Financial institutions are increasingly exposed to climate risk not through their own operations, but through the companies and projects they fund. This indirect exposure, measured through what are known as financed emissions, now sits at the heart of climate risk management for banks, asset managers and insurers alike.
A new report from LSEG Data & Analytics examining how financed emissions data can be made more operationally useful finds that, rather than being treated as a single headline figure, these metrics offer far greater value when approached as a structured analytical framework. Viewed through that lens, financed emissions can provide genuine insight into how capital flows interact with the low-carbon transition.
Among the report’s key findings, disclosure rates for financed emissions tripled between 2020 and 2024, though reporting remains limited and uneven across sectors and geographies. Where reported data is absent, estimation becomes unavoidable and is heavily shaped by methodological choices and the extent to which asset-level breakdowns are disclosed.
Critically, the report cautions that headline figures can mislead. Changes in reported financed emissions often reflect portfolio shifts or market movements rather than genuine decarbonisation progress, underscoring the need for deeper contextual analysis. Meaningful interpretation requires breakdowns by asset class, sector and emissions scope, rather than reliance on a single aggregated number.
The research sets out specific implications for different stakeholders. Investors are encouraged to treat financed emissions as a starting point, supplementing the metric with complementary data to build a fuller picture of climate exposure. Financial institutions are urged to strengthen their disclosures, improving both granularity and quality. Data users must develop a clear understanding of what is driving changes in the figures before drawing conclusions, while regulators are identified as critical to maintaining consistency, clarity and momentum in climate-related reporting standards.
The analysis draws on LSEG’s Climate MAP data, which provides a GHG emissions estimation model encompassing Scope 1, 2 and 3 data alongside PCAF data quality scores. The dataset is available via LSEG Workspace or through a direct data feed.
For more insights, read the full report here.
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