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January 2, 2024

Financed emissions (Scope 3.15) explained

Financed emissions, also known as Scope 3.15, are emissions arising from financial services, investments, and loans within the financial sector. This categorisation aligns with the Greenhouse Gas Protocol (GHGP), emphasising the significant environmental impact associated with banking and investor activities.

The Paris Agreement underscores the imperative to align financial flows with low greenhouse gas (GHG) emissions and establish a resilient climate trajectory. Within this framework, financial institutions, including banks and investors, assume a pivotal role due to their substantial contributions to funding industries with high carbon emissions.

 

The role of SMEs

As the drivers of Europe’s economy, financial institutions hold a critical position in addressing the environmental footprint of small and medium businesses (SMEs). SMEs, while vital to economic growth, contribute up to 70% of industrial pollution in Europe. Consequently, banks and investors are urged to actively engage in sustainable practices to mitigate these impacts.

In adherence to sustainability goals, banks are obligated to comply with the Sustainable Finance Disclosure Regulation (SFDR). This necessitates confident reporting on financed emissions, specifically within Scope 3.15, ensuring transparency and accountability in the financial sector’s contribution to environmental sustainability.

 

Reporting scope 3.15 emissions 

Financial institutions face challenges in reporting financed emissions, particularly within Scope 3.15. These challenges include data collection complexities, data quality, scarcity of ESG carbon emission data, the lack of standardised methodologies, and governmental constraints hindering Paris-aligned decision-making. Overcoming these hurdles is essential for banks to produce accurate reports and fulfil their environmental responsibilities effectively.

Omnevue’s suite of CO2e reporting solutions are future-proofed, facilitating compliance with financed emissions (Scope 3.15) disclosure regulations under SFDR.  Beyond ensuring regulatory adherence, Omnevue’s financial-grade data solutions empower banks to navigate the complexities of reporting and stay ahead of evolving standards.

Omnevue’s transparent and evolving methodology is grounded in collaboration and world-leading research. This ensures that reporting solutions remain effective, adaptable to future regulatory changes, and aligned with industry best practices.

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