Our approach to reducing our financed emissions is underpinned by BlueTrack™, a methodology we have developed for measuring our financed emissions and tracking them at a portfolio level against the goals of the Paris Agreement.
BlueTrack™ builds on and extends existing industry approaches to cover not only lending, but also capital markets financing, setting us apart from many of our peers. This better reflects the breadth of our support for clients through our investment bank.
BlueTrack™ starts by selecting an appropriate benchmark for a sector, which defines how financed emissions for a portfolio need to change over time in line with the goals of the Paris Agreement. We then determine how our sector portfolios are performing against these benchmarks: by estimating the emissions that our clients produce, determining how those emissions should be linked to the financing we provide, and then aggregating those measurements into a portfolio-level metric. This portfolio- level metric is then compared to the benchmark. This approach allows us to make active choices to reshape our portfolio within our ‘carbon limit’ for each sector. This reflects our focus on transition and shows specifically how we are accelerating the shift from higher-carbon to lower-carbon activity.
For this reason, BlueTrack™ does not currently take into account carbon offsets purchased at a client level or at a portfolio level. We will continue to enhance and refine BlueTrack™ over time, including as climate data quality improves and as company disclosures become more granular.
We continue to engage with peers to share our experience and many welcomed our level of transparency in relation to our methodology. We have also been pleased to hear that some have used BlueTrack™ to inform their own approach.