Malgorzata Kee
Felix Fouret
David Harris
A guide to interpreting and using financed emissions in a data sparse environment
Financial institutions are exposed to climate risk indirectly through the companies and projects they finance, linking their portfolios to real‑economy emissions.
Financed emissions, classified as part of Scope 3, account on average for 97% of a financial institution’s total greenhouse gas emissions, yet in practice remain difficult to interpret due to limited and uneven data.
Although still developing as a metric, financed emissions serve as a useful lens for understanding historical emissions and climate-related risk, particularly when combined with complementary datasets.
This report explores how financed emissions data can be made more useful in practice. We find that, when treated as a structured analytical framework rather than a single headline figure, financed emissions can provide genuinely valuable insight into how capital interacts with the low‑carbon transition.
Key findings:
- Financed emissions account for the majority of total emissions for financial institutions, illustrating their structural exposure to climate risk
- Whilst financed emissions disclosure rates tripled from 2020 to 2024, reporting remains limited and uneven
- In the absence of reported data, estimation becomes unavoidable and depends heavily on methodological choices and the level of asset breakdown disclosure
- Reported changes in financed emissions often mask multiple underlying drivers, such as market shifts or portfolio changes, rather than real decarbonisation progress
- Headline financed emissions figures provide limited insight on their own; meaningful interpretation requires breakdowns by asset class, sector and emissions scope
What does this research mean for you?
In the paper we outline implications for investors, financial institutions, data users and regulators.
- Investors should treat financed emissions as a starting point and assess results alongside complementary metrics to better understand climate exposure
- Financial institutions should continue to strengthen financed emissions disclosures to improve the granularity and quality of data available.
- Data users must understand the underlying drivers of change in the figures and assess the financed emissions alongside complementary indicators
- Regulators play a critical role in maintaining clarity, consistency and momentum in climate-related disclosures
Data used in this analysis
LSEG’s Climate MAP data provides a GHG emissions estimation model which includes Scope 1, 2 and 3 data alongside PCAF data quality scores.
Data is available via LSEG Workspace or via feed.
What are financed emissions?
Financed emissions are the share of greenhouse gas emissions from a company or project that is attributed to a financial institution, because of its exposure through financing loans, investments, or underwriting. As capital allocators rather than asset operators, financial institutions are primarily exposed to climate risk through their financed emissions.
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