Net Zero Methodological White Paper

The journey continues

Second Edition
2024
Standard Chartered | Net zero approach

Content

Foreword 4
Introduction 5
Background 5
Methodology 6
Approach 6
Financed emissions calculation 7
Data inputs 7
Scope of financial products 9
Sector value chain 10
Data quality and limitations and restatements 11
Data quality 11
Changes in estimates, methodologies, and errors 11
Portfolio balance sheet 12
Sector specific methodology 13
Aluminium 13
Automotive 16
Cement 18
Commercial real estate (CRE) 20
Oil and gas 22
Power 25
Residential mortgages 28
Shipping 30
Steel 33
Thermal coal mining 36
Facilitated emissions 38
Conclusion 40
Acronyms 41
References 43
Disclaimer 44

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Standard Chartered | Net zero approach

List of figures

• Figure 1: Net zero five-step approach

• Figure 2: Sectoral value-chain scoping overview

List of tables

• Table 1: Restatement approach

• Table 2: Portfolio balance sheet
• Table 3: Oil and gas strategic levers and options
• Table 4: Oil and gas activities and companies
• Table 5: International Maritime Organization trajectories

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Standard Chartered | Net zero approach

Foreword

Since the Paris Agreement was reached at This White Paper provides further clarity on our
COP21 in 2015, its signatories have wrestled with net zero journey. It provides transparency on
putting the pursuit of net zero into action. In the how, through our commitment to sector-specific
time since, those committed to achieving this science-based methodologies, we plan to
ambition have been tackling such challenges as measure and manage our progress. Achieving
common standards, data access, measurement, the transition net zero will continue to be
target setting, disclosures and challenging and will require a concerted and
operationalisation in order to help steer a clear sustained effort. We have much to do, but we’re
and transparent path to this critical goal. clear on our roadmap and unwavering in our
Progress toward the goal cannot be focus to get there.
accomplished in isolation by any organisation.
It will require engagement, participation and Our journey continues and we look forward to
collaboration with coalitions of the willing. continuing to partner with those vested in
helping us achieve individually and collectively
At Standard Chartered, our commitment to net the ambition enshrined in the Paris Agreement.
zero in our own operations by 2025 and in our
financed emissions by 2050, has involved active
engagement with our primary stakeholders
around the world, including clients, vendors,
shareholders, civil society and our employee
base. This engagement has required us to
carefully balance their various needs and
considerations on the path to delivery. As a Marisa Drew
financial institution we have an important role Chief Sustainability Officer
to play, in supporting our clients, sectors and
markets to deliver net zero, but to do so in a
manner that supports livelihoods and promotes
sustainable economic growth. More recently,
this has also included a heightened focus on the
security and resilience of our markets as they
respond to greater climate change induced
uncertainty. Our global footprint consists of
both developed and emerging market
economies. This blend provides us with a specific
responsibility to deliver a just transition to net
zero that achieves our climate commitment by
driving and encouraging change in the real-
world economy, while ensuring the economic
and social development of all markets.

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Standard Chartered | Net zero approach

Introduction

Standard Chartered is proud to publish the second edition of our methodological White
Paper on net zero ‘The Journey Continues’ (2024 White Paper). It provides an update of our
‘Net Zero Approach - Methodological White Paper’ (2021 White Paper) and is an important
step in delivering on our net zero commitment and the related transparent disclosure of
information.
In this 2024 White Paper, we share our methodology to support the accuracy of our
reported financed and facilitated emission calculations and disclosures as we recognise this
is critical to raising awareness and building stakeholder trust.
We strive to reach our net zero objective by 2050 through continuing to measure, manage
and reduce the emissions associated with our financing and facilitation activities. Our
approach relies on science-based and sector-agreed practices regarding our most
greenhouse gas (GHG) intensive sectors.
As a lender, we know that we have a unique and key role to play in achieving a just
transition to net zero across our 53 markets.

Background

Our net zero commitments have evolved since the 2021 White Paper. We have applied
enhanced metrics in the following sectors:
• the oil and gas (O&G) baseline and target was enhanced from a revenue-based
intensity to an absolute emissions metric, thereby placing an emissions budget on the
sector.
• power and steel have strengthened from a revenue-based intensity to a physical
intensity whereby emissions will now be measured relative to a production unit.
• shipping, automotive, aluminium, cement, Commercial Real Estate (CRE), and
residential mortgages are included in our sector deep-dive and reported on a
production, or physical intensity basis.

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Standard Chartered | Net zero approach

Methodology

We have adopted science-based and sector-agreed methodologies to measure and

govern our in-scope loan book to net zero. Our carbon accounting is calculated and
reported in-line with the Greenhouse Gas Protocol via the Partnership for Carbon
Accounting Financials (PCAF). Additionally, we refer to scientific and industrial climate
guidance from the Net Zero Banking Alliance (NZBA), Intergovernmental Panel on Climate
Change (IPCC), the International Energy Agency (IEA), the Rocky Mountain Institute (RMI),
Poseidon Principles, Global Cement and Concrete Association (GCCA), Transition Pathway
Initiative (TPI) and Mission Possible Partnership (MPP).

Approach
We adopt a five-step approach in setting and reporting the Group’s net zero targets.

