Global Manufacturers in Japan Advocate for Global Guidelines on Emissions Exclusions
In a bid to showcase the significant role of suppliers in combating climate change, Panasonic's CEO has criticised some companies for exaggerating their carbon reduction contributions using avoided emissions. This call for transparency comes as the Japan Electrical Manufacturers' Association (JEMA) urges the government, private sector, and academia to collaborate on setting international rules for avoided emissions.
The International Electrotechnical Commission (IEC) is already engaged in discussions to establish global standards for calculating avoided emissions. These standards would be based on Life Cycle Assessment (LCA) principles, emphasising clear methodologies and avoiding double counting. The Innovation for Sustainability (I4S) Methodology, developed by IFF in 2025, serves as a prime example.
The I4S Methodology assigns avoided emissions to a solution only if it is integral to the greenhouse gas (GHG) reduction relative to a benchmark. It also uses consequential thinking to identify actual emission changes rather than predicted future changes, relying on peer-reviewed LCA data where possible. Additionally, it excludes land use change (LUC) emissions directly from avoided emission calculations.
However, current international climate reporting frameworks, such as GRI 102: Climate Change 2025, exclude avoided emissions from formal GHG emission reduction targets and reporting. This is because avoided emissions often represent speculative or indirect reductions rather than actual reductions within an organization’s operational boundary. Instead, these frameworks encourage organisations to focus first on direct emission avoidance and reductions.
Financial institutions and investors, like J.P. Morgan Asset Management, do consider avoided emissions indirectly by evaluating investments in technologies and solutions that enable significant emissions reductions compared to conventional alternatives. For instance, capital allocation favours energy-efficient products such as electric heat pumps, which have a known avoided emissions impact through their superior energy performance and reduced GHG emissions relative to fossil fuel heating systems.
As the debate over methodological consistency and risks like double counting continues, there is limited publicly available guidance on broad inclusion of avoided emissions within formal organisational sustainability assessments or regulatory reporting. However, since 2023, Japanese brokerage Nomura Holdings has included avoided emissions in its ESG scores.
Japanese manufacturers Hitachi and Daikin Industries, along with European electronics maker Schneider Electric, support the introduction and regulation of avoided emissions. Panasonic Executive Officer Hirotoshi Uehara has also criticised automakers for receiving praise for selling EVs while Panasonic faces a lack of recognition for its green contributions as a major supplier of EV batteries.
In summary, while efforts are being made to incorporate avoided emissions into sustainability assessments, their integration into formal sustainability reporting and target-setting remains cautious and restricted. The G7 leaders have agreed to promote corporate efforts to foster innovation that contributes to emission reductions, and Panasonic proposes including "avoided emissions" in sustainability assessments to highlight its role in combating climate change. Manufacturers involved in EV components and energy-saving technologies could particularly benefit from a standard for avoided emissions. The CEO suggests considering third-party assurance to maintain credibility and transparency in avoided emissions calculations.
- The International Electrotechnical Commission (IEC) is discussing global standards for calculating avoided emissions, following a call for collaboration in setting international rules from the Japan Electrical Manufacturers' Association (JEMA).
- Financial institutions and investors, like J.P. Morgan Asset Management, consider avoided emissions indirectly by evaluating investments in technologies that enable significant emissions reductions compared to conventional alternatives.
- The proposal by Panasonic's CEO to include "avoided emissions" in sustainability assessments is aimed at highlighting the company's role in combating climate change, especially in the context of its significant contributions as a supplier of EV batteries.
