CDP Technical Note: Portfolio Climate Change Impact
Metrics for Financial Services Companies
CDP Corporate QuestionnaireContents
Version .......................................................................................................................................... 3
Glossary ........................................................................................................................................ 4
1. Introduction ............................................................................................................................... 8
2. CDP questionnaire asset classes .......................................................................................... 10
3. Overview of common portfolio impact metrics ..................................................................... 12
4. Metric-level technical guidance ............................................................................................. 16
a. Financed emissions ............................................................................................................ 16
b. Weighted average carbon intensity ................................................................................... 18
c. Portfolio carbon footprint ................................................................................................... 20
d. Carbon intensity .................................................................................................................. 22e. Avoided emissions and emission removals ...................................................................... 24
f. Insurance-associated emissions ........................................................................................ 25
g. Facilitated emissions .......................................................................................................... 26
5. Breaking down portfolio impact metrics ............................................................................... 28
6. Going further ........................................................................................................................... 29
References .................................................................................................................................. 30

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Version
Version
1.0
2.0

Revision date
07 January 2021
21 January 2022

3.0

25 January 2023

4.0

28 June 2024

Revision summaryFirst release.
Minor revisions and question numbers
updated to align with the 2022 CDP climatechange questionnaire.
Minor revisions and the addition of avoided
emissions, emission removals, insuranceassociated emissions, and sovereign debt.
Addition of facilitated emissions, addition ofasset class mapping, removal of worked
examples, other simplifications, morereferences directly to PCAF standards,
documentation and methodologies.

Copyright © CDP Worldwide 2024
All rights reserved. Copyright in this document is owned by CDP Worldwide, a registered charity number
1122330 and a company limited by guarantee, registered in England number 05013650.

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Glossary
Asset managers

Also known as investment managers, asset managers are
hired by clients to invest assets on their behalf.

Asset owners

Includes public- and private-sector pension plans,(re)insurance companies, endowments, and foundations
that invest assets on their own behalf or on behalf of theirbeneficiaries.

Avoided emissions

The reduction in emissions achieved by a projectcompared to a baseline of what would have been emitted
in the absence of the project.

Banks

Financial institutions that mostly undertake lending,deposit taking and other financial intermediary activities.

Carbon footprinting metrics

Metrics for assessing the greenhouse gas emissions
associated with a portfolio, depending on the metricemissions are expressed either in absolute terms or as anintensity.

Carbon intensity

Volume of carbon emissions per million of revenue in unit
currency (carbon efficiency of a portfolio), expressed intons CO2e/Million revenue.

Commercial real estate

For the purpose of this technical note, commercial realestate is on-balance-sheet loans for the purchase,refinance, construction, or rehabilitation of commercial realestate. This definition implies that the property is used forcommercial purposes.

Corporate loans

For the purpose of this technical note, corporate loans areon-balance sheet loans and lines of credit with unknown
use of proceeds to businesses, non-profits, and any otherstructure of organization. Revolving credit facilities andoverdraft facilities as well as corporate loans secured byreal estate, such as commercial real estate-secured linesof credit, are also included in this asset class.

Double counting

Double counting occurs when a GHG emission oremission reduction is counted more than once towards
attaining mitigation pledges or financial pledges for the
purpose of mitigating climate change.

Emission removals

The action of removing GHG emissions from theatmosphere and store it through various means, such as insoils, trees, underground reservoirs, rocks, the ocean, andeven products like concrete and carbon fiber.

EU TEG

European Union Technical Expert Group on Sustainable
Finance.

EVIC

The sum of the market capitalization of ordinary andpreferred shares at fiscal year-end, and the book values of
total debt and minorities’ interests. No deductions of cash

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or cash equivalents are made to avoid the possibility ofnegative enterprise values.
Exposure metrics

Metrics for assessing the exposure to fossil fuel assets in a
portfolio, depending on the metric exposure is expressed
either in currency terms or as a percentage.

GHG emissions

For the purposes of this technical note, GHGs are theseven gases covered by the UNFCCC: carbon dioxide(CO2); methane (CH4); nitrous oxide (N2O);
hydrofluorocarbons (HFCs); perfluorocarbons (PFCs);
sulfurhexafluoride (SF6), and nitrogen trifluoride (NF3).

GHG Protocol

Comprehensive global standardized framework tomeasure and manage GHG emissions established byWorld Resources Institute (WRI) and the World BusinessCouncil for Sustainable Development (WBCSD).

Global Industry Classification
Standard

The Global Industry Classification Standard (GICS) is afour-tiered, hierarchical industry classification systemdeveloped by MSCI and S&P Dow Jones.

Insurance-associatedemissions

GHG emissions in the real economy, which are associatedwith specific re/insurance policies aggregated in there/insurance portfolio. This definition is for accounting
purposes only. It is not intended, and should not beinterpreted as, an admission of liability by any re/insurer
for any emissions caused, or contributed to, by an insuredor an insured activity.

Insurers

Financial institutions that provide and sell insurance
underwriting products and services to their policyholders.
Please note that where references are made to“insurance”, these are also applicable to reinsurance
unless otherwise specified.

Investees

For the purposes of this technical note, investees means
the underlying companies and assets a financial institution
is invested in or lending to.

Facilitated emissions

GHG emissions associated with capital market
transactions, i.e. those associated with services provided
by financial institutions to support the issuance of capital
market instruments.

Financed emissions

Financed emissions: the absolute greenhouse gas
emissions associated with a portfolio, expressed in tons
CO2e. For financial institutions, the indirect emissions
caused by their financing activities are relevant and theiremissions inventory would be incomplete without
accounting for them. The GHG Protocol classifies theseemissions in Scope 3 Category 15 Investments. They arealso known as portfolio emissions or financed emissions.
Put simply, they are emissions that occur at sources
owned or controlled by other organizations, but which are
made possible because those organizations are financedby the lending and investment of financial institutions; andtherefore are indirect to the financial institution and should
be included in the financial institution’s Scope 3 inventory.

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Mortgages

For the purpose of this technical note, mortgages are onbalance sheet loans used to purchase residential property,
including multifamily properties with no limit on the numberof units. This definition implies that the property is used forresidential purposes.

Motor vehicle loans

For the purpose of this technical note, motor vehicle loans
are on-balance sheet loans that are used to finance one orseveral motor vehicles.

PCAF

Partnership for Carbon Accounting Financials.

