What’s the issue?

The measurement of financed and facilitated emissions is a complex and fast-moving area. These emissions represent key metrics for banks, insurance companies and asset managers (together, ‘financial institutions’). They help users to understand what the financial institution is funding and therefore both its ability to influence global emissions and its exposure to transition risk.


A minority of global banks currently disclose financed emissions for a subset of their lending exposures – i.e. those in specific sectors. However, measurement methodologies and practices continue to evolve and vary, and many financial institutions do not currently disclose them.

The reporting of emissions that financial institutions fund is an important area where the ISSB can drive consistency in a way that acknowledges complexity and allows for calculation methodologies to evolve in practice.

Mark Vaessen, Chair,
Global Corporate & Sustainability Reporting Topic Team

Patrick Chu
Head of ESG Reporting and Assurance 
KPMG China

Angus Choi
Partner, ESG Advisory
KPMG China

Rani Kamaruddin
Partner, ESG Advisory
KPMG China

Irene Chu
Partner, ESG Advisory
KPMG China

Eddie Ng
Partner, ESG Advisory
KPMG China

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What was proposed?

The climate proposal1 provides guidance on the disclosure of financed and facilitated emissions, building on the existing Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. The proposal aims to cover two key elements:

  • emissions relating to the financial institution’s financing and facilitation activities; and
  • the corresponding financial exposure arising from those activities.

However, the climate proposal does not specify how a financial institution should calculate its financed and facilitated emissions or require financial institutions to follow a particular calculation methodology or framework – e.g. the Partnership for Carbon Accounting Financials (PCAF).

What’s the ISSB’s latest thinking?

The International Sustainability Standards Board (ISSB) analysis shows that most respondents generally agreed with the proposal, believing that it would result in more robust and comprehensive disclosure that goes further than the cross-industry metrics.

The ISSB confirmed that financed emissions disclosures would be required for commercial banking, insurance, and asset management and custody activities2. To avoid restricting the development of industry practice, the ISSB agreed to retain the high-level measurement requirements for financed emissions together with disclosure of the methodology used. Facilitated emissions disclosures for investment banking and brokerage activities would not be required because the methodology is not yet sufficiently mature. 

The amended financed emissions disclosure requirements may include:


The ISSB agreed broader reliefs that would impact these disclosures. These include a later effective date for all Scope 3 disclosures and permitting inclusion of value chain information with non-aligned reporting periods3.

The ISSB discussed facilitated emissions disclosure as an area for future consideration, along with emissions associated with insurance (or re-insurance) underwriting portfolios. It also reflected that when the methodologies used for financed emissions are more advanced these may be revisited to increase comparability in the future. 

What’s the impact?

The requirement to report on financed emissions brings with it various complexities including determining appropriate measurement methodologies. Financial institutions reporting these metrics will need a lot of data: therefore, they need to start now. Our recent benchmarking analysis showed that the reported Scope 3 emissions of most banks currently excludes any financed emissions.

It may take many years to gather relevant data and develop effective reporting, so there is no time to lose.

Actions for management

  • Understand the detail behind the proposals for commercial banking, asset management and custody, and insurance activities.
  • Work with a specialist to understand how the proposals would apply to your lending or investment portfolio and what data would be required.
  • Consider the systems, processes, controls and data needed to support your reporting.
  • Engage with peers – the PCAF framework is an example of industry-led collaboration to resolve a complex challenge. This industry-led collaboration is expected to continue.
  • Follow the discussion of topics marked for future consideration.

How did we get here?

The Sustainability Accounting Standards Board (SASB) Standards for commercial banks, investment banking and brokerage, insurance and asset management and custody activities do not include requirements for financed and facilitated emissions. The ISSB proposed high-level requirements when creating Appendix B of the proposal and has now tentatively agreed to include the financed emissions requirements as required application guidance for financial institutions.

Document version Reference
SASB Standards n/a No content included
Proposed IFRS S2 Appendix B: Industry-related disclosures (sections B15 –18) ISSB added new requirements to the existing SASB Standards
ISSB Board meeting – 20-23 September 2022 – Frankfurt

AP4D Financed and facilitated emissions

Meeting summary

Identified topics for further analysis


ISSB Board meeting: 18-21 October 2022 – Montreal

AP6: Industry based materials

Meeting summary


The ISSB agreed that Appendix B in proposed IFRS S2 would be classified as illustrative examples

ISSB Board meeting: 13-15 December 2022 – Montreal

AP4B: Scope 3 greenhouse gas emissions

AP4D: Financed and facilitated emissions

Meeting summary

The ISSB agreed to a later effective date for reporting on Scope 3 emissions and reporting cycle reliefs 

It also clarified financed and removed facilitated emissions requirements 

Proposed IFRS S2 Climate-related Disclosures.

The ISSB agreed that other industry-specific metrics included in the climate proposal would be classified as illustrative examples.

See article on Scope 3 Greenhouse gas emissions.

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