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IIGCC Publishes Scope 3 Emissions Paper

The Institutional Investors Group on Climate Change (IIGCC), an industry network, has released its discussion paper on Scope 3 emissions. Scope 3 covers all emissions emerging from a company’s supply chain, including upstream production and downstream customer activity. The paper outlines investor perspectives on the importance and complexity of investee companies’ emissions in the context of achieving net zero portfolio emissions. It focuses primarily on publicly listed corporate instruments, including both equity and debt, and incorporates discussions held by the IIGCC Scope 3 working group, which counts 20 members. In addition, the paper includes a review of market context and of how the concept of emissions was developed, as well as an exploration of key challenges and a proposed theory of change for investors to address Scope 3 emissions. “Information on the Scope 3 emissions of investee companies is vital for investors looking to credibly decarbonise their portfolios and manage climate-related risks,” the IIGCC said in a statement. “Given that simply aggregating these emissions into portfolio level metrics – as is the case for Scopes 1 and 2 – could drive undesirable outcomes, there is a need to develop an alternative approach.” The paper aims to articulate these challenges and lay the foundations for an investor-led solution. The Scope 3 working group will reconvene to provide further practical guidance for investors.

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