Scope 3 Category 15 Overview: Investments
SCOPE 3 CATEGORY 15
Scope 3 emissions, as categorized under the Greenhouse Gas Protocol, are a broad and critical category of indirect emissions that occur from activities not owned or controlled by the reporting company but are related to the company's operations. Category 15 within Scope 3 specifically addresses the emissions from investments.
Category 15: Investments
This category of emissions includes greenhouse gas emissions from investments owned by the reporting organization. This includes emissions from the operation and operations of these investments, such as financial investment portfolios, stock funds, and real estate that the corporation owns but does not manage directly.
In the context of financial portfolios, emissions are tied to the shares of companies held within an investment portfolio. For real estate, this could involve properties owned but leased to others where the operational control and associated emissions responsibilities fall under the lessee rather than the lessor.
Calculation
This category is particularly significant for organizations that are heavily involved in investment activities, including financial institutions like banks or insurance companies, or companies with large portfolios of managed assets. The reporting and calculation of these emissions require detailed data on the operational practices and output of the invested entities, which can be challenging to aggregate and analyze.
Example
- For instance, a company might own 10% of an energy firm that emits 100,000 metric tons of CO2 annually. Under Scope 3 Category 15, the company would report 10,000 metric tons of CO2 as part of its indirect investment-related emissions.
Proper accounting of Category 15 emissions is critical for firms to properly understand their carbon footprint, especially those with significant stakes in other businesses or real estate. It emphasizes the broader implications of investment decisions in respect to climate goals.
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