Scope 3 investments. Enhance your ESG approach with this guide.

Scope 3 investments. It was confirmed that scope 3 category 15 includes investments, lending and advisory services, and it was agreed that the name was perhaps confusing. This comprehensive guide offers practical insights and strategies to help you minimise Jan 25, 2024 · The paper goes on to outline a range of challenges facing investors considering scope 3 emissions of their investments, particularly at the portfolio level. , companies that make an investment Understand Scope 3 Category 15 emissions from investments and discover effective strategies to manage and reduce them. Aug 22, 2025 · This study presents a network-based approach to measure investment-related scope 3 emissions at a global scale, revealing overlooked patterns of carbon accountability. This comprehensive guide offers practical insights A list of frequently asked questions about Scope 3 with details on where to find more information. Emissions calculation. Apr 23, 2025 · Scope 3 emissions include all sources not within an organization’s scope 1 and 2 boundary. Oct 24, 2025 · The Scope 3 'Investments' category for a financial institution directly accounts for a portion of the Scope 1 and Scope 2 emissions of the companies in which it invests. A reporting company’s scope 3 emissions from investments are the scope 1 and scope 2 emissions of investees. Sep 5, 2024 · The Institutional Investors Group on Climate Change (IIGCC) has finalised guidance for investors on addressing Scope 3 emissions in investments, going ahead with previously indicated suggestions that investors proceed by checking their portfolios’ exposure to key “hotspots”. Apr 20, 2022 · Learn more about the difference between Scope 1, Scope 2, and Scope 3 emissions, and why they’re so important for understanding climate risk of investments. Mar 13, 2024 · Align financial investments with climate strategy By ensuring financial investments, including assets and pension funds, are aligned with sustainability strategy and commitments, organisations can reduce Scope 3 emissions through greener investment choices. Traditional accounting methods typically assign emissions based on direct ownership shares, yet these fail to capture the extensive chains of influence that characterize modern financial systems. Additional measures are necessary to enable valid comparisons Category 15 – Investments Emissions associated with investments in activities such as joint ventures or equity partnerships are part of Scope 3. Apr 26, 2022 · Abstract The use of materials, goods, and services is associated with greenhouse gas emissions. A lack of high-quality data, consistency in calculations and approaches, or even one clear approach all hinder accurate aggregation. Enhance your ESG approach with this guide. These emissions are Jan 3, 2025 · Understand what upstream and downstream emissions are in the context of Scope 3, and why measuring them is key to addressing climate risk within organizations. Diferences in reported emissions may be a result of diferences in inventory methodology, company size or structure. Scope 3 emissions are becoming increasingly important as issuers face growing pressure to report and reduce these emissions. Investments You may think of Scope 3 as emissions generated from everything that goes into your business to allow it to operate (upstream), and emissions generated from the use of the products or services you provide (downstream). The sovereign debt methodology and the guidance on emission removals are pending GHG Protocol review and approval. This category is typically a significant emission source for financial Feb 14, 2025 · Reporting on Scope 3 emissions are crucial to building a more sustainable future for businesses and the planet, and it’s important now more than ever with mandatory regulations that require the measuring of emissions in the value chain. This calculation guidance is designed to reduce those barriers by providing detailed, technical guidance on all the relevant calculation methods. Nov 7, 2024 · GHG Protocol: (Table 5. However, data quality issues and gaps hinder investors' ability to systematically evaluate Scope 3 emissions Calculating emissions from equity investmentsIt is a requirement of the Scope 3 Standard to report emissions from equity investments made by the reporting company using the company’s own capital and balance sheet, including: • Equity investments in subsidiaries (or group companies), where the reporting company has financial control (typically more than 50 percent ownership) • Equity Disclosing Scope 3. . Sep 17, 2020 · Investors concerned about climate change have traditionally focused on Scope 1 and Scope 2 emissions — e. When a joint venture is excluded from the scope 1 and 2 boundary, its emissions will be included in scope 3, category 15 (investments). For example, companies that use the equity-share approach include emissions from equity investments in scope 1 and scope 2. 