Scope 3 Category 15 boundaries: a field guide for banks
Where financed-emissions inventories go wrong, and the choices you'll need to defend to an auditor.
Most financed-emissions inventories don't fail on maths. They fail on boundaries — which exposures are in, how they're attributed, and how honestly the data quality is reported.
Start with your balance sheet, not the emissions data
List every asset class you hold and map it to a PCAF method. Exposures that don't fit a method yet should be named, not silently dropped.
Pick an attribution approach and stick to it
- Listed equity and bonds: outstanding amount over enterprise value including cash
- Business loans and unlisted equity: outstanding amount over total equity plus debt
- Mortgages: property emissions attributed by loan-to-value
Mortgages: hybrid beats perfect
For a large mortgage book, energy performance certificates give coverage but not accuracy. Measured consumption gives accuracy but rarely coverage. A hybrid — measured data for the largest exposures, certificate-based estimates for the long tail — is defensible if you document the split.
Report data quality as a first-class number
A weighted data quality score that improves each year is more credible than a precise-looking total built on estimates. Publish both.
Keep facilitated emissions separate
Capital markets activity is reported alongside, not inside, financed emissions. Mixing them is the fastest way to lose an auditor's trust.