We chose an approach that measures our financed emissions relative to total lending, as opposed to an absolute emissions approach, allowing the size of our lending capabilities to remain unconstrained. As companies transition to more sustainable business operations, significant amounts of capital will be required. An absolute emissions approach would limit our ability to help finance the transition because any additional lending to a company with emissions larger than zero, regardless of their transition plan, would increase our total financed emissions.
2030 Interim Sector Targets
The three sectors below – Auto Manufacturing, Energy and Power – reflect our lending portfolio’s most carbon-intensive sectors and the percentage reductions required between now and 2030 to align with the IEA net-zero pathways.
Auto Manufacturing: Our target includes the financed emissions of newly-sold passenger cars and trucks produced by auto manufacturers, relative to our firm’s lending commitment. We focus on all GHG emission scopes, including Scope 3 emissions of auto manufacturers, which are direct emissions from the vehicles. The metric will evaluate the greenhouse gas footprint of the sector and the industry’s transition to low-carbon vehicles (such as electric, fuel cell and hybrid-electric vehicles).
-35%
Emissions Reduction Target
Energy: We set a financed emissions lending intensity target that incorporates all three GHG scope emissions. Scopes 1 and 2 emissions will capture the carbon and methane emissions generated primarily from upstream exploration and extraction activities, along with associated purchased power. Scope 3 emissions will reflect indirect emissions generated from downstream activities (i.e. gasoline combustion or petrochemical development).
-29%
Emissions Reduction Target
Power: Our financed emissions lending intensity target, covering all three GHG scope emissions, tracks greenhouse gas emissions associated with electricity producers. The Power sector metric captures fossil fuel power generation (i.e. coal and natural gas), as well as the sector’s transition to low-carbon sources such as solar, wind (onshore and offshore) and nuclear.
-58%
Emissions Reduction Target
Source: morganstanley.com
