Accounting for Time when Estimating Financed Greenhouse Gas Emissions from Investment and Lending Portfolios

Reynir Smári Atlason, Gunnar Gunnarsson, Kjartan Pálsson, Olaf Sigurjonsson*

*Corresponding author af dette arbejde

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

28 Downloads (Pure)


Because of legislation and rising public pressure, financial institutions have begun to estimate and publish their financed greenhouse gas emissions. Such emissions are indirect from financial institutions' own greenhouse gas emissions and result from those companies' financial institutions invest in or lend capital to. The current convention to allocate indirect carbon emissions of investments and loans does not reflect the duration of such loans or investment holdings, nor the variability of carbon emissions from the underlying investments. Instead, the convention is to use an outstanding loan or investment at year-end against an enterprise value including cash to estimate the portion of emissions from the investment to be allocated to the investor or a financial institution. Using such methods can result in faulty conclusions, as investment portfolios can change dynamically, where some investments may be omitted from a portfolio while others enter a portfolio later in a year. Additionally, company emissions may vary greatly throughout the year, be it because of seasonality or other factors. This pitfall results in moderately skewed financed emissions from financial institutions at best, outright wrong at worst, and opens the possibility for greenwashing. In this paper, we provide a novel way to address this, which we demonstrate through a case study.
TidsskriftCurrent Research in Environmental Sustainability
Antal sider7
StatusUdgivet - jan. 2023


  • Carbon accounting
  • Financed emissions
  • PCAF