General Details
An overview of the details needed
Why Does the Investor or Bank Need This Information?
When your business receives funding or a loan from an investor or bank, that financial institution becomes partially responsible for the environmental impact of your operations. This concept is known as "financed emissions," which refers to the greenhouse gas (GHG) emissions associated with the financial institution's lending and investment activities.
Why is it important to measure Financed Emissions?
In recent years, the finance industry has faced significant challenges in accurately calculating emissions tied to their funding activities. Traditionally, it was difficult to determine who should be accountable for these emissions, leading to risks like double counting. However, this issue has gained urgency as studies, such as those by the Climate Disclosure Project (CDP), have revealed that the emissions generated by the portfolios of global financial institutions are over 700 times greater than the emissions from their own direct operations.
Understanding the emissions financed by loans and investments allows both financial institutions and businesses like yours to better manage risks, set and achieve reduction goals, and engage with stakeholders on actions to lower these emissions. This not only supports their climate goals but also positions your business as a responsible and attractive candidate for future funding. It’s an opportunity to align with global climate initiatives and contribute to a more sustainable economy.
What specific information is being asked in this section?
You are being asked to provide general business information that will offer crucial context on your operations and the scope of your emissions. The key questions will cover:
- Industry Sector 🏭: The economic activity group your business falls under.
- Asset Class 🏦: The category of assets involved in your financing activities.
Industry Sector 🏭: The economic activity group your business falls under
In this section, you are asked to select the NACE Level 1, 2, and 3 codes that best describe your business activities.
The Statistical Classification of Economic Activities in the European Community, known as NACE (from the French "nomenclature statistique des activités économiques dans la Communauté européenne"), is the industry standard classification system used across the European Union. It corresponds with the United Nations' International Standard Industrial Classification of all Economic Activities (ISIC) and helps categorise businesses by their economic activities.
Here’s how the classification works:
- NACE Level 1: Choose the broad section that best describes your business.
- NACE Level 2: Select the division that provides a more detailed description of your operations.
- NACE Level 3: Identify the specific group that closely matches your business activities.
Guidance 📑
If you’re unsure of the definition of the classifications, visit European Union's NACE Dataset
If you know your classification under United Nations' International Standard Industrial Classification of all Economic Activities (ISIC), visit the corresponding table guide in Annex 1
Reach out to our help desk or email support@sumday.io if you’re unsure which NACE options to select for your business.
Asset Class 🏦: The category of assets involved in your financing activities
In Question 02 we ask which asset classes best represented the type of funding your business as received. Under the Partnership for Carbon Accounting Financials Financed Emissions standards (this is the standard your investor/bank will need to report under) financing activities are divided into the following 7 categories.
We are focused on Listed Equity and Corporate Bonds and Business Loans and Unlisted Equity. Under the PCAF standards, these two asset classes are defined as:
- Listed Equity and Corporate Bonds: This asset class includes investments in publicly traded stocks and bonds issued by companies, allowing investors to finance corporate activities and potentially benefit from their financial performance.
- If your business has received funding through publicly traded stocks or issued corporate bonds, this means investors are financing your company’s activities and, in return, benefiting from your financial performance on the public market.
- Business Loans and Unlisted Equity: This category covers private loans provided to businesses and investments in privately-held companies, enabling financial institutions to support and profit from non-publicly traded entities.
- If your business has secured a private loan from a bank or received investment from an investor in a privately-held capacity, this funding falls under the category of business loans and unlisted equity. This type of financing supports your operations as a non-publicly traded entity, allowing you to grow and expand with the backing of financial institutions or private investors.
For each asset class, you’ll be asked to provide specific financial data. This information is typically available with your company’s finance or administrative teams. If you’re unsure about the specifics, reach out to these departments for confirmation.
Listed Equity and Corporate Bonds:
- Enterprise Value Including Cash (EVIC): The company’s EVIC at the end of the reporting period.
- Total Assets: The value of total assets at the start and end of the reporting period.
- Operating Revenue: The total operating revenue for the reporting period.
Business Loans and Unlisted Equity:
- Total Assets: The value of total assets at the start and end of the reporting period.
- Operating Revenue: The total operating revenue for the reporting period.
- Total Equity: The total equity at the end of the reporting period.
- Total Debt: The total debt at the end of the reporting period.