Scope 3 emissions - ISSUE 9 - May 2025

This AEFR Debate Paper on Scope 3 greenhouse gas (GHG) emissions endeavours to identify the key conditions to the pivotal role of financial institutions' (FI) financed emissions in the global transition towards a low carbon economy and, in particular, for it to be the cornerstone of capital flow in this context. Scope 3 emissions, encompassing indirect emissions from an organisation's value chain, constitute a substantial portion of total GHG emissions and display specific characteristics by business models and especially for financial services. This paper underscores the necessity of providing a clearer and more specific normative and regulatory framework on the matter, to improve usability and lessen complexity. Furthermore, the paper proposes simple recommendations for policymakers and market participants to unlock the potential of the Scope 3 emissions metrics in the context set by the Draghi report on EU competitiveness and the Omnibus directives pushing for simplification.