Portfolio

The entire collection of a financial institution's corefinancing activities - loans, investments and insurance
policies. For bank lending, this is the entire collection of
products and loans held on the balance sheet for which
the receivable stream is owned. For asset owners, this is
the entire collection of products, funds and investments
owned and controlled. For asset managers, this is theentire collection of products and investments held and/or
managed on behalf of clients. For insurance underwriting,this is the entire collection of products and insurance
policies provided to clients.

Portfolio carbon footprint

Total carbon emissions for a portfolio normalized by themarket value of the portfolio, expressed in tons
CO2e/Million of unit currency invested.

Private equity

For the purpose of this technical note, private equity is all
equity holdings in non-listed companies held on thebalance sheet and/or actively managed by the financial
institution.

Project financeFor the purpose of this technical note, project finance is
on-balance sheet loans or equity with known use ofproceeds that are designated for a clearly defined activity
or set of activities, such as the construction of a gas fired
power plant, a wind or solar project or energy efficiency
projects.

Scope 1 emissions

Emissions from operations that are owned or controlled by
the reporting company.

Scope 2 emissions

Indirect emissions from the generation of purchased or
acquired electricity, steam, heat or cooling consumed by
the reporting company.

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.

Sovereign debt

Sovereign debt is issued by a country's government toborrow money. Sovereign debt is also known as
government debt, public debt, and national debt.

TCFD

Task Force on Climate-related Financial Disclosures.

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Weighted average carbon
intensity

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Portfolio's exposure to carbon-intensive companies,
expressed in tons CO2e/Million of revenue in unit currency.

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1. Introduction
This Technical Note provides references to specific guidance on the methodologies used to
calculate portfolio climate change impact metrics requested by CDP. It is aimed at banks, asset
managers, asset owners and insurers responding to CDP’s Corporate questionnaire. The
Technical Note should be used alongside CDP’s 2024 reporting guidance.
The technical note is comprised of this introduction and four further sections:
Section 2: A mapping of asset classes listed in CDP’s Corporate questionnaire to asset classes
referenced in the Partnership for Carbon Accounting Financials (PCAF) standard.
Section 3: An overview of the different portfolio impact metrics requested by CDP.
Section 4: Specific guidance for each metric. The guidance covers methodologies for calculating
the metrics and best-practice in reporting the metrics to CDP.
Section 5: Guidance on breaking down portfolio impact metrics by asset class, by industry, and by
scope.
Section 6: A discussion on how financial institutions can go further in using these metrics once
they have measured their portfolio impact. For example, setting targets to reduce the climatechange impact of their portfolio.
Alignment with a 1.5-degree world will require a major redirection of capital into sustainable
solutions and low-carbon technologies, which only the financial services sector can provide. This
profound influence on the wider economy means financial institutions’ climate change impact
occurs mostly in their portfolios, rather than through their direct operations. It also means financial
institutions can play a pivotal role in accelerating the low-carbon transition. Measuring the climatechange impact of financial portfolios will be crucial in realizing this role.
The importance of measuring portfolio impact is underlined by the TCFD, which recommends
financial institutions disclose the metrics used to measure and manage climate-related risks andopportunities, and describes specific portfolio impact metrics for this purpose1. In addition tohighlighting risks and opportunities, a quantification of climate change impact is a pre-requisite forfinancial institutions to measure improvements in the climate performance of their portfolios, andmeasure progress towards the net zero commitments that are increasingly being made2. Mark
Carney, the UK Prime Minister’s finance advisor for COP26, said:

1 Task Force on Climate-related Financial Disclosures (2017). "Implementing the Recommendations of the

Task Force on Climate-related Financial Disclosures."
2 See, for example, the net zero commitments made by Barclays and Morgan Stanley.
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3

The financial services sector is heterogeneous, with banks, investors and insurers providing adiverse set of services which together underpin the stability of our financial system. Financial
institutions also hold a variety of different asset classes in their portfolios. Reflecting this, there isno single, globally approved methodology for measuring portfolio impact that applies to all financial
institutions and all financing activities. However, there have been important developments inmethodologies since the release of the TCFD’s recommendations, including those by the PCAF.
Alongside these developments, CDP launched its first questionnaire focusing on publicly listed
financial services companies in 2020. The questionnaire fills a critical data gap by shifting the focus
onto the environmental impacts these companies finance in the wider economy. Portfolio impact
metrics are included as a disclosure request in module 12. CDP’s questionnaire allows financial
institutions to report the impact of their portfolio on climate change choosing from a variety of
metrics.
Financial institutions that are leaders in carbon accounting of portfolio impacts should be:
•
•
•

•

Disclosing multiple impact metrics, including absolute and intensity-based metrics inaddition to financed and facilitated emissions.
Working with data providers and regulators to improve emissions data quality across themarket.
Requesting disclosure from their investees and counterparties to improve access to primarydata and reduce the reliance on proxy data, and increase the portfolio coverage of theircalculations.
Reporting comprehensively as to the methodological assumptions taken, as well as
explaining any mismatches in emissions year on year – the principles for comprehensive
disclosure are outlined in the Reporting Requirements and Recommendations in the PCAF
Standard.

3 https://carbonaccountingfinancials.com/en/newsitem/partnership-for-carbon-accounting-financials-pcaf-

launches-uk-coalition#newsitemtext.
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2. CDP questionnaire asset classes
CDP’s list of asset classes offers a breakdown in line with the asset classes used by the IFRS Sustainability Disclosure Standard for climate-related
disclosures. You are requested to select from the list of asset classes when disclosing the impact of your portfolio in the following questions: (12.1.1) Provide details of your organization's financed emissions in the reporting year and in the base year.
 (12.2.1) Break down your organization’s financed emissions and other portfolio carbon footprinting metrics by asset class, by industry, and/or byscope.
The table below maps the asset classes used by CDP to the asset classes used in the PCAF Global GHG Accounting & Reporting Standard, so you canrefer to the additional guidance and methodology provided by them, when measuring your portfolio impact on the climate.
CDP Questionnaire Asset Classes (Based on
ISSB Asset Classes)

PCAF Asset Classes

PCAF Standard

Loans

Business Loans and Unlisted Equity;
And all loan categories with known Use of Proceeds(UoP)

