Category 15 after the financed emissions relief: what a bank or insurer actually has to produce

If you run reporting at a bank, an insurer or an asset manager, Category 15 is the line that decides how big your first cycle is. The December 2025 amendments made it smaller, and made what surrounds it more specific.

This piece is the implementation detail for financial institutions only. For the wider set of December 2025 changes — global warming potential values, jurisdictional relief, the measurement method — the summary is in the December 2025 amendments.

What paragraph 29A permits

The December 2025 amendments add paragraph 29A, which permits an entity, in preparing its Scope 3 disclosure, to limit what it includes in its measure of Category 15 to only its financed emissions — that is, emissions attributed to loans and investments made by the entity to investees or counterparties.

The text then does something helpful and unusually concrete: it says what “loans and investments” includes. Loans, project finance, bonds, equity investments and undrawn loan commitments. For an entity participating in asset management activities, financed emissions include emissions attributed to assets under management.

And for the purpose of the limitation, an entity is permitted to exclude emissions attributable to derivatives.

Note what this is not. It is not a relief from Category 15. It is a permitted narrowing of what Category 15 contains, available to entities whose Category 15 would otherwise sprawl across financial activities that are difficult to attribute.

Financed emissions are one type of Category 15, not all of it

This distinction causes more confusion than anything else in the area, so it is worth stating plainly.

Category 15 in the GHG Protocol Corporate Value Chain Standard covers investments generally. Financed emissions — the emissions attributed to your loans and investments — are a subset of that. The amendments recognise the subset explicitly: paragraph 29(a)(vi)(2) as amended refers to additional information about the entity's financed emissions, described as part of Category 15 emissions.

So an entity that applies the 29A limitation is saying: my Category 15 number covers my lending and investing book, and not other investment-related emissions. That is a legitimate position, and it is also a statement readers need help interpreting, which is what paragraph 29B is for.

The derivatives exclusion, and the explanation it requires

The permitted exclusion for derivatives is the part that will consume the most internal debate, because “derivative” is not self-defining across a large book.

Paragraph 29B requires an entity applying the limitation to explain what it has treated as a derivative, so that users of general purpose financial reports can understand how the limitation was applied. The standard offers an example of how you might do this: explaining that you treated as derivatives those items meeting the definition of a derivative under IFRS Accounting Standards, or the other GAAP used in preparing your related financial statements.

That example is worth taking seriously, because it is the path of least resistance and the most defensible. If your treatment of derivatives in the sustainability disclosure matches your treatment in the financial statements, the boundary is already documented, already applied consistently, and already subject to a control environment. Inventing a separate definition for climate reporting creates a second boundary that somebody will eventually have to reconcile.

Paragraph 29B also requires you to describe the financial activities excluded from the Category 15 measure as a result of applying the limitation, including activities associated with derivatives. In practice this is a short list of what is not in the number — and writing it is a good way to discover whether your firm agrees with itself about what was excluded.

The subtotal that Category 15 triggers

Paragraph 29C is the requirement most easily missed, because it does not depend on taking the limitation at all.

Where an entity has included Category 15 emissions in its Scope 3 measure disclosed under paragraph 29(a)(i)(3), it discloses the total Category 15 emissions and the subtotal of financed emissions included in that total.

Two numbers, not one. Read alongside 29A, the structure makes sense: readers need to see how much of your Category 15 is the financed emissions book, whether or not you narrowed the measure. A single Category 15 figure does not satisfy this, and it is exactly the kind of omission that surfaces late.

The practical consequence for a reporting team is that your Category 15 calculation has to be built to produce a split from the start. Retrofitting the subtotal after the total has been assembled from mixed sources is the hard version of this problem.

Industry classification after GICS stopped being mandatory

The previous text required the Global Industry Classification Standard 6-digit industry-level code for classifying counterparties. The amendments add paragraphs B62A for commercial banking and B63A for insurance, and the requirement is now a selection rather than a specified system.

