For a bank or an investment fund, the largest part of the carbon footprint is not its offices. It is the emissions of the companies and projects it finances. The GHG Protocol puts these financed emissions in Scope 3 category 15. It also applies to groups of companies that hold shares in firms outside their own boundary.
- Scope 3 category 15, investments: emissions from your company's investments that are not in Scope 1 or Scope 2.
- Who it matters for: investors and financial firms, and also non-profit investors.
- Methods: investment-specific or average data.
- Reduction: green and sustainable finance, and investments in line with the EU Taxonomy.
What does category 15 include?
Category 15 covers emissions from your company's investments that are not in Scope 1 or Scope 2.
Examples are:
- equity investments;
- debt investments;
- project finance;
- investment management and client services.
For which companies does category 15 matter?
This category applies mainly to investors and to companies that provide financial services. It also applies to non-profit investors.
The category was made mainly for private banks and other private financial firms. But it also matters for public financial bodies and other organisations that invest.
Calculation methods
You can calculate category 15 emissions with two methods:
- Investment-specific method: you collect Scope 1 and 2 emission data from the company you invested in. Then you take the part of these emissions that matches your share.
- Average-data method: you use revenue data with environmentally extended input-output (EEIO) tables. These tables give average emissions per unit of money for each sector.
Where do you find the data for this category?
You can look for the data in these sources:
- the carbon footprint reports of the companies you invested in;
- your own financial records.
What are the main challenges in category 15?
The data you need may not be available.
It is especially hard to get data from companies that do not report emissions. The same applies to companies in countries where they do not have to publish such data.
Also, with small shares or funds, the investor has little say in the climate plans of the companies. This makes it harder to manage the carbon footprint of the portfolio.
How to reduce emissions in Scope 3 category 15?
Consider green finance, for example a green finance framework. It sets out what kinds of projects the money from green bonds can fund.
You can also invest in projects in line with the EU Taxonomy, such as renewable energy or zero-emission infrastructure. This supports the move to a low-carbon economy and cuts your own carbon footprint.
