GAPS IN SCOPE 3 DISCLOSURE EXPOSE BIG FOUR BANKS TO BILLION DOLLAR CARBON RISK: EMMI REVEALS

Sydney, Australia: Australian carbon fintech and financial infrastructure company, Emmi has revealed that Australia’s big four banks will be exposed to billions of dollars in carbon risk if they fail to measure and manage Scope 3 emissions across their lending and investment portfolios.

In a first for Australian banks, Commonwealth Bank recently disclosed its Scope 3 emissions which Emmi estimated at 2,300 times higher than its direct emissions in Scope 1, potentially triggering more than $6 billion in costs by the end of the decade as carbon pricing is allocated to lenders. 

For the remaining of the big four - ANZ, National Australia Bank and Westpac - Emmi estimates their Scope 3 emissions to stand at between 18-24 million tonnes. 

Representing the first data-backed estimate of their extensive scope 3 exposure, this analysis shows that when the magnitude of financed emissions is factored into banks’ overall footprint, each institution moves into the top 15 heaviest emitters on the ASX. 

While each of the big four currently report emissions for Scope 1 (direct) and Scope 2 (energy use), there are significant gaps in quantifying their Scope 3 or financed emissions which cover the indirect value chain and use of sold products like loans and investments in companies. 

Without this crucial data, banks and their investors lack visibility of their financial exposure to the carbon transition.

Ben McNeil, co-founder and Chief Information Officer of Emmi said even though Scope 3 emissions are more materially important for the ASX 300 on carbon risk, they remain largely undisclosed by Australian companies.

“To date, Scope 3 reporting from the banks has been patchy and lacks consistency, exposing them to greater carbon risk. We do however commend CBA who recently disclosed Scope 3 emissions in their 2022 Climate Report,” said McNeil.

“Better modelling that includes Scope 3 emissions will help the banks understand the true risk position on carbon across their diversified lending and investment portfolios, uncovering previously hidden financial risk. Best practice measurement leads to best practice management.”

Australian regulators do not currently require companies to report on Scope 3 emissions. However, any Australian organisations operating globally will need to meet expanding reporting requirements in the US, Europe, UK and New Zealand. 

With the Australian parliament passing of the climate bill to cut emissions by at least 43% by 2030, climate action and regulations are set to accelerate. 

“Financial institutions need to ready themselves to better quantify their Scope 3 financed emissions footprint and carbon risk exposures associated with those. This knowledge provides an important baseline for measuring and managing potential risks in the transition to low carbon economies,” added McNeil. 

About Emmi

The world is on a journey to net-zero. Transformation to a carbon constrained economy is happening fast, with the potential to affect some $43 trillion of manageable stocks worldwide. Emmi has assessed over 40,000 globally listed stocks and exists to help the investment sector understand, manage and solve the financial risk associated with the global carbon transition. We aim to lead investors profitably to net-zero by providing data driven intelligence, carbon adjusted financial metrics, objective insights and complete integration.

Website: www.emmi.io 

LinkedIn https://www.linkedin.com/company/emmiplatform/ 

For more information: Karen Keech, karen@establishedmedia.com, 0411 052 408