Part A

Project finance

Project FinancePart A

Bonds

Listed Equity and Corporate Bonds

Part A

Equity investments

Listed Equity and Corporate Bonds

Part A

Business Loans and Unlisted Equity

Part A

Undrawn loan commitments

Not yet specified-

Fixed income

Listed Equity and Corporate Bonds

Part A

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Sovereign Debt

Part A

Cash equivalents/money market instruments

Not yet specified-

Real estate

Commercial Real EstatePart A

Mortgages

Part A

Not yet specified-

Commodities

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3. Overview of common portfolio impact metrics
As anthropogenic climate change is caused by GHG emissions, carbon footprinting metrics are measured in GHG emissions ‘owned’ by the portfolio, which
can then be normalized to compare across portfolios4. This approach demands data on the GHG emissions of companies in the portfolio, which can beeither self-disclosed or estimated.
Table 1 presents an overview of common carbon footprinting which can be used to measure portfolio impact and reported to CDP 5. It lists which industry
activities and asset classes each metric is applicable to, along with the pros and cons of each metric, including which can be calculated without demanding
data requirements. Section 3 goes into more detail on each metric presented.

MetricDescription

Financed emissions

The absolutegreenhouse gas
emissions associatedwith a portfolio,
expressed in tons
CO2eIndustry activities

Banks, Asset owners,
Asset managers

CDP question

12.1.1

Pros+ May be used tocommunicate thecarbon footprint of aportfolio consistent with
the GHG protocol+ May be used to trackchanges in GHG
emissions in a portfolio+ Allows for portfolio
decomposition andattribution analysis

Cons− Not generally used tocompare portfolios
because the data are
not normalized− Changes in underlying
companies' market
capitalization can bemisinterpreted

4 There are different approached to normalization, as described in Section 4.
5 Task Force on Climate-related Financial Disclosures (2017). "Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures."

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Metric

Weighted averagecarbon intensity

Description

Portfolio's exposure
to carbon-intensive
companies,
expressed in tons
CO2e/Million revenue

Portfolio carbon
footprint

Total carbon
emissions for a
portfolio normalized
by the market valueof the portfolio,
expressed in tons
CO2e/Million invested

Carbon intensity

Volume of carbon
emissions per million
dollars of revenue(carbon efficiency of
a portfolio),
expressed in tons
CO2e/Million revenue

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Industry activities

Banks, Asset owners,
Asset managers

Banks, Asset owners,
Asset managers

Banks, Asset owners,
Asset managers

CDP question

12.1.312.1.312.1.3

Pros+ Can be easily applied
across asset classes
since it does not relyon equity ownershipapproach+ The calculation is fairly
simple and easy tocommunicate toinvestors+ Allows for portfolio
decomposition andattribution analysis+ May be used tocompare andbenchmark portfolios+ Using the portfolio
market value tonormalize data is fairly
intuitive to investors+ Allows for portfolio
decomposition andattribution analysis+ May be used tocompare andbenchmark portfolios+ Takes into accountdifferences in the sizeof companies (e.g.
considers the carbon
efficiency ofcompanies)+ Allows for portfolio
decomposition andattribution analysis@cdp | www.cdp.net

Cons− Sensitive to outliers− Using revenue(instead of physical orother metrics) tonormalize the data
tends to favorcompanies with higher
pricing levels relative
to their peers− Does not take into
account differences inthe size of companies(e.g. does not consider
the carbon efficiency
of companies)− Changes in underlying
companies' market
capitalization can bemisinterpreted− The calculation issomewhat complex
and may be difficult tocommunicate− Changes in underlying
companies' market
capitalization can bemisinterpreted

Metric

Insuranceassociatedemissions

FacilitatedemissionsPage 14 of 30

Description
GHG emissions in thereal economy, which
are associated withspecific re/insurance
policies aggregated in
the re/insurance
portfolio. Thisdefinition is foraccounting purposes
only. It is notintended, and should
not be interpreted as,
an admission of
liability by any
re/insurer for any
emissions caused, or
contributed to, by aninsured or an insured
activity.
GHG emissions
associated withcapital market
transactions, i.e.
those associated withservices provided byfinancial institutions
to support theissuance of capital
market instruments.

Industry activities

Insurers

Banks

CDP
question(s)

Pros

Cons

12.1.3+ A standardized way tomeasure and report the
GHG emissions
associated to
re/insurance
underwriting portfolios+ Addressing the issue of
double counting by
maintaining that thereporting of insuranceassociated emissions
remains a
supplementary note to
the financed emissions− The first version of the
PCAF InsuranceAssociated Emissions
Standard covers only
two businesssegments

12.1.3+ A standardized way tomeasure and report the
GHG emissions
associated with capital
market transactions− The PCAF
methodology does notcover how targets
should be set for
facilitated emissions@cdp | www.cdp.net

Table 1 is not exhaustive. For example, avoided emissions and emission removals are notincluded in the table, but they are briefly described in section 4.
If a financial institution wishes to disclose a portfolio impact metric not listed in Table 1, they can doso by:
 Selecting ‘Yes’ in response to 12.1 ‘Does your organization measure the impact of yourportfolio on the environment?’, column one; Selecting ‘Other carbon footprinting and/or exposure metrics (as defined by TCFD)’ or ‘Other,please specify’ in response to 12.1, column two; and Disclosing the metric in response to 12.1.3 ‘Provide details of the other metrics used to track
the impact of your portfolio on the environment.’ in column three.

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4. Metric-level technical guidancea. Financed emissions
Anthropogenic climate change is caused by GHG emissions. Therefore, the most natural way forcompanies to measure their impact on climate change is by accounting for the GHG emissions
caused by their operations. The GHG Protocol Corporate Standard divides a company’s GHG
emissions inventory into direct and indirect emissions. For financial institutions, the indirectemissions caused by their financing activities are relevant and their emissions inventory would beincomplete without accounting for them6. The GHG Protocol classifies these emissions in Scope 3
Category 15 Investments7. They are also known as portfolio emissions or financed emissions. Put
simply, they are emissions that occur at sources owned or controlled by other companies, butwhich are made possible because those companies are financed by the investment and lending offinancial institutions; therefore, they can be thought of as caused indirectly by the financial
institution and should be included in the financial institutions Scope 3 inventory8.
The general approach to accounting for portfolio emissions is to establish the emissions of theinvestees in the portfolio and then allocate those emissions based on the proportional share of theinvestment in the investee. Exactly how the emissions of the investee are allocated between
investors differs depending on the asset class, but the principle of proportional share applies ineach case. Summing across all investments in the portfolio yields the total portfolio emissions intons CO2e. This approach has been formalized by PCAF who have developed the Global Carbon
Accounting Standard for the financial industry with the GHG Protocol as its foundation. CDP has astrong relationship with PCAF, and PCAF has supported the latest development of CDP’squestionnaire for the Financial Services sector to ensure that module 12 ‘Environmental
performance - Financial Services’ is aligned with the PCAF standards.

