If you're a sustainability lead at an Australian bank or insurer, one number swamps all the others: your financed emissions. The emissions of everyone you lend to or invest in, attributed back to you, sit in Scope 3 Category 15, and they're routinely larger than your entire operational footprint combined.
That makes Category 15 the headline of your AASB S2 disclosure, and PCAF the method you'll use to calculate it. The formula is the easy part. The data behind it is the work.
How attribution works
PCAF assigns a counterparty's emissions to you in proportion to your financing of them. For a business loan, the attribution factor is usually the outstanding amount over the borrower's total equity plus debt; for listed equity and bonds, your holding over the issuer's enterprise value including cash (EVIC); for project finance, your share of the total project value. Multiply the counterparty's emissions by that factor and you have your financed emissions for that exposure. The standard covers three parts: financed emissions from lending and investment, facilitated emissions from capital markets activity, and insurance-associated emissions from underwriting.
The data quality score
Every calculation gets a score from 1 to 5. Score 1 uses the counterparty's own reported emissions; score 5 falls back to asset-class averages with almost no counterparty data. In practice, most portfolios start toward the weaker end of the scale, because the majority of borrowers don't publish emissions. The disclosure story is the trajectory: moving the weighted-average score down over time as you gather better data. That's what shows an assurer, and a regulator, that the number is getting more real each year.
| Score | Basis | Typical exposure |
|---|---|---|
| 1–2 | Counterparty's own reported emissions | Large listed corporates |
| 3 | Counterparty physical activity data | Mid-market, via engagement |
| 4 | Revenue with sector intensity factors | SME and retail |
| 5 | Asset-class averages | Where no data exists yet |
The real problem is counterparty data
A major bank has tens of thousands of corporate counterparties and hundreds of thousands of SME and retail ones. Almost none publish emissions, and most never will. Moving an exposure from score 4 to score 3 means engaging a mid-market borrower and getting real activity data (kilowatt-hours, litres, tonnes) out of them, then holding it against the attribution maths. Do that across a portfolio and the calculation stops being a formula and becomes a data-collection programme.
“The attribution factor takes a spreadsheet. Improving the data quality score takes a programme: thousands of counterparties, each with evidence behind their number.”
Where the effort actually goesMake your Category 15 number defensible
Our AI Sustainability Analyst handles attribution, PCAF data quality scoring and the evidence trail across your portfolio, so the headline number holds up.
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