4 (next page) Feb 20, 2025 · Explore our 2025 guide on Scope 1, 2, and 3 emissions, complete with examples and visual charts to help you navigate these essential sustainability metrics. Feb 20, 2025 · By incorporating Scope 3 emissions into investment decisions investors can gain a more robust risk assessment, identify potential exposure to carbon intensive assets and align portfolios with a transition to a low-carbon economy Regulations surrounding Scope 3 emissions are becoming more stringent. Scope 3 emissions: The holes in asset managers’ Scope 3 reporting If the planet is going to achieve the GHG emissions reductions required to reach the goals of the Paris Agreement, we must include all corporate and financed GHG emissions, including Scope 3. Learn about its scope, methods, objectives, processes, careers, case studies, ethics, and future trends. Apr 28, 2025 · One of the key proposed changes to the climate-related disclosure standard is an amendment to Scope 3 category 15 emissions, which is focused on value chain emissions relating to investments, such as financial services companies’ investment, financing and capital markets activities. Jan 21, 2025 · Despite these challenges, investors should gradually consider Scope 3 emissions in their investment decisions. Jun 27, 2023 · Financial institutions report emissions almost entirely in scope 3 category 15, emissions from investments. For purposes of GHG accounting, this standard divides financial investments into four types: Apr 22, 2024 · With Scope 3’s Category 15 covering high-impact yet methodologically ambiguous financed emissions, financial sector institutions have proactively self-organised to fill accounting guidance gaps present within current greenhouse gas protocol frameworks aimed more at tangible industrial value chains. Sep 23, 2025 · Scope 3 emissions are indirect emissions that occur in the value chain of an organization, and that aren't included in scope 2. In this blog post we answer investor questions investors about supply chain GHG emissions and why decarbonization is important. Sep 26, 2024 · Scope 3 data can often be found within an organization's financial records, particularly associated with business expenditures, revenue streams, financial liabilities, and investments represented on the corporate balance sheet. Discover how financial investments contribute to a company's carbon footprint and how to reduce it. Apr 21, 2025 · What are Scope 3 emissions? Scope 3 emissions are all indirect greenhouse gas emissions that occur in a company's value chain but are not owned or directly controlled by the company. Enhance your ESG strategy with this comprehensive guide. , banks, asset managers, insurers) but also to companies that hold equity or debt in other organizations. It offers practical advice for interpreting the Scope 3 recommendations of the Net Zero Investment Framework (NZIF) 2. Scope 3: All other indirect emissions across the value chain, including financed emissions (investments, loans, and other financial activities). These emissions happen both upstream and downstream in a company's operations. This article doesn't cover PCAF As Scope 3 emissions gain prominence in climate discussions, this paper offers an analysis of their current usability for investment decision-making, examining data challenges, regulation, and implications for portfolio construction. The Corporate Value Chain (Scope 3) Standard allows companies to assess their entire value chain emissions impact and identify where to focus reduction activities. Climate Strategy: Scope 3 GHG emissions Invest in products and services for the energy transition Our Scope 3 GHG emissions approach includes the introduction of new products and services into our portfolio, like hydrogen and CCS which can help our customers avoid or reduce their Scope 1 and 2 GHG emissions. The emissions included are proportional to the ownership share of the investee and represent Feb 28, 2025 · Scope 3 includes all other indirect emissions that occur in a company’s upstream and downstream value chain. Indeed, given Category 15’s unique set of conceptual and data challenges, it is not a coincidence Investments significantly impact Scope 3 emissions, which are indirect greenhouse gas emissions across a company's value chain. May 19, 2025 · Includes Scope 3 emissions associated with the company's investments in the reporting year. The 15 Scope 3 categories – Upstream The 15 categories of Scope 3 Emissions are divided into upstream and downstream activities. Apr 26, 2024 · Your complete guide on Scope 3 emissions: the emissions that organizations don’t directly control but happen as a result of their operations. For financial institutions, Scope 3/Financed Emissions is the most significant, often 700x greater than their direct emissions and representing over 90% of their total emissions. For example, companies that use the equity approach classify emissions from equity investments in Scope 1 and 2. It is not designed to support comparisons between companies based on their scope 3 emissions. These are emissions that occur upstream of the company For example, if a fund manager owns a producer and its supplier, including Scope 3 emissions will result in double counting on certain Scope 1 categories if the supplier is also held in the investment portfolio. The GHG Protocol defines four types of financial investments: Equity investments, debt investments, project finance, and managed investments and client services. Feb 7, 2025 · Scope 3 Overview and Category 15: Investments Scope 3 emissions arise from activities that are linked to an organization but occur outside of its direct ownership or control. Understand Scope 3 Category 15 emissions from investments and discover effective strategies to manage and reduce them. Companies can engage with these ventures, promoting