Strategic Roadmap for Scope 3.15 Emissions and ESG Risk Integration in Financial Institutions

Summary:

SourcingHaus supported a regional financial institution in addressing two priority areas: measuring financed emissions in alignment with global standards and integrating sustainability considerations into Third-Party Risk Management (TPRM) processes. The engagement focused on introducing practical tools, building internal understanding of ESG frameworks, and embedding climate and sustainability risks into both procurement and lending systems. This work responded to increasing global expectations for transparency and accountability in financial sector sustainability performance

The Challenge:

Like many financial institutions, the client faced growing internal and external pressure to improve its climate disclosures and ESG risk governance. While existing TPRM and procurement processes were well established, they lacked structured sustainability criteria. At the same time, there was limited internal experience in quantifying Scope 3.15 financed emissions , particularly for SME lending portfolios. Bridging these technical and operational gaps was critical to strengthening climate alignment and improving institutional risk resilience.

What We Did:

1. Financed Emissions Measurement (Scope 3.15)
   • Introduced the Partnership for Carbon Accounting Financials (PCAF) standard and its relevance to the institution’s loan portfolio
   • Delivered a tailored workshop on applying Scope 3.15 accounting methodologies, with a focus on SME and construction sector financing
   • Provided guidance on data readiness, attribution, and pathways for aligning with frameworks such as TCFD and SBTi
2. ESG Risk Integration in Third-Party Risk Management
   • Conducted an assessment of current TPRM processes and identified entry points for integrating environmental and social risk factors
   • Delivered a series of technical sessions and live exercises on:
   • ESG risk prioritization
   • Supplier screening and onboarding
   • ESG clauses and templates for RFPs and contracts
   • Provided recommendations to embed sustainability performance considerations into supplier due diligence, evaluation, and monitoring

The Impact:

• Built foundational understanding of financed emissions within risk and sustainability teams
• Positioned the institution to take initial steps toward climate-aligned lending disclosure
• Enhanced TPRM processes with clear ESG integration points, supporting more robust supplier governance
• Strengthened institutional capacity to align with global standards in sustainable finance and procurement