Financed Emissions
Financed emissions are the greenhouse gas emissions attributable to a financial institution's lending and investment portfolios — Scope 3 Category 15 under the GHG Protocol. They represent the real-economy emissions that banks, asset managers, and insurers fund through their capital allocation decisions.
For financial institutions, financed emissions typically represent the vast majority of their total carbon footprint — often 100x or more than operational emissions from offices and travel. A bank's Scope 3 Category 15 includes emissions from every company and project it finances.
The Partnership for Carbon Accounting Financials (PCAF) Standard provides the leading methodology for measuring financed emissions. It covers six asset classes: listed equity and corporate bonds, business loans and unlisted equity, project finance, commercial real estate, mortgages, and motor vehicle loans. Each asset class has a specific attribution formula that allocates a portion of the investee's emissions to the financial institution based on its share of total financing.
Measuring financed emissions requires data on borrower/investee emissions, which often relies on reported data (from CDP or annual reports), estimated data (using sector averages), or modeled data (using economic activity indicators). Data quality varies significantly across asset classes and geographies.
Gravity's financed emissions module helps financial institutions calculate portfolio emissions across PCAF asset classes, track data quality improvement, and report to CDP Financial Services and regulatory frameworks. The platform supports progressive data improvement from estimated to reported emissions over time.
Frequently asked questions
What are financed emissions? +
Financed emissions are greenhouse gas emissions attributable to a financial institution's lending and investment portfolios (Scope 3 Category 15). They represent real-economy emissions funded through capital allocation and typically dwarf a financial institution's operational emissions by 100x or more.
How are financed emissions measured? +
The PCAF Standard provides methodologies for six asset classes, attributing a portion of each investee's emissions to the financial institution based on its share of total financing. Data sources range from reported borrower emissions to sector-average estimates.
Related terms
Scope 3 Emissions
Scope 3 emissions are all indirect greenhouse gas emissions that occur in an organization's value chain — both upstream (suppliers, purchased goods, business travel, employee commuting) and downstream (product use, end-of-life treatment, investments). Scope 3 typically represents 70–90% of a company's total carbon footprint.
PCAF (Partnership for Carbon Accounting Financials)
PCAF is a global partnership of financial institutions that develops and maintains the standard methodology for measuring and disclosing greenhouse gas emissions associated with financial portfolios — known as financed emissions. The PCAF Standard covers six asset classes and provides attribution formulas for allocating emissions to lenders and investors.
Carbon Accounting
Carbon accounting is the systematic process of measuring, recording, and reporting the greenhouse gas (GHG) emissions produced by an organization, product, or activity. It follows standardized methodologies — most commonly the GHG Protocol — to quantify emissions across Scope 1 (direct), Scope 2 (purchased energy), and Scope 3 (value chain) categories, producing an auditable inventory that underpins disclosure, reduction planning, and regulatory compliance.
CDP (formerly Carbon Disclosure Project)
CDP is a global non-profit organization that operates the world's largest environmental disclosure system. It collects self-reported climate, water, and forest data from thousands of companies, cities, and subnational governments on behalf of investors and purchasers, scoring disclosures from A (leadership) to D– (minimal).