6 Relevance and completeness are two of the GHG accounting and reporting principles in the GHG Protocol

Corporate Standard.
7 Bhatia, P., Cummis, C., Brown, A., Rich, D., Draucker, L., & Lahd, H. (2012). "Corporate Value Chain(Scope 3) Accounting and Reporting Standard. Supplement to the GHG Protocol Corporate Accounting andReporting Standard."
8 Portfolio emissions are included in financial institutions’ Scope 3 inventory if they are using a control
approach to defining operational boundaries and consolidating GHG emissions. In contrast, if the equity
share approach is used, emissions associated with equity investments would be included in financial
institutions’ Scope 1 inventory. PCAF’s Global Carbon Accounting Standard for the financial industry
requires financial institutions to use the operational control approach, so that approach is assumed
throughout the guidance in this technical note. For more information on different approaches to defining
operational boundaries and consolidating GHG emissions see the GHG Protocol.
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PCAF
PCAF is an industry-led initiative created in 2015 by Dutch financial institutions and now includes
a global group of bank and investor members. The partnership works together to develop andimplement a harmonized approach to assessing and disclosing the GHG emissions associatedwith loans and investments. PCAF has developed its accounting methods into the Global
Carbon Accounting Standard for the financial industry covering the following asset classes:
Listed equity and corporate bonds, business loans, private equity, project finance, commercial
real estate, mortgages, motor vehicle loans, and sovereign debt.
Financial institutions can join PCAF by committing to assess and disclose the GHG emissions of
its portfolio using the methodology. Financial institutions that join receive technical support in
implementing carbon accounting and can join one of five regional teams which will adapt the
Global Carbon Accounting Standard to their regional context, for example by expanding to
additional asset classes important to the region.

Calculating the metric in CO2e is useful for communicating the total size of the impact of a financial
institution. However, it is not as useful for comparing different portfolios, for example comparing an
investor’s different funds, as the data are not normalized. In addition to being a useful metric in its
own right, portfolio emissions are used as a building block in other carbon footprinting metrics, andis normalized to allow comparisons. How portfolio emissions are normalized depends on what isbeing analysed and communicated. For example, to understand a portfolio’s carbon footprint peramount invested, it is necessary to normalise by the portfolio market value. To understand theefficiency of a portfolio in emissions per unit of output, it is necessary to normalise by an issuer’s
accounting figure such as revenues. These normalization approaches lead to different portfolio
impact metrics which will be discussed later.

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Reporting financed emissions to CDP
The portfolio emissions metric should be disclosed by: Selecting ‘Yes’ in response to 12.1 ‘Does your organization measure the impact of yourportfolio on the environment?’, column one; Selecting ‘Financed emissions’ in response to 12.1, column two; and,
 Disclosing the metric in response to 12.1.1 ‘Provide details of your organization's financed
emissions in the reporting year and in the base year.’ See the Global Carbon Accounting Standard for fuller explanations of the methodology forcalculating financed emissions for the different asset classes.
Financed emissions should be disclosed in metric tons CO2e in column 2 (Portfolio emissions(metric unit tons CO2e) in the reporting year).
In explaining their calculation methodology, it will be important for e.g. a bank to explain: Why the calculation excludes certain asset classes, for example it covers their corporate loan
and mortgage portfolio but not consumer lending; Why a certain Scope has been excluded, for example Scope 1 and 2 emissions of theirborrowers have been included, although not Scope 3;
 The data sources used for reported emissions data of the borrowers C;
 The approach taken to estimating borrower emissions when primary data was not available –whether emissions were estimated using physical activity-based modelling or economic
activity-based modelling; and,b. Weighted average carbon intensity
The TCFD recommends that asset owners and asset managers disclose the weighted averagecarbon intensity of their portfolios in tCO2e/Million revenue9. This metric normalizes eachcompany’s emissions by the company’s revenue to obtain the carbon intensity of each individual
holding; and then weights each holding according to the importance of the holding in the portfolio.
If lots of the portfolio’s overall investment is in carbon intensive companies, the weighted averagecarbon intensity will increase.
A primary benefit of this metric is that it does not rely on attributing emissions between theinvestors in the same company. The need to attribute emissions results in a variety of attribution
approaches depending on the asset class for the portfolio emissions metric. Instead of attributing
emissions, portfolio weights (the current value of the investment relative to the current portfolio
value) are used, which means the same calculation can be used for listed equity, listed bonds,
corporate loans and private equity. This in turn means the metric is fairly simple to communicate toinvestors.
Weighted average carbon intensity calculation methodology
Across all the asset classes to which weighted average carbon intensity is applicable, themethodology remains the same:
𝑪

∑
𝒄=𝟏

𝑶𝒖𝒕𝒔𝒕𝒂𝒏𝒅𝒊𝒏𝒈 𝒂𝒎𝒐𝒖𝒏𝒕𝒄
𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒆𝒎𝒊𝒔𝒔𝒊𝒐𝒏𝒔𝒄
×
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒑𝒐𝒓𝒕𝒇𝒐𝒍𝒊𝒐 𝒗𝒂𝒍𝒖𝒆
𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒓𝒆𝒗𝒆𝒏𝒖𝒆𝒄

9 Task Force on Climate-related Financial Disclosures (2017). "Implementing the Recommendations of the

Task Force on Climate-related Financial Disclosures."
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Where:𝒄is an investee in a portfolio of investees from 1 … 𝐶;

𝑶𝒖𝒕𝒔𝒕𝒂𝒏𝒅𝒊𝒏𝒈 𝒂𝒎𝒐𝒖𝒏𝒕𝒄

is the actual outstanding investment or loan amount in investee 𝑐;𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒑𝒐𝒓𝒕𝒇𝒐𝒍𝒊𝒐 𝒗𝒂𝒍𝒖𝒆

is the total size of the investor’s portfolio;

𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒆𝒎𝒊𝒔𝒔𝒊𝒐𝒏𝒔𝒄

is the total accounted emissions of investee 𝑐; and,𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒓𝒆𝒗𝒆𝒏𝒖𝒆𝒄

is the revenue of investee 𝑐 for the reporting period.

