The financial services industry is fixated on the need for better Scope 3 data to improve investment decision-making, but data quality is not the only problem. The problem lies in the systematic application of a measure, Scope 3, which was not designed to evaluate company transition risk exposure for all sectors – and in the absence of reliable Scope 4 data.
For many sectors, like fossil fuel production, adding Scope 3 gives a far better proxy for a company’s climate risk than using Scope 1 and 2 alone, and Storebrand welcomes the reporting of Scope 3 data from our investee companies. However, for companies offering climate solutions based on electrification, adding Scope 3 gives a highly distorted impression of climate risk, both for the company in question, and also for an investment portfolio investing in the company.
Read the white paper here: