A heat-pump manufacturer in Penang, a battery-swapping start-up in Jakarta and a building-controls software firm in Singapore may have little in common. Their sustainability pages, however, often share one type of number: the tonnes of carbon dioxide their customers did not emit because of their products.
These figures are usually called avoided emissions. They can be a legitimate way for climate-technology businesses to show what their solutions achieve. They can also be the hardest number in a sustainability report to verify, because they describe something that did not happen. Whether a figure is credible usually depends on method, disclosure and discipline, not on its size.
For founders, equipment manufacturers, renewable energy developers and the investors who fund them, the question has become practical. When a company says its technology avoided emissions, what evidence would a sceptical customer, lender or regulator expect to see?
What avoided emissions measure, and what they do not
Avoided emissions compare the greenhouse gas impact of a product, service or project with a reference scenario, meaning what would most likely have happened without it. The World Resources Institute described this in 2019 as the comparative emissions impact of a product relative to a world where the product does not exist. That impact can be positive or negative.
This makes avoided emissions fundamentally different from a corporate emissions inventory. Scope 1, 2 and 3 emissions are the emissions associated with a company’s own operations and value chain, tracked against the company’s own base year. Avoided emissions are a counterfactual estimate of an effect elsewhere in the economy. The comparison point may be a competitor’s product, an older technology or a completely different solution.
Some marketing materials call these figures “Scope 4” emissions. The label is informal. The GHG Protocol does not define a Scope 4, and using the term can suggest that avoided emissions sit alongside, or cancel out, a company’s own footprint. That is exactly what current guidance says they should not do.
| Feature | Emissions inventory (Scopes 1–3) | Avoided emissions | Carbon credits |
|---|---|---|---|
| What it describes | Emissions linked to the company’s own operations and value chain | The estimated effect of a solution compared with a reference scenario | Reductions or removals from a separate project, bought as an instrument |
| Reference point | The company’s own base year | The most likely alternative without the solution | The project’s own baseline under a crediting standard |
| Can it reduce the reported footprint? | It is the footprint | No. Reported separately | Not as a reduction in the inventory |
| Can it support a net zero claim? | Reductions in it are central to net zero | No | Only in limited, tightly defined circumstances |
Why avoided emissions figures attract scepticism
The concept is sound, but the numbers are easy to stretch. Most weak claims share a small number of problems.
- The baseline does the heavy lifting. If a company compares its product with an old, inefficient technology instead of what customers would realistically buy today, the avoided emissions figure grows without any change in real-world performance.
- Several companies claim the same tonne. A component supplier, an equipment maker, an installer and a financier may all report the same reduction without explaining how they share it.
- Market effects are ignored. WRI has noted that simple comparisons assume one product perfectly replaces another. They leave out rebound effects, such as cheaper operation leading to more use, and changes in overall market size.
- Negative impacts are left out. A product may reduce emissions in use but increase them in manufacturing, logistics or disposal. WRI’s review of company claims found that negative impacts were rarely considered.
- Annual and lifetime figures are blurred. Reporting the full lifetime savings of every unit sold this year as if they happened this year makes a figure look far larger than any single year’s impact.
- The company’s own footprint is missing. A large avoided emissions figure presented without the company’s own Scope 1–3 emissions gives readers only half the picture.
What current guidance expects
There is still no single mandatory global standard for corporate avoided emissions reporting. There is, however, growing convergence on the core principles.
The most widely referenced voluntary framework is the World Business Council for Sustainable Development (WBCSD) Guidance on Avoided Emissions. It was first published in March 2023 and refined into version 2.0 in July 2025 after a two-year testing programme with companies and a public consultation. The guidance applies eligibility “gates” before a company makes a claim. These cover the credibility of the company’s own climate action, the alignment of the solution with current climate science, and whether the solution makes a direct and significant contribution to decarbonisation. It is also clear that avoided emissions must be reported separately from a company’s inventory. They must not be netted against it, used to support net zero claims or mixed with offsetting and carbon credits.
The Science Based Targets initiative takes the same position: avoided emissions belong to a separate accounting system and do not count toward science-based targets. The GHG Protocol is developing a cross-sector approach through its Actions and Market Instruments work. Its 2026 white paper proposes a separate “GHG impact statement” for consequential accounting, including avoided emissions from sold products. This work is still under development. Companies should treat it as a direction of travel, not a current requirement.
Asia has played an active role. Avoided emissions were discussed at Japan’s Global GX Conference in 2022, and the Japanese government co-hosted an event on the concept with WBCSD at COP27. Japan’s GX League later published case studies on how financial institutions can use avoided emissions. For the region’s large electrical and electronics manufacturing base, the International Electrotechnical Commission published IEC 63372 in January 2026. This international standard covers how to quantify and communicate carbon footprint, emission reductions and avoided emissions for electric and electronic products and systems.
None of this replaces mandatory climate disclosure. Where companies report under ISSB-aligned climate standards, the core of the disclosure remains their own greenhouse gas emissions. A strong product-impact story does not substitute for it.