Information on outstanding investment amounts and total portfolio value used for calculating
portfolio weights should be at hand for all investors. Financing portfolios are dynamic, and it may
make sense for financial institutions to correct the portfolio weights with a flow variable10.
As with the portfolio emissions metric, weighted average carbon intensity depends on good quality
data or estimations on the GHG emissions of underlying companies within the portfolio. Therefore,
all the same data challenges previously discussed are relevant when calculating the weighted
average carbon intensity of a portfolio. The limitations should not deter financial institutions fromattempting to calculate the metric if it is relevant and decision useful to their own portfolio. They
should use the best quality data or estimations available from the hierarchy of possible data
sources and should engage with investees and clients to drive better disclosures on company
emissions.
When establishing the emissions of companies within the portfolio, it is important to be clear which
Scopes are considered. When weighted average carbon intensity was first defined by the TCFD,
only Scope 1 and 2 emissions of the underlying portfolio companies were recommended to be
included in the calculation. The formula easily extends to include Scope 3 emissions, although thisincreases the chances of double counting emissions across Scopes and is likely to exacerbate
data limitations.
Reporting weighted average carbon intensity to CDP
The weighted average carbon intensity metric should be disclosed by: Selecting ‘Yes’ in response to 12.1 in column one “We measure the impact of our portfolio on
the climate.”
 Selecting ‘Other carbon footprinting and/or exposure metrics (as defined by TCFD)’ in
response to 12.1, column two “Disclosure metric”; and Disclosing the metric in response to 12.1.3.” Provide details of the other metrics used to track
the impact of your portfolio on the environment.”, using ‘Weighted average carbon intensity(tCO2e/Million revenue)’ in column three “Portfolio metric”.
 See the Task Force on Climate-related Financial Disclosures for fuller explanations of themethodology for calculating weighted average carbon intensity.
The weighted average carbon intensity should be disclosed in column four (Metric value in thereporting year).

10 As described in the portfolio emissions methodology for listed equity and listed bonds.

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In explaining their calculation methodology, it will be important for e.g. an asset manager toexplain: Why the calculation covers their equity investments and bonds but not investments throughother funds;
 Why Scope 1 and 2 emissions of their borrowers have been included, although not Scope 3;
 The data sources used for reported emissions data; and,
 The approach taken to estimate company emissions when primary data was not available –were emissions estimated using physical activity-based modelling or economic activity-basedmodelling?

c. Portfolio carbon footprint
The portfolio carbon footprint metric takes the portfolio emissions metric already described andnormalizes it by the market value of the portfolio to allow comparisons. The metric is expressed in
tCO2e/Million invested. This makes the metric particularly useful for asset owners with a fixedamount of capital to invest, who are interested in the climate change impact of investing that capitalthrough different investment managers. Likewise, it is useful for savers with a fixed amount ofsavings, who are interested in the climate change impact of how those savings are reinvested on
the opposite side of their bank’s balance sheet.
Since the starting point for calculating a portfolio’s carbon footprint is to first calculate Scope 3
portfolio emissions, this metric is applicable across the same asset classes as the latter metric. Aswith portfolio emissions, emissions of the investees in the portfolio must be established and thenallocated based on the proportional share of the investment in the investee, with the exact methodof allocation differing depending on asset class.

Portfolio carbon footprint calculation methodology
The methodologies for calculating portfolio emissions for each asset class are described in the
Global Carbon Accounting Standard and therefore the formulas are not repeated here. Instead,one formula is provided which assumes portfolio emissions have already been calculated
according to the methodologies described.
∗(∑𝑰𝒊=𝟏 𝑷𝒐𝒓𝒕𝒇𝒐𝒍𝒊𝒐 𝒆𝒎𝒊𝒔𝒔𝒊𝒐𝒏𝒔𝒊 )𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒑𝒐𝒓𝒕𝒇𝒐𝒍𝒊𝒐 𝒗𝒂𝒍𝒖𝒆
Where:
𝒊is an investment in a portfolio of investments from 1 … 𝐼;∗

denotes a term calculated according to the methodologies forcalculating portfolio emissions;𝑷𝒐𝒓𝒕𝒇𝒐𝒍𝒊𝒐 𝒆𝒎𝒊𝒔𝒔𝒊𝒐𝒏𝒔𝒊

is the Scope 3 portfolio emissions associated with investment 𝑖;and,𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒑𝒐𝒓𝒕𝒇𝒐𝒍𝒊𝒐 𝒗𝒂𝒍𝒖𝒆 is the total size of the investor’s portfolio.

If a financial institution has already calculated portfolio emissions, it is relatively simple and intuitive
to calculate the portfolio carbon footprint, dividing by the total portfolio size in currency. It is

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important to note that for the metric to be a true reflection of the climate change impact per Million
invested, the total value of the part of the portfolio which has been measured should be used.
Portfolio carbon footprint is measured at a fixed point in time and it is likely that the portfolio value
at that point of time will be used for normalization. However, for financing portfolios which are very
dynamic, if flow variables have been used to correct the ratios for attributing company emissions
when calculating portfolio emissions11, it may be intuitive to use an average portfolio value over thereporting period.
As it is so closely related to the portfolio emissions metric, portfolio carbon footprint depends on
good quality emissions data or estimations in the same way. All the same data challenges
previously discussed are relevant. The limitations should not deter financial institutions fromattempting to calculate the metric if it is relevant and decision useful to their own portfolio.

