Definition
This category includes Scope 3 emissions that are associated with the reporting company's investments in the reporting year and are not already included in Scope 1 or Scope 2. This category applies to investors and companies that provide financial services. This category also applies to investors that are not profit-oriented (e.g. multilateral development banks). Investments are considered a downstream Scope 3 category as the provision of capital is a service claimed by the reporting entity.
Category 15 is primarily intended for private financial institutions (e.g. commercial banks), but is also relevant for public financial institutions (e.g. multilateral development banks) and other entities with investments that are not included in Scope 1 and Scope 2.
Investments can be included in the company's Scope 1 or Scope 2 balance sheet depending on the definition of the company's organizational boundaries. For example, companies that use the equity approach classify emissions from equity investments in Scope 1 and 2. Companies that use the control approach only include the equity investments that are under the control of the company in Scope 1 and 2.
Accounting of investments
- Investment-specific method: Collection of Scope 1 and 2 emissions from investee companies and allocation of emissions based on the share of the investment. If the scope 3 emissions are significant compared to the other emission sources, these should also be taken into account.
- Average data method: Multiplication of turnover data with environmentally enhanced input-output data (EEIO) to estimate the scope 1 and 2 emissions of the investee. Use of the investor's proportional share of the investee's own share to allocate emissions. EEIO databases obtain average emission factors for each sector, so this method cannot distinguish between investments within a sector.
Investment-specific method
Required activity data:
- Scope 1 and Scope 2 issues of the investee company
- Investor's share of the investee's equity
- If significant, companies should also report the investee's Scope 3 emissions (if investees are unable to provide Scope 3 emissions data, Scope 3 emissions may need to be calculated using the methodology described in Option 2).
Required emission factors:
- The reporting entity collects emissions data from the investees, so no emission factors are required.
Average data method:
Required activity data:
- Sector(s) in which the investee operates
- Revenue of the investee (if the investee operates in more than one sector, the reporting entity should collect revenue data for each sector in which it operates)
- Investor's share of the investee's equity.
Required emission factors:
- EEIO emission factors for the economic sectors to which the investments relate (kg CO2e/$ revenue)
Data collection
The data for the investment-specific method can be taken from the following sources:
- Greenhouse gas inventory reports of companies in which investments are made
- Financial records of the reporting company
Data for the average data method can be obtained from the following sources:
- Sales data and equity share data from financial records of the reporting company and investees
- Emission factors in EEIO databases
Accounting for investments in the Climate Hub
There are no predefined activities in the Climate Hub. You can create new activities using the Add own activity button. A detailed description can be found here.
Further information can be found in the Technical Guidance for Calculating Scope 3 Emissions of the GHG Protocol in Chapter 15: Investments from page 136.