The Counterfactual Credibility Test
Before publishing an avoided emissions figure, a company can test it against seven questions. A claim that cannot answer them clearly is not ready for external use.
| Question | A credible answer | Warning sign |
|---|---|---|
| 1. Reference: what is the comparison? | What customers in that market would realistically use, based on current market data | The least efficient alternative available, or an unexplained “conventional” product |
| 2. Unit: what is being compared? | A defined functional unit, such as per kWh delivered, per tonne produced or per vehicle-kilometre | Whole products compared without a common basis |
| 3. Life cycle: what stages are included? | The same life-cycle stages for both the solution and the reference | Use-phase savings only, with manufacturing and disposal ignored |
| 4. Share: who else contributes? | A disclosed allocation where suppliers, partners or financiers also contribute | The full benefit claimed by every company in the chain |
| 5. Time: annual or lifetime? | Annual and lifetime figures reported separately and clearly labelled | Lifetime estimates presented as one year’s result |
| 6. Footprint: what about the company’s own emissions? | Scope 1–3 emissions disclosed alongside, with equal prominence | Avoided emissions shown without the company’s own emissions |
| 7. Evidence: was the solution actually deployed? | Installed, operating units supported by records or operating data | Sales projections or signed contracts treated as delivered impact |
The sixth question is often where companies struggle, especially if supplier data is thin. A practical Scope 3 supplier data strategy is usually a prerequisite for any credible product-impact claim.
Separate what was measured from what was modelled
The most useful discipline for climate-tech communication is to keep three types of number apart.
- Measured facts. These are physical quantities that were recorded: units installed and operating, electricity generated or saved according to meters, tonnes of material processed, and commissioning dates. They can be checked against invoices, meter data and site records.
- Calculated footprints. These are life-cycle estimates of the solution’s own emissions, built from activity data and published emission factors. They depend on method choices but are relatively well standardised.
- Modelled impacts. Avoided emissions belong here. They depend on assumptions about the reference scenario, grid mix, product lifetime and customer behaviour. Different reasonable assumptions can produce very different results.
Credible communication leads with the measured facts and then presents the modelled figure as an estimate. It names the reference scenario, the emission factor source, the time period and the method used. A statement such as “our systems generated this much metered electricity at customer sites last year, which we estimate avoided this many tonnes compared with the national grid average” is far stronger than an unexplained headline tonnage.
Common mistakes to avoid
- Placing avoided emissions on the same chart as the company’s footprint to suggest a “net positive” or “climate positive” position.
- Using a grid emission factor that does not reflect the country or year in which the solution operates.
- Changing the reference scenario from year to year without restating earlier figures.
- Counting products that were shipped but never installed.
- Rounding modelled estimates into precise-looking figures that suggest more certainty than exists.
Each of these can turn a genuine contribution into a greenwashing risk. The same principles that help companies communicate sustainability achievements without greenwashing apply with particular force to counterfactual claims.
When a climate-technology milestone becomes an exceptional achievement
Some climate-technology businesses reach milestones that are notable in their own right. Examples include a first-of-its-kind deployment in a country, an unusually large installation or an exceptional volume of material recovered. These are among the Asian business achievements that may deserve wider recognition, and the measured-versus-modelled distinction matters here as well.
A measured milestone is much easier to verify independently than a modelled one. A claim built on commissioned capacity, metered output or documented installations rests on physical evidence. A claim about tonnes avoided rests on assumptions that reasonable experts may dispute.
The same logic applies to formal record recognition in Asia. Asia Record assesses a proposed record by comparing a clearly defined claim with supporting evidence and with the conditions under which the result was measured. It reviews each submission for completeness, consistency, measurability, standardisation and verifiability. For a climate-tech company wondering how to get an Asia Record, this suggests a practical approach. Frame the proposal around the measured quantity, and treat the avoided emissions estimate as supporting context, not as the record itself. Asia Record’s categories include company records and next-generation achievements in emerging fields, so it is worth confirming evidence requirements before deciding to apply for Asia Record.
Becoming an Asia Record holder is one form of recognition, alongside business awards in Asia, certifications and ratings. Each proves something different, as explained in our guide to different forms of sustainability recognition. Record recognition does not replace product certification, regulatory approval, emissions verification or independent assurance of sustainability data.
A checklist before publishing an avoided emissions figure
- Confirm that the company’s own Scope 1–3 inventory is complete and disclosed.
- Document the reference scenario and explain why it reflects realistic market alternatives.
- Define the functional unit and life-cycle boundary for both the solution and the reference.
- Record the emission factor sources, including country and year.
- Decide and disclose how the benefit is shared with value-chain partners.
- Label annual and lifetime figures separately.
- Check that deployment data comes from installation or operating records, not sales forecasts.
- State the method or guidance followed, such as the WBCSD guidance or, for electrical and electronic products, IEC 63372.
- Keep avoided emissions out of net zero, carbon neutral and offsetting claims.
- Consider independent review before the figure appears in marketing, investor materials or any record proposal.
Frequently asked questions
Are avoided emissions the same as Scope 4 emissions?
“Scope 4” is an informal label that some companies use for avoided emissions. It is not a scope defined by the GHG Protocol. Describing avoided emissions plainly, and reporting them separately, avoids implying that they are part of a company’s inventory.
Can avoided emissions be used to claim net zero or carbon neutrality?
No. Both the WBCSD guidance and the Science Based Targets initiative keep avoided emissions separate from net zero claims and emission reduction targets. Neutrality claims involve their own verification questions, covered in our article on carbon neutral and net zero claims and the use of carbon credits.
Should small climate-tech companies calculate avoided emissions?
They can, but the order matters. A young company is usually better served by first building reliable records of its own emissions and its measured deployment: units installed, output delivered and customers served. An avoided emissions estimate becomes more credible when it sits on top of that evidence.
Avoided emissions can show that a technology is part of the solution, and investors, customers and policymakers in Asia are increasingly interested in that evidence. The companies that benefit most will be those that treat the figure as an estimate to be explained, not a headline to be maximised, and that can point to measured results when someone asks how they know.