Figure 1: Net zero five-step approach

Determine
a suitable
Identify an Set and
approach Measure
appropriate communicate Measure
based on and set
scenario to net zero progress
industry baseline
set net and interim and report
guidance emissions
zero targets targets
and emerging
best practice

Information related to the first three steps is included in this paper for each high-emitting
sector for which there is a baseline and a target.
Our financed emissions sector-by-sector progress (as against the relevant target) to date is
set out in the Sustainability Review section of our 2023 Annual Report.

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Standard Chartered | Net zero approach

Financed emissions calculation

There are two components to the financed emissions calculation: (i) the attribution factor;
and (ii) the emissions calculation (explored below).

Attribution factor
The share of total annual GHG emissions of a borrower or investee that is allocated to the
corresponding loan or investment (PCAF, 2022) is known as the attribution factor.

Emissions calculation
We use three types of emission metrics in our financed emissions calculations:

I. Absolute financed emissions

These are calculated based on the total GHG emissions of the client or portfolio.
Absolute emissions targets effectively create a GHG budget. This is because the
primary route to decarbonising these sectors is to use less of the commodity for
generating energy, rather than using the commodity more efficiently.

II. Physical / production emission intensity

This metric measures the emissions efficiency of a portfolio in terms of total GHG
emissions per unit of a common output. For example, absolute emissions divided by
a value of physical activity or output, expressed as tCO2e/tonne product produced
(PCAF, 2022). This can also include the emissions per distance travelled, or emissions
per square metre of an occupied building that we finance. This metric is most
appropriate in sectors that not only need to decarbonise their operations but also
require a growth in the sector throughout the transition to net zero.

III. Alignment delta (AD)

AD is a variant on the physical emissions intensity approach. It measures the
coefficient of alignment against a particular reference scenario i.e., expressed in
percentage terms, how much a particular portfolio is above or below the net zero
reference scenario. This metric is best for heterogeneous sectors where emission
generating assets need to be compared on a like for like basis but have differing
production units.

Data inputs
We use three types of data in the financed emissions calculations:
1. financial data
2. emissions data
3. physical activity data or production data

Data sourcing follows the approach outlined below (unless otherwise stated) in the sector
specific methodologies, e.g., for CRE, residential mortgages and cement.

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Standard Chartered | Net zero approach

Client exposure
This is defined as the drawn amount of the debt that is still outstanding (i.e., disbursed debt
minus any repayments) at year-end. The amount is measured in $USD, and the approach is
consistent with PCAF guidance. The client exposure data is homogenous and sourced from
internal accounting record systems. The outstanding amount at year-end is the numerator
in the attribution calculation.

Client company value

Company value is the sum of a company’s (lending counterparty) total debt plus equity. For
public companies, this is the sum of the market capitalisation of ordinary shares at fiscal
year-end, the market capitalisation of preferred shares at fiscal year-end, and the book
values of total debt and minorities’ interests, otherwise known as ‘EVIC’. For private
companies, company value is the sum of total equity plus debt. The client company value is
the denominator in the attribution factor calculation.

In general, client company value is sourced from the following:

1. externally via data aggregators (such as S&P)
2. manually from annual reports
3. internally through our risk systems and client credit assessments

If a client's company value is unavailable, we estimate this using an internal proxy. This is
only done in certain sectors and where there is sufficient comparable internal data to do so.

Client asset value

For CRE, residential mortgages and shipping the asset value is used as the denominator in
the attribution factor calculation. If the asset value is unavailable, then the asset is excluded
from the financed emission calculation population.

Client emissions
Client emissions data includes Scope 1, Scope 2 and Scope 3 GHG emissions (where
appropriate). In general, client emissions data is sourced from the following:
1. externally via third party data aggregators (such as S&P)
2. manually from annual reports/ sustainability reports
3. calculated using client production data multiplied by an appropriate emissions factor
4. estimated using internal or public datasets

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Standard Chartered | Net zero approach

Emission factors

Emission factors are the emissions per unit of production or energy consumption linked to
the client’s primary business activity. Emission factors are sourced and calculated using
reputable industry bodies such as the IEA. For specific emission factors please refer to the
sector methodologies.

Client production/ physical factor

Client production data includes quantity of produced product linked to their primary
business activity, such as tonnes of cement or steel. This can be the actual production of the
client or derived from the capacity their facilities allow them to produce on an annual basis.
Physical factors include distance travelled, and square meterage of property financed. In
general, client production/ physical data is sourced from the following:
1. third party data aggregators (such as Wood Mackenzie)
2. manually from annual reports
3. internally through our risk systems and client credit assessments
4. estimated using internal or public datasets

Scope of financial products

The following products are included in our financed emissions calculations:
• corporate bonds
• corporate lending
• project finance loans
• commercial real estate investment loans
• residential mortgages
Lending to financial institutions and private banking (except for residential mortgages) is
excluded.
Traded products, including derivative balances and unsettled trades, amongst others, are
excluded as these products are typically not classified as loans and advances within the
Standard Chartered banking book . Product exclusions are consistently applied across each
sector prior to the financed emissions calculations, the product filtering relies on product
flags held on our internal accounting system.

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Standard Chartered | Net zero approach

Sector value chain

We measure and set targets against the most emission intensive segment of the value
chain within each sector. This is determined by several considerations, some of which
include:
• the portion of the value chain included in the reference scenario we have selected to set
targets
• the materiality of emissions and importance of decarbonising that part of the value
chain
• the data availability for that section of the value chain

The parts of the value chain covered in our sector targets are outlined below.

Figure 2: Sectoral value-chain scoping overview

Primary

Oil and gas Upstream Midstream Downstream

Thermal coal
Mining Refinery Final use
mining

Secondary

Steel Mining Transport Production Final use

Aluminium Mining Transport Production Final use

Cement Raw Transport Production Final use

material

Power Raw Transport Generation Distribution and

material final use

Tertiary
Automotive Dealers and
manufactures Suppliers Producers
consumers

Shipping Suppliers Producers Operational phase

Corporate
real estate Raw material Construction Operational phase

Residential Raw material Construction Operational phase

mortgages

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Standard Chartered | Net zero approach

Data quality and limitations and restatements

Data quality
We measure emission data quality by using PCAF scoring on a client or asset basis, and this
is aggregated at a portfolio level.
The PCAF Standard for financed emissions recommends applying a data quality scoring
methodology to help assess data quality challenges and recognise areas for improvement.
PCAF’s ratings assign directly collected client emissions data score more favourably while
estimated or extrapolated data scores less favourably. A PCAF score of 1 is typically
considered to have a low margin of error for estimation of financed emissions, while a PCAF
score of 5 is considered to have a larger margin of error. Please refer to PCAF’s Global GHG
Accounting and Reporting Standard Part A – Financed emissions 2nd edition (2022) for
data quality scoring by each asset class.
We recognise that while the market improves its reporting around GHG emissions the data
used in estimating GHG emissions can vary in quality. To ensure transparency, we disclose a
PCAF score for each sector which sets out the relative accuracy of the data. Our PCAF
scores for 2021 and 2022 are disclosed in the Sustainability Review section of our 2023
Annual Report.

Changes in estimates, methodologies, and errors

The events or circumstances where we would consider recalculating or updating base year
emissions together are included below. Our approach is aligned with the GHG Protocol
Corporate Value Chain (Scope 3) Accounting and Reporting Standards (2011).
Table 1: Restatement approach
Scenario Approach
Errors in data or Restatement Comparative years are retrospectively restated to reflect the correct
methodology emissions value.

Changes to Re-baseline Emissions figures will be updated from the current reporting year. The
methodology prior year reported figure will be updated to reflect the new
or data sources used methodology and considered the new baseline year.
to calculate emissions

Structural changes Emissions figures will be updated from the current reporting year. The
in reporting entity prior year reported figure will be updated to reflect the new reporting
boundary and considered the new baseline year.

Updates to client or Captured in The impact of the update will be recorded in the current year reported
supplier data from following year emissions.
timing lags and
improved sources of
information

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Standard Chartered | Net zero approach

Portfolio balance sheet

We focus on the most emissions intensive sectors as defined by the NZBA to calculate the
GHG emissions related to our financed emissions. We also measure sectors falling outside
of this list and report on these in our ‘others’ category.
Table 2: Portfolio balance sheet
Emission Scope of Baseline
Sector metric Scenario Value chain emissions year
Corporate, Commercial and Institutional Banking (CCIB)

Automotive Physical IEA APS Automotive

1, 2, 31 2021
manufacturers intensity and NZE manufacturers

Production MPP TM
Steel Steel producers 1, 2 2021
intensity MPP TM Regional

Production IEA APS Electricity

Power 1, 2 2021
intensity and NZE generators

IMO existing See

Alignment Shipping lessors
Shipping IMO rev. min shipping 2021
delta and companies
IMO striving section

Production Aluminium
Aluminium MPP STS 1, 2 2021
intensity producers

Commercial Physical IEA APS

Real estate lessors 1, 2 2021
Real Estate intensity and NZE

Production Clinker and cement

Cement IEA NZE 1, 2 2021
intensity manufactures

Absolute Upstream, midstream

Oil and gas IEA NZE 1, 2, 3 2020
emissions and downstream
Thermal coal
Thermal coal Absolute
IEA NZE extraction and 1, 2, 3 2020
mining emissions
combustion
Absolute
Others IEA NZE Other sectors 1, 2 2021
emissions

Consumer, Private and Business Banking (CPBB)

Residential Physical Residential

CRREM 1, 2 2021
mortgages intensity households

CCIB

Facilitated Absolute
n/a Full value chain 1, 2, 3 2021
emissions emissions

1 Scope 3 excludes ‘well-to-tank’ emissions. 12

Standard Chartered | Net zero approach

Sector specific methodology

Aluminium
The production of aluminium is emissions intensive and is responsible for roughly 2% of
global CO2e emissions per year (IEA, 2023). The aluminium sector relies heavily on electricity
from the local grid. Over 60% of the sector’s CO2e emissions are attributable to the
electricity consumed during smelting for the electrolytic reduction process. We have
identified three overarching technological levers (IAI, 2021) for decarbonising aluminium
production as follows:
• promoting electricity decarbonisation – transitioning to low-emission power offers the
most significant opportunity to reduce emissions. We will engage with clients who have
smelting facilities to incentivise the uptake of reliable power purchase agreements
(PPA)2
• reducing direct emissions – electrification, fuel switching, and use of cabon capture,
utilization and storage (CCUS) offer the most credible decarbonisation pathways along
with low-emission anode production
• incentivising recycling and resource efficiency – recycled aluminium has a significantly
lower GHG footprint than primary aluminium production, therefore, increasing scrap
collection rates would reduce the use for primary aluminium

Without efforts to curtail production and consumption, annual emissions in the sector could
grow by as much as 90% by 2050 (MPP, 2023) because of population growth and economic
development.

Sustainable Aluminium Finance Framework (‘SAFF’)

SAFF is an open-source reporting framework for financial institutions to assess, disclose, and
compare their lending portfolios and aluminium makers performance against a 1.5°C
pathway (SAFF, 2023). SAFF is a voluntary reporting framework, it was developed by RMI
and the working group banks in consultation with industry experts, non-governmental
organisations (NGOs), and other stakeholders. Ultimately, SAFF aims to enable
standardised comparisons between clients, portfolios, and to catalyse further collaboration
between Standard Chartered and our clients on their transition to a low-emission future.

Value chain boundary

The majority of GHG emissions from the aluminium sector relate to the production process,
specifically alumina refining, anode/paste production, and smelting. We report our
aluminium financed emissions with reference to the ‘Fixed System Boundary’ set out by the
SAFF. As such, all emissions resulting from primary and recycled production of aluminium
are within scope3.

2 Please refer to power section of the whitepaper for an overview of power generation decarbonisation levers.
3 We have opted to exclude semi-fabrication clients from our portfolio due lack of available data. 13
Standard Chartered | Net zero approach

Emissions boundary
Scope 1 and Scope 2 emissions are calculated for aluminium producers. We aim to
accurately report Scope 3 emissions associated to the sector in the future as data quality
and availability improves.

GHG boundary
Standard Chartered reports our financed emissions in CO2e, the measurement is consistent
with the SAFF methodology and our clients.

Data sources
The data sources and hierarchy for aluminium follows the rules laid out in the generic data
section above.

Calculation methodology
In setting our emissions baseline and target, we have measured our aluminium portfolio
emissions with an intensity metric (tCO2e/t aluminium). This intensity metric is commonly
used by stakeholders in the sector and is a useful comparison against peers. Additionally,
the metric incorporates an attribution factor to derive Standard Chartered’s share of real-
world emissions in the aluminium sector.
Client exposure $
Financed emissions (tCO2e) = � × Client emissions (tCO2e)
Company value $
All clients
Client exposure $
Financed production (t Al) = � × Client production (t Al)
Company value $
All clients
Financed emissions tCO2e
Portfolio intensity (tCO2e/t Al) =
Financed production t Al

Example
Inputs:
• $0.1 billion general lending
• company value of $20 billion
• total asset production of 2 Mt aluminium
• total asset emissions of 25 MtCO2e
$0.1 billion
Financed emissions = × 25 MtCO2e = 0.125 MtCO2e
$20 billion

$0.1 billion
Financed production = × 2 Mt Al = 0.01 Mt Al
$20 billion
0.125 MtCO2e
Production−based intensity = = 12.5 tCO2e/t Al
0.01 Mt Al

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Standard Chartered | Net zero approach

Reference pathway
We have set our aluminium sector targets with reference to the Mission Possible Partnership
aluminium Sector Transition Strategy (MPP STS). The MPP STS is a bottom-up model which
covers primary aluminium production, we have adapted the scenario to include recycled
aluminium.

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Standard Chartered | Net zero approach

Automotive manufacturers
The automotive sector continues to be central for global mobility systems, and it is a key
sector for international supply chains and the economy. However, it is also a significant
contributor to climate change. Annually, the exhaust emissions from passenger vehicles
account for 8% of global CO₂ emissions (IEA WEO, 2023).
Transitioning to low and zero emission vehicles is crucial to reach net zero by 2050.
Automotive original equipment manufacturers (OEMs ) have the greatest impact on design
choices of vehicles that emit emissions when in use (IEA WEO, 2023) and as such, the
decarbonisation levers focus on automotive OEMs. Decarbonising the automotive sector is
achieved through the following overarching levers:

• encouraging fuel-switch and improving fuel-efficiency as a first step

• maximising the electrification production rate

• minimising virgin material usage in the manufacturing process

Value chain boundary

When measuring the automotive sector emissions, the boundary covers OEMs of newly
manufactured light duty vehicles (LDV)4.

Emissions boundary
We include Scope 1, Scope 2 and Scope 3 emissions (excluding well-to-tank emissions) in our
financed emissions calculation. For Scope 3 we include the lifetime tailpipe emissions of the
vehicles sold during the reporting cycle and a factor derived from supply chain emissions of
the OEM. Note that our calculation does not curently include emissions from charging EVs.
GHG boundary
For the automotive sector, we measure emissions intensity as a function of emissions,
measured as grams of carbon dioxide (CO2).

Data sources
In addition to the generic data sources outlined in the ‘data input’ section above, our client
emissions data is sourced from the TPI carbon performance assessment of automobile
manufacturers. Following the industry’s progress in adopting a test procedure that better
reflects driving conditions in the real world, TPI uses a Worldwide Harmonised Light Duty
Driving Test Procedure (WLTP) as the common basis against which all global
manufacturers are evaluated.