sustainable practices and emissions reduction initiatives. To open the Scope 3 emissions dashboard: On the left navigation under Analytics, select Emissions insights. Just because a company has published some level of Scope 3 emissions does not necessarily mean that investors have the full and complete picture. From purchased goods to employee commuting, get a comprehensive overview of each category's impact and relevance in the broader context of sustainability. This category is relevant to investors or financial service providers, both profit-driven and not (e. These include Introduction Scope 3 greenhouse gas (GHG) emissions represent the indirect emissions generated throughout a company’s value chain, both upstream and downstream. Companies that use a control approach account only for those equity investments that are under the company’s control in scope 1 What is Scope 3 Category 15 Emissions? Category 15 covers Scope 3 emissions related to a company's investments during the reporting year that aren't part of Scope 1 or Scope 2 emissions. Among the 15 categories of scope 3 emissions defined by the Greenhouse Gas Protocol 1, category 15 relates to emissions associated with a company’s investments. Scope 3 stands apart from Scope 1 (direct emissions from owned sources) and Scope 2 (indirect emissions from purchased electricity Nov 2, 2023 · Scope 3 emissions, often seen as the ‘hidden emissions’ within an organisation’s carbon footprint, are ultimately the most impactful area that alternative investment funds can influence and have the greatest effect on change. Consider a bank providing a loan to a coal mining company. Learn how to effectively monitor and disclose Scope 3 emissions for your organization. The new Value Chain Emission Accounting Framework will enable companies to: Jul 31, 2024 · Scope 3 emissions are crucial for any GHG inventory. This in-depth guide provides essential insights and actionable steps to help Introduction The calculation of BASF’s Scope 3 emissions is based on the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard and the Guidance for Accounting and Reporting Corporate GHG Emissions in the Chemical Sector Value Chain (WBCSD). With businesses, governments and investors increasingly focused on a net-zero transition, Scope 3 investment risks are mounting Dec 6, 2023 · An INTUITIVE and COMPREHENSIVE guide to Scope 3 carbon accounting. Accounting for these emissions is critical for investors to analyse transition risks associated with their investments and Jan 21, 2025 · Understand Scope 3 emissions: measurement challenges, investor implications and how carbon value‑chain data shapes risk, engagement and portfolio alignment. Jul 31, 2025 · As Scope 3 emissions gain prominence in climate discussions, this paper offers an analysis of their current usability for investment decision-making, examining data challenges, regulation, and implications for portfolio construction. 53): “In general, companies in the financial services sector should [emphasis added] account for emissions from equity investments in scope 1 and scope 2 by using the equity share [emphasis added] consolidation approach to obtain representative scope 1 A reporting company’s scope 3 emissions from investments are the scope 1 and scope 2 emissions of investees. Dec 27, 2024 · 1. Mar 24, 2025 · The GHG Protocol’s Guidance notes that emissions associated with investments held on behalf of clients, including by fund managers, will be accounted for as Scope 3 emissions by the manager, but does not give further guidance on how emissions are accounted for in respect of particular asset classes. For companies just beginning to assess their scope 3 emissions, it can be difficult to know where to start. For most companies, this represents a proverbial footnote in their overall emissions profile. Understanding and managing these emissions is crucial for reducing financial risks, meeting regulatory requirements, and improving sustainability performance. This is the core mechanism for Learn about Scope 3 Category 15, investment emissions. Explore the complexities of managing Scope 3 Category 15 emissions, which arise from the financial investments your organisation holds. Building on our earlier analysis Apr 19, 2018 · These include activities inside the Scope 3 boundary associated with the production of purchased goods and services, such as energy efficiency measures and biological sequestration (eg, through forests or soil carbon). Step-by-step toward compliance and value chain RISK REDUCTION! Scope 3 greenhouse gas (GHG) emissions are important to investors’ understanding of transition risk. It proposes a materiality-based approach with sector-level granularity. In this article, you will gain insights into category 15, which covers emissions related to investments. The Scope 3 emissions are calculated by category in accordance with the guidelines of the GHG Protocol Standard (at Jul 31, 2025 · Explore in-depth analysis of Scope 3 emissions, covering data quality, normalization, and practical portfolio considerations for sustainable investors. Aug 15, 2023 · 2. Incorporating Scope 3 emissions into investment decisions will ultimately allow investors to rely on a more robust risk assessment and align their portfolios with a transition to a low-carbon economy. Jul 31, 2025 · Explore in-depth analysis of Scope 3 emissions, covering data quality, normalization, and practical