption of purchased electricity, steam, heat, and cooling i.e. energy that is generated off-site. Examples of scope 2 emissions include emissions from electricity used by your office buildings and warehouses.
Definition of Scope 3 emissions
Scope 3 emissions are all emissions that are not produced by the company’s assets or the activities it controls, but that the company is indirectly responsible for up and down its value chain. Examples of scope 3 emissions include emissions from business travel, waste disposal, and purchased goods and services.
Scope 3 emissions are usually the most complex to calculate and often make up the largest portion of your total carbon footprint. This is also the reason scope 3 is considered the holy grail as to carbon accounting.
Emissions calculation for scope 1, 2, and 3 GHG emissions
Calculating your scope 1, 2, and 3 emissions is relatively straight-forward for one shipment, journey, or transport type. However it can get pretty complicated and stressful when calculating emissions for your entire transport and logistics operations, especially when your customers ask for detailed emissions reports for their shipments.
That’s why many companies like Meelunie, Farm Trans, and De Rijke Group are using carbon accounting software to easily and accurately calculate, analyze, and report on their GHG emissions. Check out our full guide on how to calculate Scope 1, 2, and 3 emissions.
Now that we’ve walked through the GHGP’s scope 1, 2, and 3 emissions, let’s explore scope 4 emissions.
So what are scope 4 emissions and how are they different?
Scope 4 emissions are the emissions that are avoided thanks to a company’s product or service, or thanks to R&D efforts or new innovations. While scope 4 emissions are not an official GHG Protocol scope, the GHGP published a neutral framework on estimating and reporting avoided emissions to help companies get started with measuring this type of emissions.
For example, if product A produces 2 tons CO2 in an (average) lifetime and R&D develops product B which produces 0,5 tons per (average) lifetime, then a company can report that it has avoided 1.5 tons CO2 per product per (average) lifetime.
Why was scope 4 developed?
The Greenhouse Gas Protocol (GHGP) introduced the concept of avoided emissions or scope 4 emissions to inspire innovation in technologies and processes that reduce CO2 emissions in the medium- and long-term. A good example of how scope 4 emissions helps to fairly capture a company’s emissions reduction efforts is transitioning a transport fleet from diesel vehicles to electric vehicles.
Building an electric vehicle (especially the batteries) initially emits more CO2 than it prevents. The CO2 that will be prevented is not visible in the existing GHGP scopes, so if you do not take avoided emissions into account then it looks like transitioning to electric vehicles means you create more CO2 emissions instead of reducing the CO2.
Instead of just calculating the CO2, scope 4 emissions helps companies report on the emissions they help to avoid over time. It also helps to ensure companies don’t ‘cheat’ on emissions by making overly optimistic estimates of the emissions they emit, because doing so would make it difficult to show measurable improvements over time.
And their customers, supply chain partners, and investors will expect to see them continuously reduce their emissions over time, which is pretty difficult if you choose an unrealistic starting point.
Why is calculation of avoided emissions still only voluntary?
The fact that companies themselves can calculate how much their product has ‘avoided’ makes critics worried. If scope 4 is formally introduced, it will be important to have a benchmark for every product, and organizations must communicate their emissions against the market average.
This is also the reason climate organizations and government bodies are reluctant to talk about this scope because there is no standard calculation developed and this can cause greenwashing, something everybody agrees is not desirable.
To add to the confusion, some sources mistakenly refer to scope 4 as employee-related emissions, but that is not aligned with the GHGP definition.
What emissions reporting is mandatory for my company?
It depends! Emissions calculation is still voluntary for many transport and logistics companies, especially those companies that are small or mid-sized. However, it’s likely that your customers, supply chain partners, investors and other stakeholders will still require you to provide emissions data, even if you’re not directly mandated to report on your emissions.
We recommend that you get up to speed on which regulations apply to your company by reading our guide on the most important sustainability regulatory requirements for transport and logistics companies. We also dive deep into the differences between the CSRD and the VSME voluntary standard to help you understand whether your reporting requirements are mandatory or voluntary.
Either way, getting started with emissions calculation and reporting not only helps with compliance, but also helps you gain a competitive edge in tenders, reduce your costs, and take action to reduce your overall emissions.
In short, we not only help you to make your emissions reporting more accurate and hassle-free, but we also help you reduce your emissions and gain a competitive edge. Want to learn more? Book a call with one of our experts.
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