4 LDVsare defined as ‘passenger cars and light commercial vehicles (gross vehicle weight <3.5 tonnes)’ per the IEA
2023 WEO. 16
Standard Chartered | Net zero approach

Calculation methodology
In setting our emissions baseline and target, we have measured our automotive portfolio
emissions in grams of CO2 per vehicle kilometre travelled (gCO2/Vkm). The portfolio is
aggregated on an exposure-weighted approach, the emission intensity is calculated by
multiplying the physical intensity of each OEM with the percentage exposure to OEM in the
portfolio.
Where:
• exposure = client’s drawn exposure at year-end
• client intensity = inclusive of OEM’s Scope 1, Scope 2 and Scope 3 ‘supply chain’ and 'use
of sold products’ for passenger vehicles sold

Exposure−weighted emission intensity (gCO2/ Vkm)

Client exposure ($)

= � × Client emission intensity (gCO2/ Vkm)
Total portfolio exposure ($)
All clients

Example (portfolio level)

Inputs:
• clienta exposure = $0.2 billion
• clientb exposure = $0.3 billion
• total portfolio exposure = $0.5 billion
• clienta emission intensity = 150 gCO2/Vkm
• clientb emission intensity = 170 gCO2/Vkm
$0.2 billion
Emission intensity client 𝑎𝑎 = × 150 gCO2/ Vkm
$0.5 billion
$0.3 billion
Emission intensity client b = × 170 gCO2/ Vkm
$0.5 billion

Portfolio physical−based intensity = 162 gCO2/ Vkm

Reference pathways
We have set an interim target range using the IEA Net Zero Emissions (NZE) scenario as the
lower-bound range and the IEA Announced Pledges Scenario (APS)5 scenario as the upper
bound-range. Both scenarios are consistent with the Paris Agreement to hold the increase
in the global average temperature to well below 2°C above pre-industrial levels and to
pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels.

5 TheAPS is an exploratory scenario, the latest scenario modelling predicts the global temperature rise to 1.7°C (50%
probability) (IEA, 2023). 17
Standard Chartered | Net zero approach

Cement
The cement sector contributes approximately 7% towards global GHG emissions (IEA,
2023). The primary source of the emissions occurs during the production process where a
chemical reaction takes place between limestone and heat. By incorporating sustainable
practices into cement production, such as increasing energy efficiency and utilising
alternative fuels, the sector can contribute to a more environmentally friendly future by
reducing its emissions footprint.
The main challenge for the cement sector is to reduce CO2 emissions while meeting global
demand. The infrastructure needs of developing economies necessitate the global
development and implementation of new emission reduction technologies in the sector.
The following sections briefly describe the key choices in calculating cement sectors’
emission intensity baseline and 2030 target.

Value chain boundary

The majority of GHG emissions from the cement sector occur from the:
• heated limestone in clinker and cement manufacturing (~60%); and
• combustion of the fuels used in the cement kiln and other plant processes (~40%)

Therefore, the technical boundary for emissions calculation covers midstream processes
where the majority of the sector emissions are concentrated.

Emission boundary
As we are measuring the emissions from the production of cement the emissions boundary
considered is the direct emissions (Scope 1) and indirect energy emissions (Scope 2). In some
cases where it is not possible to disaggregate direct and indirect emissions, we classify
these as Scope 1, and Scope 2.

GHG boundary
Due to data availability and materiality, we have chosen to report only on CO2. The uplift
from CO2 to CO2e in cement is less than 1% and, as such, is considered not material to the
calculation (UK Department for Energy Security and Net Zero, 2023).

Data sources
The cement sector financed emissions calculation utilises the same data sources as outlined
above in the general data input section. However, due to our value-chain scoping we
prioritise annual reports and sustainability reports over S&P.

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Standard Chartered | Net zero approach

Calculation methodology
In setting our emissions baseline and target, we have measured our cement sector portfolio
emissions with a production-based emissions intensity metric of tonnes CO2 per tonnes of
cementitious material6 (tCO2/t cement). This intensity metric is commonly used by
stakeholders - such as the GCCA and is a useful comparison against peers. Additionally, the
metric incorporates an attribution factor to derive Standard Chartered’s share of real-world
emissions in the cement sector. Generally, our selection of a production-based emissions
intensity metric for the cement sector is motivated by the need to balance the rising
demand for cementitious materials in emerging economies with the pressing requirement
to decarbonise the cementitious material production process.

Parent exposure ($)

Financed emissions (tCO2) = � × Client emissions (tCO2)
Company value ($)
All parents

Parent exposure ($)

Financed production (t cement) = � × Client production (t cement)
Company value ($)
All parents
Financed emisisons (tCO2)
Production−based intensity (tCO2/t cement) =
Financed production (t cement)

Example
Inputs:
• cementitious material producing company
• $0.1 billion general lending
• company value of $10 billion
• total cementitious material production aggregated at parent level of 20 Mt
• total Scope 1 and Scope 2 emissions aggregated at parent level of 12 MtCO2

$0.1 billion
Financed emissions = × 12 MtCO2 = 0.1 MtCO2
$10 billion

$0.1 billion
Financed production = × 20 Mt cement = 0.2 Mt cement
$10 billion
0.1 MtCO2
Production−based intensity = = 0.5 tCO2/t cement
0.2 Mt cement

Reference pathway

Our cement sector target aligns with the IEA NZE scenario. This science-based scenario is
consistent with the Paris Agreement commitment to limit global temperature rise to within
1.5°C.

