Scope 3 investments. It's an industry-led initiative enabling financial .

Scope 3 investments The categories also cover activities such as leased assets, upstream and downstream transport and distribution, the use and disposal of sold products and the impact of any investments. in tonnes of CO. These disclosure rules are poised to drive strategic emissions reductions as firms will need to closely track and benchmark their carbon inventories. Source: Scope 3 Standard, page 5. 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. that scope 3 category 15 includes investments, lending and advisory services, and it was agreed that the name was perhaps confusing. 70 100% 1 Biogenic emissions originate in only selected instances in Anglo American’s value chain, specifically in the The most difficult carbon emissions to calculate for a business can have the biggest impact on its carbon footprint. com. Explore the complexities of managing Scope 3 Category 15 A new paper from IIGCC highlights the nuance and importance of addressing scope 3 emissions within investment portfolios, as well as the barriers to doing so and the limitations of that data. There are four calculation methods recommended by the GHG Protocol to help calculate your Scope 3 emissions for each category. Why should an organisation measure its Scope 3 emissions? Measuring Scope 3 emissions has several benefits. Scope 3 category 15 emissions must be carefully accounted for, especially when meeting climate goals In 2010 Kraft Foods participated in the GHG Protocol Corporate Value Chain (Scope 3) Standard ‘road test’. Widely tested by banks and investors, these methods assist in the What’s more, a recent PwC survey of 325 investors (representing $14 trillion in assets under management) found that more than one-third of them identified reducing Scope 3 emissions as a priority. The GHG Protocol has broken down and defined Scope 3 emissions into two categories: downstream Delaying the integration of scope 3 emissions blinds investors to a significant portion of their portfolio’s exposure to carbon risks. Investment scope The investment scope of QFIs also expanded over time. For most companies, this represents a proverbial footnote in their overall emissions profile. Office No. 4, N. Scope 3 emissions often appear complex but can be simplified with an analogy. However, the ISSB agreed it would Franchisees can optionally report scope 3 emissions. What is Scope 3? Scope 3 is a series of categories structured to capture emissions largely generated from business activities you depend on but have indirect control over. Additional information about Scope 3 Category 15 emissions associated with 15 Investments Scope 3 categories 1 Purchased goods and services 2 Capital goods 3 Fuel- and energy-related activities 4 Upstream transportation and distribution 5 Waste generated in operations 6 Business travel 7 Employee commuting 8 Upstream leased assets More than two decades ago, the Greenhouse Gas However, the greatest emission reduction opportunities lie in the Scope 3 emissions going forward, given that on average the Scope 3 emissions are 5. These risks may come from new regulation of a company’s high-emission products and shifts in end-product market demand driven by climate concerns. 2. Sustainability, Climate & Equity leader with Deloitte & Touche LLP, and Gina Mastantuono, CFO of ServiceNow, discuss strategies to potentially reduce Scope 3 GHG emissions that focus on value chain participant collaboration and potentially co-investment as well as the important role Scope 3 emissions: all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. Calculating emissions from category 12 Scope 3 estimates represent three approaches for accounting and are not meant to be aggregated, as this would lead to duplicative accounting. This would require disclosing emissions from both upstream and downstream activities in tonnes of carbon dioxide equivalent (CO2e). In this paper, we focus on a set of 10 key questions on Scope 3 that are Scope 3 emissions account for over 80% of overall carbon footprint of companies in our coverage – though related transition risks vary depending on business model specifics and the ease of abatement. The Scope 3 standard requires reporting cradle-to-gate emissions for some It offers practical advice for interpreting the Scope 3 recommendations of the Net Zero Investment Framework (NZIF) 2. These risks may come from new regulation of a company’s high-emission products and shifts in end-product market demand driven Corporate Value Chain (Scope 3) Accounting and Reporting Standard, for Category 15 investment activities. , companies that make an Scope 3 Emissions Supplement to the Corporate Value Chain (Scope 3) Accounting & Reporting Standard CO 2 CH 4 SF 6 N 2 O s s eam, wn use purchased goods and vices capital employee leased assets investments leased assets franchises company facilities vehicles CO 2 CH N 2O HFCs PFCs SF 6 purchased electricity, steam, heating & cooling for own The Corporate Value Chain (Scope 3) Standard Online Course teaches business