Investors Must Wrestle With the ‘Scope 3 Conundrum’

When asset managers first made commitments to align their portfolios with net-zero emissions, they mostly skirted the thorny issue of Scope 3.

Three years on and that’s no longer possible. A wave of regulation and public scrutiny is pushing investors to face what a unit of London Stock Exchange Group calls “one of the most vexing problems in climate finance.”

Scope 3 emissions are those produced by a company’s customers and supply chain. They typically account for more than 80% of a company’s carbon footprint. In some of the most polluting industries such as oil and gas, the number can ...