Hi All, I would like to confirm understanding of where Portfolio Companies emissions sit under the Financial Control Approach.
The Financial Control approach methodology differs between SBTi and the GHG Protocol/PCAF. As presented in the table below, when you have financial control, under GHG Protocol and PCAF, the PCs emissions are treated as yours. However, the SBTi specifically asks for all Portfolio company emissions to be reported in Scope 3 Cat 15 even when the PE firm has control.
Could you please confirm that the below division is correct? and is this compulsory or just a reccomendation from SBTi?
Thanks for posting. That is a recommendation and PE firms are welcome to include their portfolio companies’ scope 1+2 emissions in their own scope 1+2 emissions based on the chosen inventory consolidation approach.
Jack, in many cases, it is the Funds emissions not the PE firm’s own emissions. please follow PCAF facilitated financed emissions guidelines for asset managers. Unless of course the source of the capital invested is the firm’s own capital and not capital of LPs (asset owners) that are managed.
This is why in the SBT PE guidance we say these emissions go in CAT 15 of scope 3.