11 As described in the portfolio emissions methodology for listed equity and listed bonds.

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Reporting portfolio carbon footprint to CDP
The portfolio carbon footprint metric should be disclosed by: Selecting ‘Yes’ in response to 12.1 in column one “We measure the impact of our portfolio on
the climate.”
 Selecting ‘Other carbon footprinting and/or exposure metrics (as defined by TCFD)’ in
response to 12.1, column two “Disclosure metric”; and Disclosing the metric in response to 12.1.3.” Provide details of the other metrics used to track
the impact of your portfolio on the environment.”, using ‘Portfolio carbon footprint(tCO2e/Million invested)’ in column three.
The portfolio carbon footprint per Million invested should be disclosed in column four (Metric value
in the reporting year).

d. Carbon intensity
The carbon intensity metric uses a different approach to normalizing portfolio emissions,normalizing by the revenue of the companies in the portfolio. This approach leads to ameasurement of how efficient the portfolio is at producing units of output while generating less
GHG emissions. The carbon intensity metric is expressed in tCO2e/Million revenue.
To calculate carbon intensity, financial institutions must attribute the emissions of the companies
they invest in or lend to between the equity and debt owners of those companies, in a similar way
to when calculating portfolio emissions. In addition, they must attribute the revenue of thecompanies they invest in or lend to between the equity and debt owners of those companies.
There are different approaches to attribution depending on asset class. With this information, they
can calculate the emissions of their portfolio relative to the revenue or economic output theportfolio produces. One advantage of this normalization approach is that it takes into account the
carbon efficiency of the underlying companies.

Carbon intensity calculation methodology
Below are the methodologies for calculating carbon intensity for each applicable asset class, as
defined by PCAF.

Equity investments and bonds
𝑶𝒖𝒕𝒔𝒕𝒂𝒏𝒅𝒊𝒏𝒈 𝒂𝒎𝒐𝒖𝒏𝒕𝒄
× 𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒆𝒎𝒊𝒔𝒔𝒊𝒐𝒏𝒔𝒄
𝑬𝑽𝑰𝑪𝒄
𝑶𝒖𝒕𝒔𝒕𝒂𝒏𝒅𝒊𝒏𝒈 𝒂𝒎𝒐𝒖𝒏𝒕𝒄∑𝑪𝒄=𝟏
× 𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒓𝒆𝒗𝒆𝒏𝒖𝒆𝒄
𝑬𝑽𝑰𝑪𝒄

∑𝑪𝒄=𝟏

Where:
𝒄is an investee in a portfolio of investees from 1 … 𝐶;

𝑶𝒖𝒕𝒔𝒕𝒂𝒏𝒅𝒊𝒏𝒈 𝒂𝒎𝒐𝒖𝒏𝒕𝒄

is the actual outstanding amount in listed equity or bonds of investee
𝑐;

𝑬𝑽𝑰𝑪𝒄

is the enterprise value including cash of investee 𝑐;Page 22 of 30@cdp | www.cdp.net

𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒆𝒎𝒊𝒔𝒔𝒊𝒐𝒏𝒔𝒄

is the total accounted emissions of investee 𝑐; and,𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒓𝒆𝒗𝒆𝒏𝒖𝒆𝒄

is the revenue of investee 𝑐 for the reporting period.

For listed equity and bonds, the attribution of emissions and revenue is according to the ratio of aninvestor’s outstanding investment amount to the enterprise value of the company they are invested
in. EVIC is the most natural measure to use for enterprise value, if available, as it ensures thatexactly 100% of all investee’s emissions and revenue will be attributed to the equity and debt
holders as these jointly determine 100% of the company’s EVIC.
For financial institutions which only invest in equity, attribution can instead be according to the ratioof outstanding amount in listed equity to total market capitalization. This follows the ownershipapproach and is aligned with financial reporting and consolidation rules.
Carbon intensity is calculated by dividing the total emissions attributed to the portfolio by the total
revenue attributed to the portfolio.
As with all other carbon footprinting metrics, the emissions of the companies within the portfolio area crucial component of the calculation. All the same data challenges previously discussed are
relevant when calculating the carbon intensity of a portfolio. The limitations should not deter
financial institutions from attempting to calculate the metric if it is relevant and decision useful totheir own portfolio. They should use the best quality data or estimations available and should beclear which Scopes are considered. When carbon intensity was first defined by the TCFD, only
Scope 1 and 2 emissions of the underlying portfolio companies were recommended to be includedin the calculation. The formula easily extends to include Scope 3 emissions, although thisincreases the chances of double counting emissions across Scopes and is likely to exacerbate
data limitations.

Loans and equity investments
𝑶𝒖𝒕𝒔𝒕𝒂𝒏𝒅𝒊𝒏𝒈 𝒂𝒎𝒐𝒖𝒏𝒕𝒄
× 𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒆𝒎𝒊𝒔𝒔𝒊𝒐𝒏𝒔𝒄(𝑬𝑽𝑰𝑪𝒄 ) 𝒐𝒓 (𝑻𝒐𝒕𝒂𝒍 𝒄𝒐𝒎𝒑𝒂𝒏𝒚 𝒆𝒒𝒖𝒊𝒕𝒚 + 𝒅𝒆𝒃𝒕𝒄 )𝑶𝒖𝒕𝒔𝒕𝒂𝒏𝒅𝒊𝒏𝒈 𝒂𝒎𝒐𝒖𝒏𝒕𝒄∑𝑪𝒄=𝟏
× 𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒓𝒆𝒗𝒆𝒏𝒖𝒆𝒄(𝑬𝑽𝑰𝑪𝒄 ) 𝒐𝒓 (𝑻𝒐𝒕𝒂𝒍 𝒄𝒐𝒎𝒑𝒂𝒏𝒚 𝒆𝒒𝒖𝒊𝒕𝒚 + 𝒅𝒆𝒃𝒕𝒄 )∑𝑪𝒄=𝟏

Where:
𝒄is an investee in a portfolio of investees from 1 … 𝐶;

𝑶𝒖𝒕𝒔𝒕𝒂𝒏𝒅𝒊𝒏𝒈 𝒂𝒎𝒐𝒖𝒏𝒕𝒄

is the actual outstanding amount in listed equity or bondsof investee 𝑐;

𝑬𝑽𝑰𝑪𝒄

is the enterprise value including cash of investee 𝑐;

𝑻𝒐𝒕𝒂𝒍 𝒄𝒐𝒎𝒑𝒂𝒏𝒚 𝒆𝒒𝒖𝒊𝒕𝒚 + 𝒅𝒆𝒃𝒕𝒄

is the total equity and debt from investee 𝑐’s balance
sheet;

𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒆𝒎𝒊𝒔𝒔𝒊𝒐𝒏𝒔𝒄

is the total accounted emissions of investee 𝑐; and,𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒓𝒆𝒗𝒆𝒏𝒖𝒆𝒄

is the revenue of investee 𝑐 for the reporting period.

