What are financed emissions?

Each figure is attributed to the lender or investor in proportion to its share of the counterparty, and each carries a data quality score. They are reported separately from the institution's own operational emissions, and they are the line most disclosure questions land on.

How are financed emissions calculated?

Attribution factor multiplied by counterparty emissions, exposure by exposure, then summed. The attribution factor is the institution's share of the counterparty, defined per asset class by PCAF.

A worked example. A lender holds a 10 million business loan to a manufacturer that has 40 million of equity and 60 million of debt. Total capital is 100 million, so the attribution factor is 10%. The manufacturer reports 50,000 tCO2e of Scope 1 and Scope 2 emissions. The lender's financed emissions for that exposure are 5,000 tCO2e, and the score attached depends on whether that 50,000 was verified, self-reported or estimated.

Which of the counterparty's emissions count?

Scope 1 and Scope 2 of the counterparty, always. Counterparty Scope 3 is required for exposures in the sectors where it dominates the footprint, and PCAF phases the requirement in rather than demanding it everywhere at once. Reporting counterparty Scope 3 separately from Scope 1 and 2 is expected, because mixing them makes year on year comparison impossible once coverage improves.

How do financed emissions differ from a portfolio carbon footprint?

A portfolio carbon footprint expresses the attributed emissions of the holdings per unit invested, usually tonnes of CO2e per million. Financed emissions is the Category 15 reporting concept, governed by PCAF, covering loans as well as investments. Weighted average carbon intensity is a different metric again: it weights each counterparty's emissions per unit of revenue by its share of the portfolio, so it answers a risk exposure question rather than an inventory question. An institution often reports all three, and they are easy to confuse in a disclosure.

What makes financed emissions hard?

The arithmetic is the easy part. Four things get in the way, in roughly the order teams hit them.

• The private company gap. Listed counterparties disclose. Mid-market borrowers and unlisted holdings usually do not, so those exposures fall back on proxy data.
• Inconsistent boundaries. Counterparties report on different organisational boundaries and different Scope 2 methods, so totals are not comparable until they are normalised.
• Restatements. Companies revise historical emissions, which makes a baseline move for reasons that have nothing to do with decarbonisation.
• Matching. A holdings file and an emissions dataset have to resolve to the same legal entity before anything can be attributed. See entity matching in emissions data.

The result is a portfolio calculation that lives in spreadsheets and gets rebuilt by hand.

Where does DitchCarbon fit?

DitchCarbon provides verified emissions data for over 2 million organisations, so procurement, sustainability and finance teams can measure and act on supply chain and portfolio emissions from one source. Counterparty figures arrive normalised to GHG Protocol boundaries, matched by entity resolution against DUNS, LEI and ISIN identifiers, with every figure carrying its source and change history. Restatements are tracked, so the time series stays stable and a change in the baseline can be explained. Coverage gaps are shown rather than hidden. The full method is published: see how the Scope 3 calculation works.

What that supports is tracking, at whichever level the target was set: counterparty, group, account, portfolio or category. Once the same data refreshes continuously with documented sources, a portfolio target stops being an annual rebuild and becomes something you can report against through the year. See financed emissions and portfolio analysis.

Will an auditor accept the numbers?

That determination belongs to your assurance provider, and what they will ask for is provenance. What you hand over is audit-ready and verified to ISO 14064-3, limited assurance, by UL Solutions, renewed annually, with every figure carrying its source and change history. DitchCarbon data has been used in emissions reports that were subsequently assured by ten different third-party assurance providers, including Big Four firms. Reports are on the trust centre.

Related

• What is PCAF?
• How do PCAF data quality scores work?
• What are portfolio emissions?
• What is WACI and why do investors use it?

Are you the company being asked? Claim your company profile and give every investor and lender the same set of figures. Or see coverage across your own holdings.

Last reviewed July 2026.