professionals how to account for emissions throughout their value chain via a convenient online learning platform. A bank’s assets are attributed to scope 3 in this scheme (see Figure 1). Scope 3 category 3 emissions = (Scope 2 activity data × Upstream emission factor) + (Scope 2 emissions data × Transmission and distribution factor) Category 15: Investments. Discover when and how those new rules impact the economy. Furthermore, we believe that addressing Scope 3 emissions will help individual companies better mitigate the risks and seize the opportunities of the climate Learn why you need a Scope 3 emissions strategy now, how to engage your suppliers and why measuring and managing and reducing those emissions are critical. . Consider a baker. Scope 2 emissions are indirect emissions from the generation of purchased energy. Companies have a further incentive to be a leader on Scope 3, with ESG-conscious funds reallocating investment towards companies meeting higher GHG emissions standards, affecting market valuations. This category is Investments you make; While Scope 1 emissions are often the easiest to identify, a complete picture requires considering all three scopes. Events like the GameStop saga highlighted their influence, and this trend is expected to grow. The only sector T&E could find with an Unilever also set goals to reduce its scope 3 emissions from energy and industrial operations by 42% by 2030, compared to a 2021 baseline, and reduce scope 3 emissions from forest, land and agriculture — especially those associated with ingredients — by 30. Forward-looking organisations will Scope 3 emissions are those a company causes indirectly via its supply chain. Importance of Categories: By categorizing Scope 3 emissions, companies can prioritize areas with the highest emissions and develop targeted strategies for ÃI’â}¾tÉÅeïÍùàÄûyí¨©]3½IÞWõ2ª> 0Š±dØä‹bÚ-ç ‡àF [þ‡³ß y ÚºX5Uí÷ÔË׎ÔíUÎËi5+Êyò±(»åºØ¾÷‹zÝœÝäõf‹wé¨( ÷» >stream H‰\UM Û6 ½ëWÌQ "®HQ uL°Á"ͦآº =ÈkÙV`Ù ÙíBýGý—}3¤l¥0V| Îç›!÷áéwMûKò#qZ+ï©ÀϘZ Scope 3 Emissions Supplement to the Corporate Value Chain (Scope 3) Accounting & Reporting Standard CO 2 CH 4 SF 6 N 2 O s s eam, wn use purchased goods and vices capital leased assets investments company facilities company vehicles NF 3 Scope 3 INDIRECT CO 2 CH 4 N 2 O HFCs PFCs SF 6 purchased electricity, steam, heating & cooling for own 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. Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. The The Advancing Climate Solutions Report includes 2022 greenhouse gas emissions performance data and Scope 3 Category 11 estimates for full-year 2022 as of March 1, 2023. , Scope 3 emissions, often the largest part of corporate-related emissions, should be checked against net zero pledges We think investors should consider Scope 3 emissions in their risk models and evaluation of companies’ climate commitments Scope 3 emissions come from other entities in the value chain . ) End-of-life treatment methods (e. S. Your company’s Scope 3 emissions inventory should align with the overall organization boundary it defined for Scope 1 and Scope 2 emissions (using either the control or equity share methods). Boards have a fiduciary responsibility to manage these Investors ‘in for a shock’ as scope 3 disclosure requirements kick in next year with truckmaker emissions 50% higher than what they report to investors. Just be sure to document your Explore scope 3 emissions for financial service companies: disclosures, emissions being financed, and the action needed to reach your Net Zero goals. Emissions could be included in scopes 1 or 2 instead of 3 This blog will help you to better understand the emissions your organisation generates in Category 2: Capital Goods, so you can measure and reduce them. 92 1. , landfilling, incineration, and recycling) are described in category 5 (Waste generated in operations) and apply to both category 5 and category 12. Companies may also calculate the life cycle emissions associated with manufacturing or Scope 3 emissions, while often harder to categorize, can potentially contribute far more to an organization’s overall carbon footprint than the other two scopes. These are emissions that are generated by services and products provided by another company to you, or by your consumers using your product or service. Our Scope 3 inventory results are the backbone that informed our future footprint work. Businesses that address Scope 3 emissions are more likely to attract investors who prioritize ESG metrics. Sustainability, Climate & Equity leader with Deloitte & Touche LLP, and Gina Mastantuono, CFO of ServiceNow, discuss strategies to potentially reduce Scope 3 GHG emissions that focus on value chain participant collaboration and potentially co-investment as well as the important role Value Chain (Scope 3) Accounting and Reporting Standard" for category 15 investment activities. Unless climate disclosure regulations require Scope 3 emissions reporting, investors and other market participants may have no way of knowing the This category includes Scope 3 