What methods can financial services providers use to measure their environmental impact?

1 Carbon footprinting

One of the most common methods to measure your environmental impact is carbon footprinting, which is the process of estimating the greenhouse gas (GHG) emissions associated with your activities, products, or services. Carbon footprinting can help you identify the sources and magnitude of your emissions, as well as the potential areas for reduction and offsetting. To calculate your carbon footprint, you need to collect data on your energy use, transport, waste, and other relevant factors, and then apply emission factors that convert them into CO2 equivalent units. You can use tools such as the GHG Protocol or the Carbon Trust to guide you through the carbon footprinting process and ensure you follow the best practices and standards.

2 Life cycle assessment

Another method to measure your environmental impact is life cycle assessment (LCA), which is a comprehensive and systematic analysis of the environmental effects of a product or service throughout its entire life cycle, from raw material extraction to disposal or recycling. LCA can help you evaluate the environmental impacts of your products or services across different categories, such as climate change, water use, land use, biodiversity, and human health. LCA can also help you compare different alternatives and identify the hotspots and trade-offs in your value chain. To conduct an LCA, you need to define the goal and scope of your study, collect and analyze data on the inputs and outputs of your product or service system, and interpret the results and implications. You can use tools such as SimaPro or OpenLCA to perform an LCA and follow the guidelines and principles of the ISO 14040 and 14044 standards.

3 Environmental, social, and governance reporting

Another method to measure and communicate your environmental impact is environmental, social, and governance (ESG) reporting, which is the practice of disclosing information on your performance and practices related to environmental, social, and governance issues that are relevant to your business and stakeholders. ESG reporting can help you demonstrate your commitment and accountability to sustainability, as well as enhance your reputation, trust, and competitiveness. ESG reporting can also help you comply with regulatory requirements and meet the expectations of investors, customers, and other stakeholders who are increasingly interested in your ESG performance. To prepare an ESG report, you need to identify the material ESG issues that affect your business and stakeholders, collect and verify data on your ESG indicators, and present your ESG information in a clear and concise manner. You can use frameworks such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), or the Task Force on Climate-related Financial Disclosures (TCFD) to guide you through the ESG reporting process and ensure you follow the best practices and standards.

4 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?