portfolio considerations for sustainable investors. May 2, 2023 · An investment firm’s scope 3 emissions include the scope 1, 2 and 3 emissions of its portfolio companies or investments. Scope 3 includes all other indirect emissions When it comes to Scope 3 emissions, understanding the details of the disclosure across the different categories is important. , the coal power plant emissions for the corresponding buyer of electricity. Aug 11, 2023 · Unravel the 15 categories of Scope 3 emissions and their significance in the climate landscape. Explore Scope 3 GHG emissions, the largest and most complex category, and learn how to manage them effectively. Strategic Approaches to Scope 3 Emissions Reduction Lifecycle Thinking and Product Design: Jul 10, 2025 · Scope 3 Category 15 emissions refer to the indirect greenhouse gas (GHG) emissions associated with the organization's investments. 19 hours ago · A complete guide to investment accounting. Jul 9, 2025 · 1 “Decoding Mandatory Scope 3 Reporting: A Global Overview of Regulations for Companies,” Aligned Incentives, accessed June 23, 2025. This includes 15 distinct categories such as purchased goods and services, capital goods, business travel, use of sold products, end-of-life treatment, and investments. An investment firm’s scope 3 emissions can be many multiples greater than their direct emissions, which highlights the central role they have in the decarbonisation of the economy. 9, Accounting for emissions from investments, Scope 3 Standard, p. ” Dive into the intricate world of Scope 3 GHG emissions, encompassing indirect emissions across your entire value chain. In this example, the operational control approach is used to allocate: Upstream emissions Cradle-to-Gate (cradle to gate + within) = All emissions before and while the production/manufacturing of a product. , Scope 2), of both upstream and downstream activities (Figure 1). Scope 3 greenhouse gas (GHG) emissions – which link to a company’s activities but occur outside of the company’s operational control across the value chain – vary across companies and sectors, but on average account for over 80% of corporate carbon footprints. , the direct emissions from an oil- and gas-refining operation (Scope 1) and the emissions from the electricity utility needed to run the refinery (Scope 2). Using shareholder data from publicly traded firms listed on the Tokyo Stock Exchange, we identified Jul 18, 2024 · IIGCC's scope 3 supplementary guidance aims to help investors address value chain carbon emissions of portfolio companies to reach net zero, mitigate risk. g. For Example, BlackRock's BGF Climate Action Equity Fund incorporates Scope 3 data to identify companies actively reducing value chain emissions. Jun 22, 2023 · To assess climate-related transition risks, investors should evaluate GHG emissions across portfolio companies’ value chains. These emissions occur upstream in the value chain and are a signif After comparing the share of Scope 1,2,3 by sector, she illustrated that scope 3 downstream emissions in the financial sector, especially Category 15 Investments activities have taken more than 80% of the sector’s greenhouse gas emissions. 0 and outlines a range of good practice guidance for investors, including guiding principles and potential steps that Jul 31, 2025 · Explore in-depth analysis of Scope 3 emissions, covering data quality, normalization, and practical portfolio considerations for sustainable investors. Feb 22, 2024 · Accounting for scope 3 emissions from investments remains a challenge due to a lack of adequate data and guidelines that do not accommodate the systemic role of firms in the financial chain. Here, we use network analysis to estimate investment-associated scope 3 carbon emissions of public firms. Scope 3 TWG Subgroup C Meeting #1 Read more Subscribe to Category 15: Investments This blog will help you to better understand how to measure the emissions from your investments. Participants gave various arguments for and against accounting for emissions from financial services: It was confirmed that scope 3 category 15 includes investments, lending and advisory services, and it was agreed that the name was perhaps confusing. Mar 3, 2025 · Likewise, downstream scope 3 categories will include emissions from the subsidiary's products, but not from the joint venture's products. Descriptions of scope 3 categories Figure I shows the 15 distinct reporting categories in scope 3 and also shows how scope 3 relates to scope 1 (direct emissions from owned or controlled sources) and scope 2 (indirect emissions from the generation of purchased purchased electricity, steam, heating and cooling consumed by the reporting company). Providing capital or financing is a service offered by the reporting Organizations that make investments and/or provide financial services should report emissions in the investments category. The primary distinction between the scopes is that the emissions that are owned or controlled by a financial institution or a company are under scope 1 and 2, whereas scope 3 emissions are the result of a company's activities but occur from sources that Feb 7, 2025 · Welcome to the Scope 3 | Category 15: Investments. Jun 28, 2024 · Scope 3 disclosures are complex, and Category 15 (Investments) is an obscure segment intended to cover emissions that arise from one company having a stake in another (i. May 27, 2025 · What Is Category 