An entity shall select an industry-classification system that enables it to classify investees or counterparties in a way that produces information helping users understand the entity's exposure to climate-related transition risks. The text then expresses a preference: a system commonly used by other entities, such as those in the same industry or jurisdiction, is more likely to support comparability than an entity-specific one, and where a commonly used system would enable the entity to provide useful information, all else being equal, the entity prioritises that system.

Then the disclosure. The entity discloses the classification system it used, and information enabling users to understand how its selection fulfils that requirement.

So this is not a deregulation. GICS became one option among several, and in exchange you acquired a judgement to make, justify and publish. An entity participating in both commercial banking and insurance activities need not use the same system for both, which is a sensible accommodation and one more decision to record.

This is the sort of judgement that ages badly if it lives only in someone's head, which is the argument in could you reproduce this figure in eighteen months.

Undrawn loan commitments

A small point with disproportionate operational weight.

Undrawn loan commitments appear twice. They are named in paragraph 29A as part of loans and investments, so they sit inside the limited Category 15 measure. And in the gross exposure disclosure for commercial banking and insurance, an entity discloses the full amount of the commitment separately from the drawn portion of loan commitments.

Gross exposure for funded amounts is calculated as the funded carrying amounts before subtracting the loss allowance where applicable, whether prepared under IFRS Accounting Standards or other GAAP.

What this means for a first cycle is that your climate disclosure needs a data cut that your credit systems can produce but that your sustainability team probably cannot request unaided: exposure by industry by asset class, drawn and undrawn separated, on a gross basis. That is a conversation with finance and credit risk, and it is better had in the first quarter than the fourth.

Effective date and what to do now

An entity applies these amendments for annual reporting periods beginning on or after 1 January 2027. Earlier application is permitted, and an entity applying them earlier discloses that fact.

There is also a first-year interaction worth knowing. The transition relief at IFRS S2 paragraph C4(b), as amended, means an entity in its first annual reporting period is not required to disclose Scope 3 emissions — and that expressly includes the additional financed emissions information where the entity participates in asset management, commercial banking or insurance. So a first-time applier can defer this entire area for a year, with the consequences set out in the transition reliefs.

Three things worth starting before you need them. Agree the derivatives boundary with the people who own it in the financial statements, and write down what you agreed. Build the Category 15 calculation so the financed emissions subtotal falls out of it rather than being derived afterwards. And make the classification-system decision explicitly, with a record of the alternatives, because paragraph B62A asks you to publish the reasoning and not merely the answer.

Common questions

What does IFRS S2 paragraph 29A permit?

It permits an entity to limit what it includes in its measure of Scope 3 Category 15 greenhouse gas emissions to only its financed emissions, meaning emissions attributed to loans and investments made to investees or counterparties. Loans and investments include loans, project finance, bonds, equity investments and undrawn loan commitments. For entities in asset management, financed emissions include emissions attributed to assets under management. Emissions attributable to derivatives may be excluded for the purpose of the limitation.

What must I disclose if I apply the Category 15 limitation?

Paragraph 29B requires two things: an explanation of what you treated as a derivative, so users can understand how you applied the limitation, and a description of the financial activities you excluded as a result, including activities associated with derivatives. Separately, paragraph 29C requires that where Category 15 emissions are included in your Scope 3 measure, you disclose both the total Category 15 emissions and the subtotal of financed emissions within that total.

Is GICS still required for classifying counterparties?

Not under the amended text. Paragraphs B62A and B63A require an entity to select an industry-classification system that enables users to understand its exposure to climate-related transition risks, to prioritise a commonly used system over an entity-specific one where all else is equal, to disclose which system it used, and to disclose information enabling users to understand how that selection meets the requirement. An entity in both commercial banking and insurance need not use the same system for each.

When do these amendments apply?

An entity applies the December 2025 amendments for annual reporting periods beginning on or after 1 January 2027. Earlier application is permitted, and an entity that applies them earlier must disclose that fact.