Despite good intentions, companies say they are struggling to cut their emissions in line with targets. Their inability to measure appropriately is the leading roadblock.
CO2 FI by BCG
Net Zero for Financial Institutions
Financial institutions are faced with a lack of emissions data. In fact, today, only 3% of large corporates publish their GHG emissions. CO2 FI by BCG—our AI-powered solution for net-zero alignment in the financial services industry—solves this challenge.
Our Solution to Carbon Accounting for Financial Services
Financial institutions are considered change agents for financing net zero globally. With their ability to direct capital flows into sustainably economic activities, they can exert tremendously positive impact on our world’s climate. Critically, this also positions them to unlock significant business value—from mitigating long-term risks and meeting evolving regulatory expectations to capturing emerging market opportunities tied to the low-carbon transition.
With CO2 FI by BCG, we provide our clients with the best possible emissions estimate for each individual asset in their portfolios. Combining advanced analytics with strategic planning and industry and climate expertise, CO2 FI by BCG supports clients in navigating their climate change and sustainability journey by building a robust climate data asset. Tailored specifically for the financial industry, it’s an AI-powered solution by BCG X that helps companies measure, simulate, reduce, and track their environmental footprint at scale.
Which Industries Was CO2 FI by BCG Designed For?
We help retail and commercial banks measure GHG emissions financed by loans and investments and support facilitated emissions measurement.
We help asset managers measure GHG emissions associated with assets under management.
We help the investors and private equity players measure GHG emissions financed by investments.
We help insurance players measure associated GHG emissions.
The Benefits of CO2 FI by BCG
Following a cascaded approach using the best information available from more than 50 data sources, CO2 FI by BCG provides carbon accounting, net-zero alignment, and business impact simulation.
1.
Carbon Accounting
We use more than 50 data sources and PCAF methodology to calculate the portfolio carbon footprint financed by loans, assets, and investments across scopes 1, 2, and 3 emissions, and rely on industry-specific models to estimate non-disclosed emissions. All external data for the assessment is already included in CO2 FI by BCG, with only a minimal ask for portfolio data.
2.
Net-Zero Alignment
Our solution calculates physical emissions intensities and compares them with established decarbonization pathways to determine the net-zero gap. It identifies technology mix and reduction levers for all emission-intense sectors including power and utilities, metals and mining, fossil fuels, real estate, aviation, and shipping.
3.
Financial Impact Modelling
CO2 FI by BCG facilitates customizable scenario analysis to determine the best way for sectors to decarbonize and quantifies financial impact for the financial institution.
The Financed Emissions Imperative: Measurement, Disclosure, and Beyond
Bank-financed emissions are the most material component of a bank’s carbon footprint and are notoriously complex to estimate. Many financial institutions have committed to disclosing financed emissions, but few have delivered. Here are seven steps that can help.
Client Success in Carbon Accounting for Financial Institutions
18%
emission reduction potential with neutral revenue impact until 2030
Bank and Asset Manager
Rapid baselining of the carbon footprint for a major asset manager and bank to provide the necessary transparency for establishing a robust climate action strategy. We assessed decarbonization strategies both in terms of emission reduction potential and financial impact. Emission reduction potential with neutral revenue impact was assessed to equal 18% by 2030.
40%
average reduction target in emission intensity until 2030
European Financial Institution
Our client used CO2 FI by BCG to baseline its carbon footprint and to assess the ongoing sector-by-sector net-zero alignment. They were able to cover the entirety of the lending book with carbon emission estimates and define decarbonization strategies for their seven highest emitting sectors, amounting to an average reduction target on the emission intensity of 40% across sectors.
Experts
Meet Our Team
Our tool is just one dimension of our work with clients. Our CO2 FI by BCG team has combined expertise in financed emissions, artificial intelligence, climate analytics, climate methodology, and financial institutions’ sustainability initiatives, as well as the industries our clients serve.
Insights on Net Zero for Financial Institutions
Climate Change and Sustainability
Slideshow
October 13, 2021
Sustainable Finance and Investing
Interview
June 17, 2021
Larry Fink, the chairman and CEO of BlackRock, the world’s largest asset manager, explains how the climate crisis is fundamentally reshaping his firm’s approach to investing.
In order to meet the Paris Agreement goals, price levels need to increase to an estimated $50-150/tonne average by 2030 from the current global average of <$5/tonne.
This guide assembles FSTF member experience, and the recommendations made in the guide provide suggestions for approaches banks can take over time as methodology, data and climate science continue to evolve.
