Best Practices for Calculating Product Avoided Emissions

In our previous article What are “scope 4” emissions and why should I care? we attempted to demystify the concept of scope 4 emissions, or how we prefer to call it: avoided emissions. This category of emissions covers both positive and negative emissions happening outside of the value chain, but as a result of using a product / service or making an investment decision. Recapping from this article, measuring avoided emissions should not take precedence over calculating, reporting, and setting science-based targets for scopes 1, 2 and 3. This is in part due to the considerable reduction potential of these emissions (given the degree of control the emitting company has over them), as well as the fact that they can be difficult to calculate in their own way, and no supplementary efforts should be drawing attention away from this.

Lacking a standardized methodology

As more information and tools become available for companies to comprehensively calculate their scopes 1, 2 and 3, many are preparing to expand their efforts to include avoided emissions in their reporting. One of the main limitations in doing so is the lack of a standardized methodology to calculate these emissions. Although there are several reference frameworks that exist, such as the WRI’s working paper on Estimating and Reporting Avoided Emissions, or the GHG Protocol’s Policy and Action Standard, these are often sector- or country-specific, and differ in their methodological approach. So, how can you ensure you are reporting on avoided emissions accurately and transparently? Based on a comprehensive review of leading guidance and frameworks, we put together a simple 3-step approach to calculate product avoided emissions with all the best practices we gathered along the way:

The first step is the foundation and has to do with choosing the right product to undergo the study; step two, is about deciding on the right methodology based on how you intend to use the results; the third and final step, centers on communicating your results, and doing so in a way that’s both valuable for your organization and transparent to all stakeholders.

Step 1: How do I choose the right product for my assessment?

Similar to Life Cycle Assessments (LCA), one of the primary things to look for in an ideal product for avoided emissions is for it to be emissions intensive or contribute significantly to your total emissions. This will ensure the avoided emissions impact is significant, and the results more meaningful. If you already have an emissions assessment on individual products, you can use this information to choose your product. If not, there are two main ways to determine whether a product is emissions-intensive:

1. Corporate Greenhouse Gas Inventory: If your company has completed a scope 1, 2 and 3 inventory, you can use the inventory to identify products or product categories with the highest emissions.

2. Physical and/or Economic Factors: Although this is the least preferred method given that certain factors may not directly correlate to greenhouse gas emissions intensity, companies may use some of these factors to estimate emissions-intensity based on product mass, volume or spend.

These options are not exhaustive but do provide the greatest level of granularity, specifically at the product-level. In thinking about the right product for the assessment, there are other criteria to consider beyond emissions-intensity that are equally relevant, including:

- Products that are core to the business, meaning the primary product of a company or representing the highest share of their revenue

- New products with enhanced features or new technologies, often meant to replace an existing product

- Strategy-aligned products, meaning those enabling the attainment of specific business goals

As the list of options continues to narrow down and prior to moving into steps 2 and 3, it is essential to consider how much data is available for each of the products under consideration to limit the reliance on estimates. In thinking about the purpose and expected outcome of the assessment, we want to ensure that the available data will produce results that are accurate enough to make credible external claims and/or inform product decisions that are reliable.

Step 2: What is the most appropriate methodology for my assessment?

Once the product has been selected, the next immediate step is to reflect on the purpose for conducting the assessment. Having clarity around the goal will guide which methodological approach you ultimately choose. There are two main approaches – attributional and consequential – each answering a different question: 1. Attributional Approach: this method measures the impact between two products in a constant system, meaning it measures the individual emissions generated along each of the product’s value chain, assuming no changes. The total calculated emissions for each product are then compared, which leads to an understanding of the net reductions.

The attributional approach is preferred when looking to understand which of the products under study is less or more environmentally impactful and, more favorable if using the results to make external claims.

For example, a company wants to know if their new fabric treated with a cooling technology generates less emissions than a traditional fabric, which can presumably reduce the number of washes in between uses.

2. Consequential Approach: this method measures the impact as a result of a change in the system, meaning it measures the emissions at a baseline state and compares it to a scenario where this baseline is impacted by an action.

The consequential approach is preferred when looking to understand the environmental impacts that may result from said action and for using the results from the assessed scenario to inform decision-making.

For example, a company wants to understand the impact of their decision to develop a new fabric with a cooling-technology treatment.