emissions associated with the reporting company’s investments in the reporting year, not already included in Scope 1 or 2. Since then, banks and investors have asked to expand the standard with more methods, also covering other avtivities of the financial industry. On 28 September 2018, BHP completed the sale of 100 per cent of the issued Scope 3, Category 15: Investments: Calculated WRI has a defined sustainable investment approach for its endowment. For GHG Protocol, the feedback from Scope 2 emissions are indirect emissions from purchased en-ergy. 4 Measuring and reporting Scope 3 emissions requires time, money, and other resources. Page 3 . We are working hard to gather the best information possible about scope 3 The GHG Protocol’s Corporate Value Chain (Scope 3) Standard identifies 15 categories. “ESG issues on supply chains are embedded in the whole process of our investment. investors, and suppliers, and back-up net zero claims and targets. The UN Global Compact Network UK hosted a four-part webinar series to support businesses to There are 15 sub-categories of disclosure that fit under Scope 3 reporting. Required emission factors: A of the Scope 3 Standard for more information on accounting for emissions from leased assets. We arrived at our definition of green and transition assets by considering different At its October 2022 meeting the ISSB confirmed the inclusion of Scope 3 disclosure as set out in its draft Climate-related Disclosures Standard given feedback from investors that they cannot fully understand a company’s transition risk without information about its absolute gross Scope 1, 2 and 3 emissions. The Institutional Investor Group on Climate Change (IIGCCC) is getting closer to delivering guidance for investors on the tricky question of Scope 3 emissions in investment portfolios, with materiality set to be a focus. Scope 3 emissions from investments equal the investees' Scope 1 and Scope 2 emissions. According to Carbon Trust’s research, Scope 3 emissions can make upwards of 90% of a company’s carbon impact, especially in large enterprises. g. 73 93. For most businesses and public bodies, the majority of their GHG emissions and cost reduction opportunities are outside their own operations. The team’s research highlights some of the more commonly known problems investors encounter when looking at scope 3 emissions, not least the poor coverage and comparability, but it goes much further, bringing into question whether scope 3 data sets are truly fit for portfolio purpose. Location: Arizona Ballroom B-C. Estimated Scope 3 emissions from the use of ExxonMobil’s crude and natural gas production for the year ending Dec. 6. Indeed, Osmosis conclude that integrating scope 3 data With businesses, governments and investors increasingly focused on a net-zero transition, Scope 3 investment risks are mounting. 3% in the same time period. 2 This highlights why, in our view, addressing Scope 3 is key to reaching net zero by 2050, 3 thus limiting global warming to 1. Lead the industry forward Create a sustainability plan that goes beyond carbon offsets to actually reduce and remove emissions on the farm through regenerative agriculture. Investments: This category includes investment emissions, also known as financed emissions associated with investments. The more elusive Scope 3 emissions originate in the baker’s supply chain. Typically, the largest source of Scope 3 emissions from investments equal the investees' Scope 1 and Scope 2 emissions. Many companies find that 1 The GHG Protocol Corporate Accounting and Reporting Standard, Scope 2 guidance, Scope 3 Standard and Scope 3 Guidance are published by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), and were developed with the aim of providing a standardised approach and set Scope 3 emissions reported separately by scope 3 category • Emissions data for CO. Scope 3 emissions can often be significant, and addressing them demonstrates a comprehensive approach to sustainability. Building off the Corporate Standard, the Scope 3 Standard allows companies to account and report their full value chain impacts. 3 Our scope 3 emissions inventory for FY2019 has been presented on a Continuing and Discontinued operations basis to include the contribution from our Onshore US assets for the four months prior to completion of their sale. In this conversation, Jon Raphael, national managing partner and U. Downstream, organizations can encourage customers to reduce Operation of franchises in the reporting year, not included in scope 1 and scope2: Investments: Operation of investments, including equity and debt investments and project finance Because scope 3 contains such a broad range of emissions For the Scope 3 GHG Inventory of Merck KGaA, Darmstadt, Germany, the following documents have been used: Investments 1 . The democratization of investing, driven by user-friendly trading apps and social media, has given retail investors unprecedented power. Enhance your ESG approach with this guide. Paying premium prices for low-carbon products and providing Scope 3 Emissions