Case study: Estimating Financed Emissions The indirect Scope 3 GHG emissions related to our lending activities, commonly called financed emissions, represent the largest category of GHG emissions for a bank. We are in the process of estimating absolute financed emissions for our full portfolio, where established estimation methodologies exist, and are disclosing estimates for two categories this year as a first-step, related to our October 31, 2022 financial year: residential mortgages and oil and gas extraction lending. We intend to continue to refine our financed emissions estimates and expand the scope of our portfolio that is covered by our disclosures in future years. In calculating our financed emissions, we have leveraged the Partnership for Carbon Accounting Financials (PCAF) Global GHG Accounting and Reporting Standard, which meets
the requirements set out by the GHG Protocol for Scope 3, Category 15 investment activities. The PCAF standards use an allocation approach where our share of client GHG emissions (actual or estimated) is allocated to CWB based on our proportional share of the lending or investment to each client. We have used the PCAF methodology for Mortgages for our Residential Mortgage portfolio and the methodologies for Business Loans and Motor Vehicle Loans for our Oil and Gas Extraction lending book. See the Energy consumption and GHG emissions results table for our initial estimates.
Refer to 2023 Climate Metrics on page 69 for our financed emissions estimates.
The general approach to calcuate financed emissions
=
Emissions i
X
Financed emissions
Attribution factor i
(with i = borrower or investee)
Outstanding amount i Total equity + debt i
PCAF, 2020
Data quality and limitations Financed emissions estimates are limited by the information available on our client emissions. This is recognized under the PCAF standard by assigning a data quality score from one to five for each portfolio. A data quality score of one indicates the highest level of input data, such as audited public disclosures of client GHG emissions, and a score of five indicates client emissions have been estimated based on basic information and average emission factors. As we continue to develop our approach to financed emissions, we will assess options to improve our average data quality score to enable future targets to be set for our financed emissions. Our financed emissions are estimated for the previous fiscal year to improve availability of higher quality data in advance of calculation. For financed emissions estimated as at October 31, 2022, we have estimated our share of the Scope 1 and Scope 2 GHG emissions of our borrowers. We recognize the importance of also disclosing our share of Scope 3 borrower emissions, especially for carbon- intensive industries, and intend to continue to improve our data availability and estimation processes to disclose this figure in future years. Future priorities The development of our climate strategy is a complex, multi-year undertaking as we are focused to ensure that our approach makes sense for our business and our stakeholders and is aligned with our growth strategy and prudent risk appetite. The steps we have taken in 2023 to set clear targets to reduce our climate impact, invest in our disclosures, and further integrate climate factors into our overall strategy and Risk Management framework are foundational to the ongoing development of our approach to climate change. We will continue to progress our approach, supported by metrics and science-based reduction targets, and strong engagement with our clients and other stakeholders.
70 2023 SUSTAINABILITY REPORT AND PUBLIC ACCOUNTABILITY STATEMENT
Powered by FlippingBook