For corporate loans and private equity, the same principle is followed of attribution according to theratio of an investor or bank’s outstanding investment (loan) amount to the value of the company
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they are invested in (lending to). However, for non-listed companies, EVIC is not likely to beavailable due to a lack of information on market capitalization. In this case, the total balance sheet
value expressed as the sum of total company equity and debt shall be used.

Reporting carbon intensity to CDP
The carbon intensity metric should be disclosed by: Selecting ‘Yes’ in response to 12.1 in column one “We measure the impact of our portfolio on
the climate.”
 Selecting ‘Other carbon footprinting and/or exposure metrics (as defined by TCFD)’ in
response to 12.1, column two “Disclosure metric”; and Disclosing the metric in response to 12.1.3.” Provide details of the other metrics used to track
the impact of your portfolio on the environment.”, using ‘Carbon intensity (tCO2e/Million
revenue’) in column three.
The carbon intensity per Million revenue should be disclosed in column four (Metric value in thereporting year).
e. Avoided emissions and emission removals
Not all loans and investments result in GHG emissions. Some may result in mitigating activities.
For instance, project-specific loans and investments in the forestry and land use sector, direct air
carbon capture and storage, or bioenergy with carbon capture and storage can result in CO2 being
sequestered or removed from the atmosphere and stored in solid or liquid form, removing its
harmful global warming effect. Similarly, project-specific loans and investments in renewableenergy projects can result in emissions being avoided as they displace the emissions that would
have otherwise occurred without the project’s implementation, referred to as avoided emissions.
Reporting on financed emission removals (also known as carbon removals financed) and avoided
emissions financed shall always be done separately from that of the financial institution’s scope 1,
2, and 3 GHG inventories.
The above description along with guidance on measurement are included in the second version of
PCAF’s Global GHG Accounting and Reporting Standard for Financed Emissions, which waslaunched in December 2022. We invite readers to consult that document as a supplement to thistechnical note.
PCAF emphasize that the distinction between avoided emissions and emission removals is
important from an accounting perspective. They illustrate the differences in the figure below:

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In the context of your CDP response, avoided emissions financed and carbon removals financed
must be reported separately from any other carbon footprinting and/or exposure metrics used to
track the impact of your portfolio on the climate in question 12.1.3
Reporting avoided emissions financed and/or emission removals financed to CDP
The avoided emissions financed and/or emission removals financed should be disclosed by: Selecting ‘Yes’ in response to 12.1 in column one “We measure the impact of our portfolio on
the climate.”
 Selecting ‘Other carbon footprinting and/or exposure metrics (as defined by TCFD)’ in
response to 12.1, column two “Disclosure metric”; and Disclosing the metric in response to 12.1.3.” Provide details of the other metrics used to track
the impact of your portfolio on the environment.”, using ‘Avoided emissions financed (tCO2e)’and/or ‘Carbon removals financed (tCO2e)’ in column three.
The avoided emissions and/or emission removals in tCO2e should be disclosed in column four(Metric value in the reporting year).

f. Insurance-associated emissions

For insurance underwriting, carbon footprinting metrics are in their infancy. A barrier to progresshas been the issue of double counting. It is plausible that insurers count Scope 3 emissions on
their underwriting portfolio but also count the same emissions on the other side of their balance
sheet if the premiums received are invested in the same companies being covered. Until now,there has not been a globally accepted standard for measuring and reporting emissions associatedwith re/insurance underwriting portfolios (“insurance-associated emissions”). Responding toincreasing demand from the insurance industry and other stakeholders, PCAF published the
Global GHG Accounting and Reporting Standard for Insurance-Associated Emissions in November
2022. This Standard constitutes Part C of PCAF’s Global GHG Accounting and Reporting Standard
for the Financial Industry. As such, this standard supplements the requirements of the GHG
Protocol "Corporate Value Chain (Scope 3) Accounting and Reporting Standard".

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It's worth noting that disclosers should not aggregate financed emissions and insurance-associatedemissions in their reporting. We quote PCAF: “For the avoidance of doubt, insurance-associatedemissions and financed emissions are not, and are not intended to be, directly comparable.
Insurance-associated emissions and financed emissions shall be reported separately and not,under any circumstance, aggregated under the GHG Protocol scope 3 category 15 (Investments).
Insurance-associated emissions are a supplementary accounting note to the GHG Protocol scope
3 category 15 (Investments).”
It is the first version of the Insurance-Associated Emissions Standard and provides detailed
methodological guidance for the measurement and disclosure of GHG emissions associated with
two segments; commercial lines and personal motor lines. The next version of the Standard aims
to address the issue of data availability and consistency across the entire re/insurance value chain,and define an attribution methodology for reinsurance associated with treaty reinsurance alignedwith PCAF principles.
Reporting insurance-associated emissions to CDP
The insurance-associated emissions should be disclosed by: Selecting ‘Yes’ in response to 12.1 in column one “We measure the impact of our portfolio on
the climate.”
 Selecting ‘Other carbon footprinting and/or exposure metrics (as defined by TCFD)’ in
response to 12.1, column two “Disclosure metric”; and Disclosing the metric in response to 12.1.3.” Provide details of the other metrics used to track
the impact of your portfolio on the environment.”, using ‘Insurance-associated emissions(tCO2e)’ in column three.
The insurance-associated emissions in tCO2e should be disclosed in column four (Metric value inthe reporting year).

g. Facilitated emissions

Until 2023, there had not been a globally accepted standard for measuring and reporting emissions
associated with capital market activities. PCAF’s new standard constitutes PCAF (2023) The
Global GHG Accounting and Reporting Standard Part B: Facilitated Emissions for the Financial
Industry. As such, the standard supplements the requirements of the GHG Protocol 'Corporate
Value Chain (Scope 3) Accounting and Reporting Standard'.
The Facilitated Emissions Standard provides detailed guidance to calculate the facilitatedemissions resulting from capital market activities. By following the methodologies, financial
institutions can measure GHG emissions for each segment and produce disclosures that areconsistent, comparable, reliable, and clear.

Facilitated emissions calculation methodology
Facilitated emissions from primary issuances of capital market instruments are calculated using theformula below:

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Where:𝑭𝒂𝒄𝒊𝒍𝒊𝒕𝒂𝒕𝒆𝒅 𝒂𝒎𝒐𝒖𝒏𝒕Defined as the product of the total amount raised andvolume attributed to the financial institution;

𝑪𝒐𝒎𝒑𝒂𝒏𝒚 𝒗𝒂𝒍𝒖𝒆

For all listed companies this is the company enterprisevalue including cash (EVIC) of the respective client. Onlyfor private companies EVIC should be replaced by thesum of the total company equity and debt when no
market value for equity is available.