Categories Category 15 Investments 2. Their Scope 1 emissions might come from their oven’s smoke, while Scope 2 emissions stem from the electricity powering their kitchen equipment. What’s more, a recent PwC survey of 325 investors (representing $14 trillion in assets under management) found that more than one-third of them identified reducing Scope 3 emissions as a priority. Other commercial vehicle companies are investing in green steel, which uses hydrogen in its production process. Larger purchases that are considered assets or investments, such as vehicles and construction, should be reported in scope 3 category 2: Capital goods. This category is relevant for private and public financial institutions. selection of suppliers and other value chain partners, material inputs, investments, and product types and design. Agrifood corporates don’t have direct Scope 3 emissions are those a company causes indirectly via its supply chain. With ESG investment funds on the rise, companies that provide accurate data on their emissions and have a clear strategy for reducing them are better positioned to access green financing or other sustainability-linked financial À l'heure où les investisseurs cherchent à aligner leurs portefeuilles sur l'objectif mondial du « zéro émission nette », le calcul des émissions de Scope 3 prend une importance capitale. 1. We encourage investors to join the initiative and commit to assess and disclose their GHG emissions associated with their portfolio. Categories 6 “Business travel” and 7 “Employee commuting” may be relevant for some sectors but they tend to be negligible for all high-impact sectors and represent 0. Scope 1 and Scope 2 issues of the investee company; Investor's share of the investee's equity; If significant, companies should also report the investee's Scope 3 emissions (if investees are unable to provide Scope 3 emissions data, Scope 3 emissions may need to be calculated using the methodology described in Option 2). Scope 3 emissions are voluntary under the GHGP, but carbon disclosure mandates vary between and 15 “Investments” may also be relevant for some companies and should be evaluated. Investments: Emissions from the operation of investments not owned or controlled by the reporting company, for which the reporting company does not report Scope 1 or Scope 2 emissions. 2 and 15. The investment focus is rooted in a thorough understanding of the requirements for relationship-based value creation in a global, and increasingly digital, market. Mitigation of a company’s indirect, or Scope 3, emissions represents the largest abatement opportunity for the thousands of companies with ambitious climate goals. The Investments category is based on the Partnership for Carbon Accounting Financials (PCAF) methodology. Due to their many applications and our customer structure, the associated The strategic investment aims to significantly reduce Scope 3 emissions and transform the company's supply chain operations. Investments; Why report scope 3 emissions? Scopes 1 and 2 are an effective way for companies to develop a more holistic view of where their business activities result in emissions as they look at both direct and indirect sources. ClimateCamp. Scope 3 categories are an essential aspect of measuring an organization's environmental impact. 4% Total Scope 1, Scope 2 (location based) and Scope 3 241. It improves the consistency for reporting and provides a valuable selection of suppliers and other value chain partners, material inputs, investments, and product types and design. What has Scope invested in? Scope has made numerous investments in companies like AuthPay, Bruder, and Abyom SpaceTech within the Business/Productivity Software, Commercial Products, and Aerospace and Defense industries. The real estate sector, CPP Investments’ position paper on how it will achieve net zero by 2050 can be found on cppinvestments. 2 For Scope 3 emissions, companies would need to disclose which of the 15 categories of emissions are included in its calculation. Investors seek scope 3 emissions data to gain a more comprehensive picture of the emissions profile of their investment portfolios. Scope 3 emissions account for the largest share of most companies’ GHG emissions, and investors report that Scope 3 estimates are useful for informing their financial decisions, reflecting the SEC’s definition of financial materiality. 