6 For completeness, we take the higher of the cement or clinker production number. 19
Standard Chartered | Net zero approach

Commercial real estate (CRE)

The CRE sector is an important area to decarbonise in order to achieve net zero by 2050.
The CRE sector contributed 8% towards global emissions in 2022 (IEA, 2023). Emissions
primarily arise from two sources:
• the operation of the building; and
• embodied emissions which are emissions related to the construction, maintenance, and
disposal of real estate assets
Key determinants of the GHG emissions of the CRE portfolio include the size and type of the
building which impact the buildings energy needs as well as the energy mix of the electricity
grid in the region in which the building is located.

Value chain boundary

We only measure emissions on the operation of buildings. We consider the embodied
emissions to be largely captured in the steel and cement sectors.

Product scoping
We consider the following financial products in CRE:
• Investment loans (IL) where the proceeds are utilised to purchase a building are
included
• Property development loans (PDL) are excluded as there are no operational emissions
• due to data limitations, General lending (GL) is excluded as presently our lending
cannot be accurately linked back to a client’s property assets

Emissions boundary
As we are measuring the emissions from the operation of buildings the emissions boundary
considered is the Scope 1 and Scope 2 emissions of the buildings being financed.

GHG boundary
All GHG emissions are considered with a CO2e value measured and reported.

Data sources
In addition to the generic data sources outlined in the ‘data input’ section above, our client
emissions and net floor area7 data for the CRE sector is sourced from the following sources:
• Morgan Stanley Capital International (MSCI) Real Capital data is used where actual
floor area is not available
• emissions factors from Carbon Risk Real Estate Monitor (CRREM) are also used when
building report and MSCI emissions are unavailable

7 Net floor area is defined as the actual occupied area of a floor, not including accessory unoccupied areas or the

thickness of walls. (International Building Code, 2018). 20

Standard Chartered | Net zero approach

Calculation Methodology
We use an emissions intensity of kgCO2e/Sq.m to measure the progress of our portfolio
towards net zero by 2050. This is to more accurately reflect the decarbonisation progress
made by any company over time as it factors in investment into green buildings which
would not be captured through absolute emissions. Additionally, it also allows for better
comparisons with peers.

Building exposure $
Financed emissions (kgCO2e) = � × Building emissions (kgCO2e)
Building value $
All clients

Building exposure $
Financed physical area (Sq.m) = � × Building floor area (Sq.m)
Building value $
All clients

Financed emissions (kgCO2e)

Physical−based intensity (kgCO2e/Sq.m) =
Financed physical area (Sq.m)

Example
Inputs:
• $8 million investment loan
• building value of $10 million
• floor area of 300 Sq.m
• emissions of 16,000 kgCO2e

$8 million
Financed emissions = × 16,000 kgCO2e = 12,800 kgCO2e
$10 million

$8 million
Financed physical area = × 300 = 240 Sq.m
$10 million

12,800 kgCO2e
Physical−based intensity = = 53 kgCO2e/ Sq.m
240 Sq.m

Reference pathway
We have set a range target using the IEA NZE scenario as the lower-bound range and the
IEA APS scenario as the upper bound-range. Both scenarios are consistent with the Paris
Agreement to hold the increase in the global average temperature to well below 2°C above
pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above
pre-industrial levels.

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Standard Chartered | Net zero approach

Oil and gas

The O&G sector’s production emissions (i.e., operations) and consumption emissions (i.e.,
use of fuel products) account for approximately 15%, and 36% (IEA WEO, 2023) of global
energy-related emissions respectively. As such, the decarbonisation of the O&G sector is
crucial if we are to reach net zero.
Over half of the O&G sector’s emissions originate in Asia, Africa, and the Middle East (IEA,
2023). These regions contain the vast majority of Standard Chartered’s market footprint
and related financing activity. The O&G sector is the largest contributor to our absolute
financed emissions, comprising approximately 10 million tonnes of CO2e per annum. Given
these factors, we have set an absolute emissions target for our exposure to the O&G sector.
Fossil fuel assets are deeply entrenched in the global economy, hence, the transitioning,
phasing-down and phasing-out of unabated fossil-fuel production assets in the O&G sector
is one of the most substantial challenges towards realising net zero. The transition requires
the development and scaling of new technologies and business models to drastically
reduce production (supply) and alter consumption (demand) patterns.
To transition to net zero, we need to see a rapid global scale up of clean energy. This should
be delivered through a just transition that ensures a secure, equitable and sustainable
future (World Energy Council, 2023). The added complexity of embedding ‘energy trilemma’
considerations into clean energy investment decisions is ongoing, and our frameworks are
reviewed and updated regularly to reflect the latest industry knowledge from reputable
institutions, including the IEA.
Beyond the net zero baseline and target, we have also published our O&G position
statement. Our position statement reflects the criteria we assess our clients against when
considering the provision of financial services to extractives activities in the O&G sector. For
further information please refer to our extractive industries position statements.
We have identified the following overarching strategies to decarbonise the O&G sector in
the table below.
Table 3: O&G strategic levers and options

