The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

What if I told you that around 95 per cent of banks' carbon emissions come from their lending book? 
Some say there isn’t a single solution to take the heavy lifting out of the calculation and reporting burden that this presents. At Equifax and CienDos we believe our unique partnership and products are set to change the game. Together we have built the Financed Emissions Calculator™ - a tool that provides automated, efficient and precise calculations, taking away the headache for banks’ reporting requirements supporting their Scope 3 financed emissions submission. 

So, why is this such a significant issue? There is a growing realisation that banks need a comprehensive understanding of their Scope 3 Financed emissions reporting before they can accurately set and work towards their climate goals. Banks lack the necessary resources for data collection, data cleansing, or the development of data analytics on that data. This is Equifax’s bread and butter, which is why it’s such an interesting and important driving factor for the development of the Financed Emissions Calculator™. This is just the beginning.

It’s now clear that Equifax and partners' data capabilities are key to unlocking the important question - how can we hit net-zero by 2050, or earlier? However, more recently, achieving net-zero emissions has been controversial, largely due to a lack of clear direction and understanding regarding how we can meet a target that lacks reliable underlying data.

We must begin by addressing the financed carbon emissions of lenders and investors, this could be the solution to reliable data reporting, management and strategic decision-making across their portfolios. As highlighted above, these financed emissions equate to 95% of their carbon emissions and provide a way in which banks and financial institutions can effectively manage their own carbon emission reduction whilst supporting their customers’ transition to net-zero.

According to a CDP report, “The greenhouse gas emissions associated with financial institutions' investing, lending and underwriting activities are on average over 700 times higher than their direct emissions.”

It’s not all doom and gloom though, the ability for financial institutions to accurately measure and manage their financed emissions supports decarbonisation, contributing to global emissions reduction. That's what Equifax’s new Financed Emissions Calculator™ offers – an opportunity for financial institutions to use reliable and actionable data, which is auditable and traceable to source. This solution offers the highest accuracy of the carbon emissions calculations for Financial Institution’s financed emissions, and is fully underpinned by the globally recognised Partnership for Carbon Accounting Financials (PCAF) methodology.

The calculator combines Equifax commercial cloud-native data with CienDos’ industry-leading emissions data to automatically and efficiently calculate accurate financed carbon emissions for reporting needs. This will then enable both front and back office effective carbon management for Financial Institutions, leading to effective decision making to both support emissions reduction and innovative transition-friendly growth.

Due to the necessary steps of planning data requirements, manual data gathering per company, data cleaning, data analysis, and subsequent reporting calculating financial emissions on a portfolio level could take financial institutions up to six months each year to complete. 

In contrast, Equifax can deliver this comprehensive calculation within a couple of weeks. This efficiency is what makes the Equifax solution so powerful for financial institutions, allowing them to focus their resources on managing their emissions down rather than the time-consuming reporting tasks.

If you want to find out more, please take a look at our product sheet and schedule a meeting with one of our experts.