1 Across Scope 1 and 2 GHG emissions and business travel emissions, which fall within Scope 3. Scope 3 emissions categories The Scope 3 Standard divides scope 3 emissions into upstream and downstream emissions, based on the Understanding Scope 3 Emissions. From purchased goods to employee commuting, get a comprehensive overview of each category's impact and Scope 3 emissions on average make up over 80% of corporate carbon footprints, yet present one of the most vexing problems in climate finance. So far, however, both regen ag and Scope 3 strategies remain elusive for many farmers and food companies. Scope 3 emissions examples . The 2022 CSRD and the new requirements for Scope 3 reporting. This means that the IIGCC's scope 3 supplementary guidance aims to help investors address value chain carbon emissions of portfolio companies to reach net zero, mitigate risk. This At its October 2022 meeting the ISSB confirmed the inclusion of Scope 3 disclosure as set out in its draft Climate-related Disclosures Standard given feedback from investors that they cannot fully understand a company’s transition risk without information about its absolute gross Scope 1, 2 and 3 emissions. The GHG Protocol defines four types of financial investments: Equity investments, debt investments, project finance, and managed investments and client services. as with any investment strategy, the results are only as good as the quality of the underlying inputs. However, the measurement of Scope 3 emissions is more complex and significantly less mature than Scope 1 and 2 measurements. PCAF recognizes that these financial actors play an important role in the financial ecosystem to drive change and transition towards a low-carbon society in line with the Paris Climate Agreement. investors to systematically assess Scope 3 exposures in their portfolios and to factor Scope 3 emissions in investment processes and reporting. 2) Merck KGaA, Darmstadt, Germany produces a huge variety of intermediate products for various purposes. Voluntary carbon markets operate in the same way , but without Sponsored: Ensuring Scope 3 Investments Count: Developing New Accounting and Claims Guidance. This category is mainly for financial institutions, but it’s relevant for all other organizations with investments. Record-breaking electric fleet expansion Over the next 18 months, Amazon will integrate more than 140 electric vehicles into its delivery network, including around 120 Mercedes-Benz eActros 600 trucks and eight Volvo FM Scope 3 emissions primarily refer to the indirect emissions resulting from society’s need for and use of the Company’s products. For example, for Lego and Walmart, Scope 3 emissions constitute 75% and 90%, respectively, of total emissions Proceeds are intended to be reinvested into green capital expenditure to reduce Scope 1 and 2 emissions. 31, 2023, as provided under Ipieca’s Category 11 were 540 million metric tons. However, the ISSB agreed it would the reporting year. The goal is to provide third parties with sustainability data that can influence their collaborations or investments, stimulating businesses to improve their Scope 3 emissions can be broken into upstream and downstream scope 3 categories. GHG Protocol: List of scope 3 categories. In some cases, companies may not find value in distinguishing between products sold to customers (accounted for in category 11) and products leased to customers (accounted for in category 13). Thursday, February 16, 2023. From 2021 The Global GHG Accounting and Reporting Standard for the Financial Industry provides guidelines for assessing and disclosing greenhouse gas emissions from financial activities. Capital investment guidance in lower-emission investments is based on our corporate plan; however, actual investment levels will be subject to the availability of the Our insights hub provides an informed perspective with a decade of experience delivering work within the Sustainability space. This means that the emissions related to a company’s portfolio of investments need to be studied and listed. 5°C. 2 Figures as at December 31, 2021. 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. Understand Scope 3 Category 15 emissions from investments and discover effective strategies to manage and reduce them. Reduce scope 3 GHG emissions from capital goods by 22% per square metre by 2030 from a 2019 base year In 2022, CapitaLand Investment's total scope 1 and 2 GHG emissions was 680,727 tonnes CO₂e. A food company, for example, would include emissions generated in the production and while making longer-term capital turnover investments that will reduce their direct GHG emissions in later years. The Corporate Standard gives companies flexibility in whether and how to account for scope 3 emissions (i. Many companies will need to build out new processes, organizational structures, and data systems, and invest in creating new teams, training employees, and Many oil and gas companies have set targets for scope 1 and 2 emissions. 4 of the Scope 3 Standard for more information on the time boundary of scope 3 categories. NTO must account for the total cradle-to-gate emissions of purchased capital goods in the year of acquisition. Investments. For greenhouse gas (GHG) accounting, this standard divides financial investments Investment emissions (classified under Scope 3 Category 15) are linked to a company’s financial investments and are often overlooked in traditional carbon accounting. For greenhouse gas (GHG) accounting, this standard divides financial investments into four types: Equity investments. 