Strategic levers Strategic options

Reduce O&G • improve the operational efficiency of O&G production; reduce methane
production leakages, venting, and flaring
emissions • integrate renewables and low-emission electricity into upstream and
(Scope 1, and liquefied natural gas (LNG) developments
Scope 2) • abate emissions at source8 through deployment of carbon capture and
storage technologies (CCS, CCUS)

Develop non-oil • transition to non-fossil fuel energy businesses: low-emission electricity

and generation, synthetic fuels, advanced biofuel, power-to-x, etc.
gas businesses • transition to non-energy businesses: electricity distribution, electric vehicle
(EV) battery charging, energy efficiency, distributed battery/energy storage

8 By implementing CCUS, emissions can be reduced directly at source by preventing CO from entering the atmosphere;
2
however, the overall effectiveness depends on factors such as the efficient of capture technologies, the extent of
utilisation and the long-term storage of captured CO2. 22
Standard Chartered | Net zero approach

Reducing production emissions is an important aspect for all O&G companies, this strategic
lever is considered most achievable in the short-term on a global basis as the technology
and knowledge to reduce production-related emissions are generally proven and cost-
effective.

However, the reduction of consumption emissions and the development of non-O&G

businesses will vary across companies due to:
• geographical considerations
• value-chain operations
• degree of vertical integration
• rate of new technology adoption
• local legislation
• government mandates

Therefore, the implementation and timing of the second lever is more variable and assessed
on a regional and asset basis.

Value chain boundary

Our value chain boundary is set out in the table below and adapted from the IEA’s The O&G
sector in Net Zero Transitions report (2023b).

Table 4: Oil and gas activities and companies

Companies

Activities Pure players Integrated O&G and NOCs

E&P pure players

Upstream9

Exploration & production

Services companies
Integrated oil companies

Pipeline and land transportation Integrated LNG companies

Natural gas transporters
Midstream10

Oil products transporters National oil companies (NOC)

Maritime transport (crude or
product tanker, LNG)

Midstream services Service companies

Downstream11

Refineries and LNG facilities Refining pure players

Petrochemicals Petrochemical pure players

9 Defined as entities that explore for, extract, or produce energy products such as crude oil and natural gas. Companies in the sector that
develop conventional and unconventional O&G reserves; these include, but are not limited to, shale oil and/or gas reserves, oil sands, and
gas hydrates (IEA, 2023b).
10 This consists of companies that are involved in the transportation, storage, and processing of natural gas, crude oil, and refined
petroleum products (IEA, 2023b).
11 Entities that refine petroleum products, and/or operate petrochemical production facilities (IEA, 2023b) 23
Standard Chartered | Net zero approach

Emissions boundary
• The Scope 1 and Scope 2 emissions across upstream, midstream and downstream
counterparties
• Scope 3 emissions are solely the end use of product (i.e., combustion). This is attributed
to counterparties with production activities
GHG boundary

We report our O&G sector financed emissions in CO2e covering Scope 1, Scope 2 and
Scope 3 use of sold products.

Data sources

In addition to the generic data sources outlined in the ‘data input’ section above, our clients’
production data is downloaded from the Wood Mackenzie data analytics ‘Lens’ platform.
The production figure is multiplied by a barrel of oil and gas equivalent emission factor to
calculate the Scope 3 ‘use of sold product’ emissions.

Calculation methodology

In setting our emissions baseline and target, we have measured our O&G sector portfolio
emissions on an absolute emissions basis.
Client exposure $
Financed emissions (tCO2e) = � × Client emissions (tCO2e)
Company value $
All clients

Example
Inputs:
• $0.5 billion in-scope lending
• company value of $150 billion
• total Scope 1 and Scope 2 emissions: 30 MtCO2e
• total Scope 3 emissions: 300 MtCO2e
$0.5 billion
Financed emissions Scope 1 and 2 = × 30 MtCO2e = 0.10 MtCO2e
$150 billion
$0.5 billion
Financed emissions Scope 3 = × 300 MtCO2e = 1.00 MtCO2e
$150 billion
Financed emissions Total = 0.10 MtCO2e + 1.00 MtCO2e = 1.10 MtCO2e

Reference pathway

Our O&G sector target aligns with the IEA NZE scenario. This science-based scenario is
consistent with the Paris Agreement commitment to limit global temperature rise to within 1.5°C.

24
Standard Chartered | Net zero approach

Power
The electricity and heat sector contributed 40% towards global GHG emissions in 2022 (IEA,
2023). It is projected that global electricity demand will continue to rise especially in
emerging markets and developing economies. This is because as population growth
continues, urbanisation accelerates, and socio-economic development drives an increase in
consumption. As such, fossil fuel electricity generation makes up a disproportionately larger
share in many of the markets in which Standard Chartered operates. We aim to direct
capital to promote the uptake of renewable energy technologies in tandem with providing
transition finance to our clients in emerging markets in support of their journey to net zero.

