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The biggest sources of emissions often lurk where they are least expected – in loans and investments.
Financed emissions are carbon emissions that arise indirectly from a financial institution's financing and investment activities. These often represent the majority of a financial institution's carbon emissions. In the face of increasing regulatory requirements and growing demand for sustainable finance, financial institutions need to take action to transparently measure and reduce their financed emissions. A proactive approach not only protects against reputational risks, but also opens up opportunities for innovative and sustainable financing and investment.
Growing pressure
Governments and regulatory authorities around the world are tightening their requirements for financial institutions to measure and disclose financed emissions. In Switzerland, climate reporting is regulated by the Ordinance on Climate-Related Issues (Art. 964 ff. OR), which came into force in 2024. The ordinance is based on the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD) and requires companies to disclose the emissions they have financed (Scope 3.15). In addition to the regulatory authorities, other stakeholders, such as investors, ESG rating agencies, customers and NGOs, are also calling for more transparency with regard to carbon emissions and their management.
Relevance and impact
Financed emissions account for the majority of carbon emissions at financial institutions. According to the Carbon Disclosure Project (CDP), they are on average 700 times higher than direct emissions. Financial institutions therefore have enormous leverage to direct financial flows towards a net-zero economy.
Realizing opportunities and risks
Climate risks also include financial and reputational risks. Calculating the financed emissions provides a holistic picture of carbon emissions and forms the basis for credible climate targets and the transition to a low-carbon economy. This also reduces the risk of greenwashing. In addition, transparency regarding financed emissions serves as a risk management tool to identify and minimize transition risks in a targeted manner, while at the same time realizing opportunities – for example, through active engagement with carbon-intensive companies or the development of new climate-friendly products and services.
Swiss Climate offers customised solutions to calculate and reduce the financed emissions of your financial institution in the long term. With our expertise, we help you to meet regulatory requirements and create the basis for future climate goals.
Our services include:
Financial institutions are faced with the challenge of playing a leading role in the global transition to a net-zero economy. We help you turn this responsibility into an opportunity and create long-term value for your organization and society.
Contact us now for a no-obligation discussion.