Financed emissions are those enabled through lending and investing. As they make up the bulk of a financial firm's climate impact, reducing them is vital to achieving net zero. So far, however, very few firms have disclosed the full scope of the planet-warming emissions they finance, partly because the task is fiendishly complex. Until that information is known, the true scale of the climate task facing the finance sector is obscured — and can't be properly tackled.
Apollo hasn't made a net-zero commitment, and its disclosed financed emissions relate to only 7% of the $598 billion in assets it oversaw at the end of March. Yet it believes the initial disclosure will give investors and limited partners a better view on the carbon footprint of the firm's portfolios.
"At this juncture, the number isn't the most important thing," Dave Stangis, partner and chief sustainability officer at Apollo, said in an interview. "It's how do we onboard this capability and how do we build expertise and familiarity."
The New York-based firm says it has teamed up with carbon accounting platform Persefoni, and has begun to invest in other tools and processes required to collect and calculate the data. It intends to increase disclosures over time.
Just as many companies find it hard to pin down emissions linked to their far-flung supply chains, fund managers can struggle to calculate the carbon pollution enabled by providing capital to companies. Apollo said data obtained from its portfolio companies can be inconsistent, incomplete and out of date.
"It's continuous improvements," said Mr. Stangis. "If we waited for perfection, the sustainability report would be a page long."
Apollo also said it has begun to implement the Partnership for Carbon Accounting Financials financed emissions standard, a widely used tool for calculating the CO2 enabled by loans and investing. BlackRock and HSBC Holdings are among financial institutions to calculate financed emissions data using the PCAF standard.
