Understanding Scope 4: The Increasing Importance of Avoided Emissions Data in the Commercial Real Estate Market


Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.

If you’re unfamiliar with Scope 4 emissions, you’re not alone. Although scope categories for carbon accounting were introduced in 2001 with the Greenhouse Gas (GHG) Protocol corporate accounting standard, many real estate professionals are still working to understand the differences between the four tiers. Lesser known than the other categories, Scope 4 is used to capture avoided carbon emissions from improved efficiency or renewable energy adoption. These emissions can be more challenging to quantify but have incredible potential to advance both sustainable outcomes and business goals.

Scope 4 gives real estate organizations a way to demonstrate the emission reductions they achieve through efficiency and switching to renewable energy, even in cases where their overall emissions may increase due to property acquisitions, expansions, or changes in usage patterns, such as an increase in emissions from a multi-family building with more residents now working from home. By firmly understanding Scope 4, real estate organizations can develop emissions scenarios, boost outcomes, and improve transparency for all stakeholders.

Reviewing Scope 1, 2, and 3 Emissions

Before exploring Scope 4 emissions, it’s helpful to clarify the differences between Scope 1, 2, and 3 emissions. Each category offers valuable information for organizations to gather, analyze, and act on.

Scope 1 includes direct emissions that are burned, such as fuel combusted on-site.  

Scope 2 refers to on-site energy usage purchased from an off-site source, such as electricity and steam.

Scope 3 covers everything else. For landlords, this mainly refers to tenant emissions, and also includes embodied carbon from building construction, supply chain, etc.

Scope 4, on the other hand, most commonly describes avoided emissions, such as tenant commuting, energy footprint, and waste. Because some reporting initiatives don’t require organizations to report avoided emissions, this data can be hard to capture. However, Scope 4 data holds tremendous possibilities for real estate organizations to drive environmental progress and improve the quality of life of tenants.

Reporting Scope 4 Emissions to Accelerate Net-Zero Progress

Scope 4 emissions are avoided emissions driven by efficiency improvements or reductions in carbon-emitting activities. In other words, Scope 4 emissions aren’t the emissions produced by working from home, they’re the emissions avoided by not commuting. For real estate organizations, these emissions include efficiency improvements within buildings and measures taken to encourage a work-from-home environment or promote the use of public transit.

The value of Scope 4 within the real estate industry can be found in receiving credit for achieved emission reductions even if other circumstances, such as hotter weather, acquired properties, increase in occupancy and building usage, prevent an absolute emission reduction across the organization’s portfolio.

Understanding Scope 4 emissions is just the first step. To advance sustainability outcomes and business innovation, real estate organizations need access to data measurement and the ability to interpret key findings before they can take informed actions that lead to significant progress in pursuing reduction opportunities and sharing achieved reduction efforts.

Reporting and Measuring Scope 4 Emissions

A common pain point for real estate organizations when it comes to Scope 4 emissions is the lack of access and ability to measure them. Environmental, social, and governance (ESG) software solutions offer an all-in-one sustainability hub to collect info for emission scopes. Being able to access data, make accurate interpretations, and take action regarding the emissions your company or building produces are now must-haves that create value across your organization — from company operations to financing activities. Acting on this data allows real estate organizations to improve scores across multiple sustainability frameworks, increase brand resonance, and enhance enterprise value.

This article was written by Zach Shelin, Product Manager at Measurabl.