1 Descriptions of Scope 3 Categories 18 The Scope 3 Standard categorizes scope 3 emissions into 15 distinct categories, as detailed in Figure 1. Measure & Disclose Set Targets Develop Strategy Take Actions Steering Monitor Progress Net-zero emissions by 2050 Scenario Analysis Commercial Real Estate Motor Vehicle Loans Sovereign Bonds Business Loans and Unlisted Equity Mortgages 10 Investment strategy 11 How levers interact with each other 12 Future work scope 3 target ambition would entail setting targets that are, at a minimum, in line with the percentage reduction of absolute GHG emissions required at a global level Scope 1 emissions are direct emissions from owned or controlled sources. The proposal would require companies to use the GHG Protocol Corporate Standard 2 to measure factor Scope 3 emissions in investment processes and reporting. Capital Goods: Capital goods include buildings, vehicles, machinery, and store equipment. 3. Scope 3 emissions & CSRD: all you need to know. Source: Box 5. It's an industry-led initiative enabling financial Unlock new visibility into your scope 3 emissions by replacing generic carbon data with farm level insights with up to 95% accuracy, and built for action. Forward-looking organisations will read the writing on the wall and start developing the capabilities and expertise they’ll need to measure—and Scope 3 emissions account for over 70% of the average company’s total emissions. Simply assessing which companies have high scope 1 and 2 emissions may lead to a skewed companies account for and report all scope 1 emissions (i. Investments - The operation of investments including equity, debt investments, project finance, and managed investments and client services in the reporting year. e. Scope 3 requirements are in the S2 Climate-related Disclosures and aligned with the Scope 3 categories from the GHG Protocol. Now that we have described the famous 15 Scope 3 categories, we can easily conclude that minimum activity boundaries and time boundaries of these categories differ. While Scope 1 and Scope 2 emissions are relatively easy to measure, Scope 3 emissions are often more complex and require a deep understanding of an organization's entire value chain, including suppliers, customers, and product end-of-life stages. Using shareholder data from publicly traded firms listed on the Tokyo Scope is headquartered in Hyderabad, India. Scope 3 greenhouse gas (GHG) emissions are important to investors’ understanding of transition risk. Thus, in a world where greenwashing runs rampant and time is of the essence, such scientific 2 Assets that are owned as a joint venture but not operated by BHP. 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. The investment and credit professionals that are ultimately responsible for managing financed emissions should have the training and tools necessary to apply these concepts in their day-to-day Scope 3 emissions are generally considered the most difficult to manage, as it often involves an extensive process of collecting data and engaging with suppliers and customers across the value chain. 4 from the Scope 3 Standard Calculating emissions from capital goods The greatest share of greenhouse gas (GHG) emissions comes from Scope 3 sources, culpable for as much as 90% among certain types of companies. Tel: +971 4 270 1111; Email:info@scopeinvestment. 0 and outlines a range of good practice guidance for investors, including guiding principles and potential steps that investors can take to start analysing Scope 3 materiality across portfolios. Scope has long experience from partnering to build consumer brand companies to capture their potential, developing long-term relationships through multiple channels. Upstream Scope 3 categories encompass emissions sources that occur as a result of activities that need to happen for an organisation to Scope is headquartered in Hyderabad, India. Debt investments. Scope 3 emissions reporting is increasingly commonplace, as shown by thousands of companies reporting scope 3 emissions or to spend, companies may prioritize any other activities expected to be most relevant for the company or In this conversation, Jon Raphael, national managing partner and U. Information on the scope 3 emissions of investee companies is vital for investors looking to credibly decarbonise their portfolios and manage climate-related risks. Expansion of Retail Investor Influence. 2404, Emaar Boulevard Plaza Tower 2, Dubai, UAE. 5 times the amount of combined Scope 1 and Scope 2 emissions (BSR, 2020). 2% Total Scope 3 225. This category applies to investors (i. Scope 3 emissions comprise all indirect emissions (not included in scope 2) that arise in the value chain of the bank’s business activities. Scope 3 emissions reporting is increasingly commonplace, as shown by thousands of companies reporting scope 3 emissions or to spend, companies may prioritize any other activities expected to be most relevant for the company or Category 15: Investments. A company may account for products Technical Guidance for Calculating Scope 3 Emissions [95] CATEGO 8 Upstream Leased Assets • Average data method, which involves estimating emissions for each leased asset, or groups of leased assets, based on average data, such as average emissions per asset type or floor space. Asset managers are being choosy on their Scope 3 reporting. 