[Financial Institution] Calculation of Scope 3 Portfolio GHG Emissions


As a financial institution, we are planning to submit Scope 1+2 and Scope 3 Portfolio reduction targets.
Before setting the targets, I would like to ask couple questions regarding the calculation methodology and data that we will be using.

(1) In “The Global GHG Accounting & Reporting Standard for the Financial Industry (2020),” PCAF recommends to use verified emissions when we calculate scope 3 portfolio emissions. We are planning to use company data provided by S&P Global (Trucost ESG Analysis). These data includes GHG emission data for companies in which we have invested. The emission data are calculated based on the ratio of our client’s investments to their respective corporate values (EVIC).
Is data from S&P admittable to use for SBTi validation? If not, what methodology we should apply to get emission data of each company?

(2) Furthermore, if there are companies’ data that are not included in the data specified in (1), can we calculate and use “Economic Activity based Emissions” option as stated in PCAF guideline?

(3) Currently, SBTi requires financial institutions to calculate Scope 3 Portfolio emissions on corporate loans, listed equity, bonds, ETFs, and buildings sector separately for SDA. Can we still proceed with the SBTi validation procedure even if we cannot set targets on some sectors(e.g. ETF, commercial estate) due to internal problems(e.g. insufficient data collection)? Or is there any exception rules that could be applied?

(4) If we are using the temperature score methodology, is it possible for us to use temperature scores provided by MSCI (“Implied Temperature Rise”) instead of using the methodology stated in the Guidance?

Thank you very much, and I look forward to your anwers!!

Hi @simonmsw,

Thanks for your questions and welcome to the community.

  1. If you are referring to historical and modelled emissions data from S&P Trucost, then yes. If you are referring to their model for ITR (implied temperature rise) the answer is unfortunately no, at this point, as this has not yet been approved to be used in submissions to the SBTi.

  2. For the temperature rating methodology you should apply a default score to companies where there is no available data for targets and/or emissions.

  3. Unfortunately, if your organisation have assets/activities that are required in table 5.2 of the guidance, then they have to be included in your target submission to the SBTi.

  4. Currently the MSCI ITR method in not approved by the SBTi, and currently you have to use a tool or service that uses the CDP-WWF Temperature Rating Methodology. Currently Bloomberg, CDP and Urgentem provide temperature scores and/or tools that comply with this methodology.