I am somewhat puzzled by the fact that the explanatory document uses reference to both the GHG Protocol and PCAF.
In the GHG Protocol, the investment-specific method for calculating emissions from equity investments are based on share of equity:
Whereas PCAF’s methodology is based on the share of its enterprise value (including cash, i.e. “equity + debt”):
The above is taken from page 49 in the explanatory document (my highlights).
Thus, for equity investments in highly leveraged companies (could be those owned by Private Equity funds), the emissions are shared between equity owners and borrowers (even if the companies are solely controlled by the private equity fund and less so (if at all) by the borrowers).
Does this mean that both methodologies can be used – and how do you ensure, that the methodology chosen is not made to “optimize” carbon inventory data or portfolio coverage metrics?