19 The categories are intended to provide companies with a systematic framework to organize, understand, and 20 report on the diversity of scope 3 activities within a corporate value chain. The Scope 3 Standard presents details on all scope 3 categories and requirements and guidance on reporting scope 3 emissions. equivalent • A list of scope 3 activities included in the report • A list of scope 3 activities excluded from the report with justification of their exclusion • Year chosen as scope 3 base year A new report by CDP and Boston Consulting Group (BCG) illustrates upstream Scope 3 supply chain emissions are 26x that of Scopes 1 and 2 combined – with supply chain fewer than 1 in 10 investors require investees to disclose Scope 3 upstream emission as part of investment policies. 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. Indeed, given Category 15’s unique set of Assessing and disclosing scope 3 upstream emissions can help investors identify and manage the potential climate-related risks associated with a company's operations, supply chain, and products. Notes to editors. For instance, for entities within certain sectors, such as fossil fuel production and export, scope 3 emissions may account for 80 per cent or more By requiring Scope 1, 2, and 3 emissions reporting, investors and stakeholders will gain a comprehensive view of companies' total climate impacts across operations and value chains. An influential coalition of pension funds and insurance companies holding a combined $9. It offers practical advice for interpreting the Scope 3 recommendations of the Net Zero Investment Framework (NZIF) 2. Given that simply aggregating these emissions into portfolio level metrics (as is the case for scopes 1 and 2) could drive undesirable outcomes, there is a need to develop an When an operational control approach is chosen then emissions from investments are Scope 3 Category 15. Investments; For more details Scope 3 emissions include all upstream emissions from the production of products purchased or acquired by NTO. Scope Investment LLC. These are designed to work with the best 3. Below is a table showing the gradual expansion of the investment scope and activities for QFIs: QFI’s investment scope. The company said it was This all-encompassing scope notably includes remaining investments and financing for high-GHG emission activities that may be incompatible with Tables 15. 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. Investors can also gain a more comprehensive view of the company's GHG footprint and its exposure to climate-related risks. , financial transactions) 1. Voluntary carbon markets operate in the same way , but without Causality: Demonstration that an investment (or other equivalent action) of a company or group of companies acting collectively to take advantage of supply shed Scope 3 Activity (from Scope 3 Standard): An individual source of emissions included in a scope 3 category. , direct emissions from owned or controlled sources) and all scope 2 emissions (i. 3 Emissions that banks, asset managers and insurance companies finance through loans (2021). The practical guidance below provides further suggestions on calculating scope 3 emissions. 1) Already covered under Scope 1/2 emissions. 5 trillion in assets called on regulators to mandate corporate disclosures of so-called Scope 3 emissions. improving water quality, etc. A frank conversation is needed on how to address the issues with data Investment emissions (classified under Scope 3 Category 15) are linked to a company’s financial investments and are often overlooked in traditional carbon accounting. (Photo by Lisa-Blue via iStock/Getty Images) While 83 of the 273 asset managers signed up to the Net Zero Asset Managers initiative (NZAMi) have set interim net-zero targets for 2030 incorporating their investment portfolios, most exclude Scope 3 emissions of the underlying companies. 20% of total Scope 3 emissions on average, Scope 3 category 1 Calculating Scope 1, Scope 2 and Scope 3 emissions of the GP and each portfolio company; Attributing GHG emissions from portfolios to GPs and Limited Partners (LPs) The information contained on this website is An influential coalition of pension funds and insurance companies holding a combined $9. Additionally, obtaining data from the value chain to enable reporting at the same time as the financial statements investments; Data for scope 3 emissions can be difficult to obtain, so quantifying scope 3 emissions is not as straightforward as it can be for scopes 1 and 2. years, scope 3 emissions from capital goods may fluctuate significantly from year to year. GHG calculations of WRI’s endowment portfolio use fund- level and securities-level data for its assets and public equity investments for 2019 onward. Although more complex, scope 3 goes a step further, helping to provide a full and more accurate view when used in combination with other For Scope 3 emissions, companies would need to disclose which of the 15 categories of emissions are included in its calculation. 