Financed Emissions – Methodologies and Implication for Global Financial Institutions

Financed Emissions is the process of analyzing the environmental impact of lending and investment decisions in the portfolio of financial institutions. Financed Emissions analysis is essential to Scope 3 emission disclosures since the core business of most financial institutions relates to disbursing loans and other market-making activities. As financial institutions worldwide grapple with aligning their portfolios with the Paris Accord and increasing scrutiny by investors to improve ESG disclosure, the topic of Financed Emissions is gaining prominence. The thesis involved researching GHG calculation methodologies for different sectors and asset classes, compiling a concise outline of relevant case studies and recommendations for assessing financed emissions. The thesis is a highly qualitative state-of-the-art study on financed emissions that approaches the topic mainly from an academic standpoint tailored specifically to help practitioners understand the universe of existing methodologies and crucial strategic and operational considerations bordering financed emissions.