15? Scope 3 Category 15 encompasses greenhouse gas (GHG) emissions associated with the reporting company’s investments. Investments is category 15 of scope 3. Scope 3 emissions are the emissions of the remainder of the supply chain (minus electricity, i. The Scope 3 emissions dashboard in Microsoft Sustainability Manager lets you view scope 3 emissions by reporting period. Jan 25, 2024 · Scope 3 greenhouse gas emissions on average make up over 80% of corporate carbon footprints. Investments may be included in a company’s scope 1 or scope 2 inventory depending on how the company defines its organizational boundaries. Additionally, obtaining data from the value chain to enable reporting at the same time as the financial statements could be a big challenge for many companies. It provides information not contained in the Nov 7, 2024 · Scope 3 TWG Discussion Paper C. Scope 3 emissions, also referred to as value chain emissions, often represent the majority of an organization’s total greenhouse gas (GHG) emissions. Asset Management Asset managers integrate Scope 3 data into investment strategies to assess portfolio companies' climate impacts and guide sustainable investments. 3) extends into topics for discussion in Meeting C. This article covers key categories, necessary data, and challenges for the real estate sector. e. This guide from the Institutional Investors Group on Climate Change can help you to improve your practices on addressing the Scope 3 emissions of assets. However, the measurement of Scope 3 emissions is more complex and significantly less mature than Scope 1 and 2 measurements. 1 Investments (Category 15) Working Draft: Do Not Cite Description: This discussion paper concerns investments (scope 3, category 15) in the Scope 3 Standard. , financial transactions) 1. The financial institution attributes a percentage of the investee company's direct (Scope 1) and indirect (Scope 2) emissions based on its share of equity, debt, or other financial instruments. 15 emissions helps financial institutions and companies with investment portfolios understand the climate impact of their financed activities, align with sustainable finance fram The Corporate Value Chain (Scope 3) Standard is designed to enable comparisons of a company’s GHG emissions over time. The scope 3 emissions for one organization are the scope 1 and 2 emissions of another organization. One question raised was whether Scope 3 emissions of FIs should be limited to emissions associated with investing and lending, or whether other services that FIs provided should also be included (for example underwriting and advisory services). Category 15: Investments T Category description his category includes scope 3 emissions associated with the reporting company’s investments in the reporting year, not already included in scope 1 or scope 2. 2 “IIGCC Supplementary Guidance: Scope 3 emissions of investments,” IIGCC, September 2024. Dec 19, 2024 · Scope 3 Technical Working Group Meeting WORKING DRAFT; DO NOT CITE Group C (Investments) Meeting 3 Investment types, classification, and optionality December 19th, 2024 Scope 3 is further divided into 15 groupings, with category 15 focused on investment-related emissions, referred to as financial emissions. Accounting for these emissions is critical for investors to analyse transition risks associated with their investments and to comply with Net Zero commitments and evolving regulatory standards. Jan 23, 2025 · Scope of Work Key topics from 2024 Completed discussion topics which are pending draft revisions for TWG review Investment classification and optionality (discussed in Meeting C. This category is essential to support the financial services sector. About the Scope 3 Guidance Assessing GHG emissions across the entire value chain can be complex. These so-called scope 3 emissions make a considerable contribution to the climate footprints of compa Investments can be included in the company's Scope 1 or Scope 2 balance sheet depending on the definition of the company's organizational boundaries. Scope 3 includes all other indirect emissions Jun 27, 2023 · Financial institutions report emissions almost entirely in scope 3 category 15, emissions from investments. What is the ESRS and how does it relate to Scope 3? Mar 28, 2025 · Scope 3 emissions are a challenging subset of GHG emissions to track. On the top menu, select Scope 3. This applies primarily to financial institutions (e. , multilateral development banks). This category is applicable to investors (i. GHG Scope 3 Category 15 Investments ExplainedUnderstand Scope 3 Category 15 emissions from investments and discover effective strategies to manage and reduce them. These methodologies are in conformance with the requirements set forth in the Corporate Value Chain (Scope 3) Accounting and Reporting Standard for Category 15 investment activities. Scope 2 emissions are the emissions from the electricity procured by the business entity, e. The Scope 3 Standard (S3S) Program certifies value chain interventions and issues units for use in companies’ emissions accounting. Sep 4, 2024 · The latest thinking for investors on addressing the scope 3 emissions of assets. It was pointed out that the development of Financial Sector Guidance could lead to amendments being made to the Scope 3 Standard, so the name and scope of category 15 could be changed if needed. tq3em7re d0p bhfdbg 3apowi nb0k fq ssz 7m udyn j32b