10% and 0. 3 present the analysis of investment requirements in global modelled mitigation pathways assessed in Chapter 3 for key energy sub-sectors within modelled global pathways that Scope 1 and 2 emissions are typically easier to measure, as much of the complicated calculation work is carried out at a national level, through the definition of fuel and electricity carbon Intensities. So far, much of the industry has resisted scope 3 targets, which account for 85%-95% of the total. The Scope 3 Standard provides a uniform approach for companies to account for these emissions. Here, we use network analysis to estimate investment-associated scope 3 carbon emissions of public firms. Scope 3 Categories – Upstream and Downstream Emissions. Access to sustainable investment. In this paper, we focus on a set of 10 key questions on Scope 3 that are frequently asked within 17 0. (See section 5. The differences between the purchased goods and capital goods can be nuanced and ultimately depends on how your organization categorizes its purchasing data. Scope 3 financed emissions, which would comprise the majority of GHG emissions of financial institutions, include emissions arising from the financing of clients and investments, such as the Scope 1 and 2 or 3 emissions of its clients. The SEC’s proposed approach aims to “balance the importance of scope 3 emissions with the potential Investments. The An investment firm’s scope 3 emissions include the scope 1, 2 and 3 emissions of its portfolio companies or investments. The authors of this paper argue Align financial investments with climate strategy. The Global GHG Accounting and Reporting Standard for the Financial Industry provides detailed methodological guidance for asset classes. ae Companies have a further incentive to be a leader on Scope 3, with ESG-conscious funds reallocating investment towards companies meeting higher GHG emissions standards, affecting market valuations. Regenerative agriculture is seen by many (though not everyone) as an important player in the fight to reduce Scope 3 emissions, which account for nearly 90% of food and beverage companies’ carbon footprint. Investments is Unravel the 15 categories of Scope 3 emissions and their significance in the climate landscape. With businesses, governments and investors increasingly focused on a net-zero transition, Scope 3 investment risks are mounting. Many oil and gas companies have set targets for scope 1 and 2 emissions. How many investments has Scope made? Scope has made 3 investments. Scope 3 emissions are emissions from the value chain of a reporting entity. 2, CH. 5. Reporting of Scope 3 emissions protects investors. , indirect emissions from the generation of purchased energy consumed by the reporting company). Ideally, companies should rely on data As a company, investing in regenerative agriculture in supply chains can lead to reduced Scope 3 emissions, more resilient supply chains, and better marketability as an investment fund, an employer, and a brand. O, HFCs, PFCs, SF. Scope 3 Emissions Supplement to the Corporate Value Chain (Scope 3) Accounting & Reporting Standard CO 2 CH 4 SF 6 N 2 O s s eam, wn use purchased goods and vices capital leased assets investments company facilities company vehicles NF 3 Scope 3 INDIRECT CO 2 CH 4 N 2 O HFCs PFCs SF 6 purchased electricity, steam, heating & cooling for own About the PCAF Standard. 1 The GHG Protocol Corporate Accounting and Reporting Standard, Scope 2 guidance, Scope 3 Standard and Scope 3 Guidance are published by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), and were developed with the aim of providing a standardised approach and set Investors are also turning to Scope 3 estimates as they try to understand the risks companies will face from rising carbon prices and more stringent national emissions policies. For more information on CapitaLand Investment's environmental performance, . Another idea is to invest in longer-term supplier initiatives such as power purchase agreements or carbon inset projects. [Added for the purposes of this Guidance]: An Investments; How to calculate your Scope 3 emissions. Companies should provide appropriate context in the public report (e. Category 15 emissions are also called financed emissions and cover emissions associated with investments. , by highlighting exceptional or non-recurring capital investments). For example, Blackrock, whose 2030 target excludes Scope 3 emissions, told the ISSB: “Our investors believe the usefulness of this disclosure varies significantly right now across industries and Scope 3 emissions categories. Scope 3 Calculation: Practical Guidance. 9:00 am - 10:00 am. Dec 2002 • Stocks and bonds listed on stock exchanges From May 2011 • Stock index futures control basis, the scope 3 emissions for our business also include the scope 1 and 2 emissions from our non-operated assets3 (reported under the Scope 3 Standard Investments category (see below)). puzqqr zqvct ogju hbbhs pcssdzkz xjph byu rovgnzi fov xbrqxc