Voluntary scope 3 emissions disclosure: A comparative analysis of financial firms

Abstract

One of the greatest challenges of our century is climate change. In recent years, concern for the environment has led governments to adopt strategies and set targets to mitigate the climate impact of our society, one of them being the reduction of greenhouse gas emissions. In view of keeping track of these targets, the last decade has seen increased regulation regarding companies' disclosure of their carbon emissions. The most recent European standard is Directive 2022/2464/EU, or Carbon Reporting Standard Disclosure (CRSD), which requires companies subject to the standard to report scope 1, scope 2 and scope 3 emissions, in accordance with the European Sustainability Reporting Standards (ESRS). However, this regulation has not yet been transposed into Spanish law, so its application is not yet required in Spain. Of the three types of emissions, scope 3 emissions are particularly relevant, which are those generated indirectly by the company's value chain activities, for example, employee business trips. This type of carbon emissions constitutes the main component of their emissions in many sectors, accounting for around 70-90% of total carbon emissions. Specifically, the financial sector – which is one of the most important sectors of our current society – is one of the economic sectors that generates the most scope 3 emissions through its activity, since its investments finance the emissions generated by the activities and companies financed, so that the impact of this sector goes beyond the strictly economic and financial. Therefore, taking into account the role played by the financial sector in the generation of scope 3 issuances, we can ask ourselves whether in Spain financial institutions are disclosing this type of information in their annual accounts despite not being obliged to do so. The objective of this paper is to analyse whether financial institutions have disclosed their scope 3 carbon emissions in recent years – in accordance with the provisions of the CRSD and the ESRS – and with what degree of detail.