For a comprehensive description of the calculation methodology, please refer directly to the PCAF
Standard, part B, Facilitated Emissions.
.

Reporting facilitated emissions to CDP
The facilitated emissions should be disclosed by: Selecting ‘Yes’ in response to 12.1 in column one “We measure the impact of our portfolio on
the climate.”
 Selecting ‘Other carbon footprinting and/or exposure metrics (as defined by TCFD)’ in
response to 12.1, column two “Disclosure metric”; and Disclosing the metric in response to 12.1.3.” Provide details of the other metrics used to track
the impact of your portfolio on the environment.”, using ‘Facilitated emissions (tCO2e)’ incolumn three.
 The facilitated emissions in tCO2e should be disclosed in column four (Metric value in thereporting year).

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5. Breaking down portfolio impact metrics
As well as calculating and disclosing portfolio impact metrics for their entire financing portfolio,
financial institutions should also break down their portfolio impact to get more granular details on
exactly where in their portfolio they face climate-related risks.
CDP requests portfolio impact breakdowns by asset class, industry, and scope. It is worth noting
there are other ways of breaking down portfolio impact metrics. For example, the TCFD
recommends that in addition, banks break down metrics used to assess the impact of climaterelated risks on their lending business activities by credit quality (e.g. investment grade or noninvestment grade) and average tenor.
Breakdowns should be disclosed in questions 12.2. and 12.2.1. Question 12.2.1 “Break down yourorganization’s financed emissions and other portfolio carbon footprinting metrics by asset class, byindustry, and/or by scope.” can be used to break down multiple portfolio metrics.
 Add a row for each portfolio for which you are able to provide a breakdown of yourorganization's portfolio impact.
 Add a row for each category in each metric breakdown12.
 If you are able to provide a breakdown of multiple scopes for a single portfolio, industry orasset class, add a separate row for each scope.
In response to 12.2.1, e.g. an asset manager would add two rows, one for each portfolio, asset
class, emissions scope and/or industry.
In explaining their calculation methodology, it will be important for the asset manager to explain: Why the calculation covers their listed equity and listed bonds portfolios but not investments
through other funds;
 Why Scope 1 and 2 emissions of their borrowers have been included, although not Scope 3;
and The data sources used for reported emissions data; and,
 The approach taken to estimate company emissions when primary data was not available –were emissions estimated using physical activity-based modelling or economic activity-basedmodelling?

12 I.e. if you were breaking down a single portfolio’s emissions reported in 12.1.1 and also breaking down

weighted average carbon intensity reported in 12.1.3, both by asset class into equity investments and fixedincome, there would be four rows in total.
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6. Going further
Calculating and disclosing portfolio impact metrics is not in itself an end-goal. The metrics
requested by CDP quantify portfolio impact at one point in time only. It is the greening of thefinancial sector which will be instrumental in achieving the low-carbon transition. For most financial
institutions, the journey starts with a high-level commitment to act through international initiatives
such as the UNEP FI established frameworks for responsible investing, banking and insurance13.
The next step, which has been the focus of this technical note, is the measurement of climatechange impact. Financial institutions can go further once they have calculated portfolio impact
metrics by using the metrics to set targets for reducing their climate change impact and to inform
actions they can take to reduce their impact. Reporting on progress through effective
environmental disclosures is important at every stage of the journey.
The obvious way for financial institutions to go further once they have calculated a portfolio impact
metric is to set a target to improve the metric. Each of the metrics requested by CDP in module 12
could be used to construct a target for reducing the climate change impact of financial portfolios
over time.
The gold standard for climate change targets are science-based targets. Targets are consideredscience-based if they are in line with what the latest climate science says is necessary to meet thegoals of the Paris Agreement. In 2022, the Science Based Targets Initiative released guidance andcriteria on science-based targets for financial institutions14. One approach to target setting
permitted under the criteria, the sector decarbonization approach, builds directly on the portfolio
emissions metric requested by CDP in 12.1.1. Other target setting methodologies include thoseoutlined by, for example, the Net Zero Investment Framework (NZIF), the Net-Zero Banking
Alliance (NZBA) and the Net-Zero Asset Owner Alliance (NZAOA). NZBA has recently updated its
guidelines to include facilitated emissions which now require banks to set 1.5C aligned targets forfacilitated emissions from their capital markets activities. We note here with respect to reporting
financed avoided emissions and/or emission removals that, in line with science-based target
setting, financial institutions should continue to prioritize reducing absolute financed emissions
above other forms of mitigation, such as actions taking place beyond their value chains or those of
their portfolio companies.
Based on the recent developments announced by industry groups such as PCAF and NZBA,
financial institutions should enhance and expand the scope of their emissions accounting by
including facilitated emissions. Financial institutions will need to adapt their carbon accounting
practices to incorporate new and updated methodologies developed by PCAF. This may involve
updating data collection processes, calculation methods, and reporting frameworks. This also calls
for better data quality to improve on their data quality scoring of financed and facilitated emissions.
Financial institutions can report on their climate change target setting to CDP in module 7.
Another way financial institutions can go further once they have calculated portfolio impact metrics
is through third-party verification. For some time, verification of GHG emissions data has been bestpractice in environmental reporting as it increases the reliability of data and builds a strong
reputation. For financial services companies, as the focus shifts onto the environmental impacts
they finance in the wider economy, particularly their portfolio emissions, there will be interest in
ensuring the reported metrics are accurate.
Financial institutions can report on their verification to CDP in modules 7 and 13.

13 See the Principles for Responsible Investment: https://www.unpri.org/, the Principles for Responsible

Banking: https://www.unepfi.org/banking/bankingprinciples/ and the Principles for Sustainable Insurance:
https://www.unepfi.org/psi/.
14 SBTi (2022) "Financial Sector Science-based Targets Guidance,"https://sciencebasedtargets.org/resources/files/Financial-Sector-Science-Based-Targets-Guidance.pdf.
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Chain (Scope 3) Accounting and Reporting Standard. Supplement to the GHG Protocol Corporate
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CRO Forum (2020). "Carbon footprinting methodology for underwriting portfolios,"
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