Chapter 4 required readings

Question 1

6 recommendations by NGFS to manage environmental and climate-related risks.

Answer 1

1. Integrating C-related R into fin stability monitoring and micro-supervision
2. Integrating sustainability factors into own-portfolio management.
3. Bridging the data gaps.
4. Building awareness and intellectual capacity and encouraging technical assistance and knowledge sharing.
5. Achieving robust and internationally consistent climate and environmentrelated disclosure
6. Supporting the development of a taxonomy of economic activities.

Question 2

5 principles of GHG accounting

Answer 2

1. Relevance - GHG inventory appropriately reflects emissions of the company, has all relevant info for decision making
2. Completeness - report on all GHG emission sources, disclose any exclusion
3. Consistency - use consistent methodologies to allow for comparisons
4. Transparency - address all relevant issues, clear audit trail, disclose any relevant assumptions. Clear, factual, neutral, understandable documented disclosure
5. Accuracy - quantification of GHG is not systematically unequal to actual emissions. Precise data.

Question 3

2 types of approaches to consolidate GHG emissions + explain them

Answer 3

Equity share approach - company accounts for GHG em. from operations according to its share of equity in the operation. E.g. own 30% of a joint venture -> account for 30% of the venture’s emissions

Control approach (fin.control or operational control) - account for 100% of GHG em. from operations over which company has control (operational or fin., depending on what is chosen) (and no reporting where it has interest, but no control)

(You can have an interest in operation, but not be an operator)

Question 4

Share of equity

Answer 4

Ownership percentage (e.g. ownership the company holds in particular operation)

Question 5

When a company has fin control of the operation?

Answer 5

When it has ability to direct the fin and operating policies to gain economic benefits from its activities

Question 6

When a company has operational control over an operation?

Answer 6

When it has the authority to introduce / implement its operating policies at the operation

Question 7

Organizational boundaries of the comany

Answer 7

Organizational b. - operations that the company owns or controls

Question 8

Operational boundaries of a company

Answer 8

Emissions associated with its operations, categorized as direct / indirect, with chosen scoe of accounting and reporting

Question 9

Direct vs indirect emissions

Answer 9

Direct - directly from the sources owned / controlled by the company

Indirect - emissions as a consequence of company’s activities but at sources, controlled by another company