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Accounting for Risk

Conceptualizing a Robust Greenhouse Gas Inventory for Financial Institutions

This report takes a first step in helping financial institutions create more robust GHG inventories, by discussing objectives, options, and challenges for financial institutions and stakeholders to consider when creating and evaluating a GHG emissions inventory.

Executive Summary

Executive Summary

Compiling greenhouse gas (GHG) emissions inventories is no longer the province of only first-mover corporations: Approximately two-thirds of Fortune 500 companies now use the standards developed by the Greenhouse Gas Protocol — an initiative of the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) — to compile their GHG emissions inventories. While the standards set forth by the Greenhouse Gas Protocol Initiative are broadly applicable, the diverse, complex, and service-focused nature of financial services has triggered discussion about the appropriate application methods for financial institution users. Accordingly, financial institutions and their stakeholders are seeking additional clarification on developing and evaluating GHG inventories for financial institutions.

In response, this issue brief draws from the widely used WRI/WBCSD Greenhouse Gas Protocol’s Corporate Accounting and Reporting Standard, Revised Edition, to discuss objectives, options, and challenges for financial institutions and stakeholders to consider when creating and evaluating a GHG emissions inventory.

The inventory ultimately should facilitate positive environmental outcomes, namely, the reduction of GHG emissions, and serve a business imperative. To achieve these business and environmental objectives, setting GHG reduction targets as well as tracking and reporting on progress are critical.

Table of Contents

  • Executive Summary
  • The Business Case for Robust GHG Emissions Accounting
  • Primer on Corporate GHG Accounting
  • Applications for Financial Institutions
  • Scope of Products and Services
  • Calculating and Reporting Emissions, and Using the Inventory
  • Final Thoughts and Next Steps


Because emissions related to investments and services may contribute to a significant portion of financial institutions’ GHG inventories and potential business risk, this brief discusses such options as

  • Using an equity share approach to capture emissions from relevant proprietary investments.
  • Reporting relevant indirect emissions (i.e., emissions that are a consequence of business activities but occur at sources owned or controlled by another entity) related to debt and equity investments and other products, services, and financial contracts.

Given the practical and conceptual complexity in creating an inventory that includes emissions from investments and services, we encourage financial institutions to keep the following business objectives in mind during the development process:

  • Demonstrating environmental stewardship to stakeholders (i.e. managing reputational risks).
  • Informing risk management practices for proprietary and managed investments (i.e., helping manage GHG risks in an institution’s own portfolio and fulfilling its fiduciary duty to its clients).

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