Value chain boundary

The majority of GHG emissions from the power sector are emitted at the point of
combustion where fossil fuels or biomass are used to generate electricity and heat. We only
consider power generation for electricity as in-scope within the value chain and we exclude
steam, heating, cooling producers and transmission & distribution (T&D) entities from our
financed emissions calculation. We consider the following power generation types (non-
exhaustive) to be in-scope: gas turbines, steam turbines, diesel engines, supercritical
pulverised coal, hydro, geothermal, wind, solar, nuclear, tidal, concentrated solar, and
waste-to-energy.

Emissions boundary
We primarily consider the Scope 1 emissions associated with power generation and the
combustion of fossil fuels. In some cases, we use our clients’ Scope 1 and Scope 2 emissions
when the emissions data is not disaggregated.

GHG Boundary
We have chosen to report on CO2 emissions due to data availability and materiality. The
CO2 to CO2e uplift is less than 1% for fuels used in power generation and not considered to
be material to the calculation (UK Department for Energy Security and Net Zero, 2023).

Calculation methodology
In setting our emissions baseline and target, we have measured our power portfolio
emissions with an intensity metric (tCO2/MWh). Financed emissions calculated in the
power sector can be generalised based on generation type, but the emissions factors
utilised to calculate the clients’ emissions will vary based on the type of lending and nature
of the project.

Client production
Power sector client production data in order of preference:
• reported generation from:
– annual reports/ sustainability reports
– internally through our risk systems and client credit assessments

25
Standard Chartered | Net zero approach

• estimated production from reported or estimated capacity leveraging:

– Enerdata12 average utilisation factors by region and technology

Client emissions
• power sector client emissions data in order of preference:
• reported emissions from
– externally via third party data aggregators (e.g., S&P)
– annual reports/ sustainability reports
• estimated emissions derived from reported production or capacity leveraging:
– IEA average intensity factors by region and technology

Client exposure $
Financed emissions (tCO2) = � × Client emissions (tCO2)
Company value $
All clients
Client exposure $
Financed production (MWh) = � × Generation (MWh)
Company value $
All clients

Financed emissions tCO2

Emission intensity (tCO2/MWh) =
Financed production MWh

Example (project finance)

Inputs:
• project finance (or specified general lending) for combined cycle gas turbine (CCGT)
plant
• $0.1 billion lending with project value of $3 billion
• total asset generation of 30,000,000 MWh (100% CCGT)
• total asset emissions of 10.5 MtCO2

$0.1 billion
Financed emissions = × 10,500,000 tCO2 = 350,000 tCO2
$3 billion

$0.1 billion
Financed generation = × 30,000,000 MWh = 1,000,000 MWh
$3 billion

350,000 tCO2
Production−based intensity = = 0.35 tCO2 /MWh
100,000,000 MWh

12Enerdata is an independent research company that specialises in the analysis and forecasting of energy and climate
issues 26
Standard Chartered | Net zero approach

Reference pathway
We have set a range target using the IEA NZE scenario as the lower-bound range and the
IEA APS scenario as the upper bound-range. Both scenarios are consistent with the Paris
Agreement to hold the increase in the global average temperature to well below 2°C above
pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above
pre-industrial levels.

27
Standard Chartered | Net zero approach

Residential mortgages
Residential housing contributed 5% towards global emissions in 2022 (IEA, 2023). The
residential housing sector emissions are primarily from two sources:
• the operation of the building
• embodied emissions which are emissions related to the construction, maintenance, and
disposal of real estate assets
We omit embodied emissions in our financed emissions calculation (refer to value chain
boundary below for the rationale). As such, the key determinants of operational emissions
are the energy efficiency of the residence being funded (demand) as well as the cleanliness
of the grid that is providing the house with electricity (supply).
The levers available to decarbonise the portfolio are:
• increase lending to clients to improve unit or building energy efficiency through
retrofitting and improvement of insulation, ventilation, and energy management
• through collecting specific unit or building emissions data within the portfolio which
reduces the need to proxy data and increases emission accuracy
• through engaging with clients to decarbonise their electricity supply, for instance,
through the direct purchase of green electricity, or green certificates
Standard Chartered issues residential mortgages in Asia, Africa, the Middle East, and
Europe, however 89% of the residential mortgage book is concentrated in South Korea,
Hong Kong, Taiwan, and Singapore. These markets constitute our residential mortgages
net zero target, the remaining 11% has been de-scoped.

Value chain boundary

For residential mortgages, the value chain only includes financing towards residential use of
housing. Emissions calculated are based on residential activities occurred in the occupying
space. This means that the loans are only in scope when:
• it is for new purchase or re-financing of the property
• when the property is completed, and
• the property is used only for residential purpose
As such, buildings under construction, equity loans, and properties with full or partial
commercial usage are excluded from the calculation. Additionally, embodied emissions
through the construction of buildings are not included as these emissions are considered to
be accounted for in steel and cement manufacturing.

Emissions boundary
As we are measuring the emissions from the operation of residential buildings, the
emissions boundary considered are the Scope 1 and Scope 2 emissions of the building area
being financed.

28
Standard Chartered | Net zero approach

GHG boundary
All GHG emissions are considered with a CO2e value measured.

Calculation methodology
We have used national energy consumption data for each in scope market to estimate our
financed emissions and emission intensity. We use an emissions intensity of kgCO2e/Sq.m
to measure the progress of our residential mortgage portfolio towards net zero in 2050.
Building exposure $
Financed emissions kgCO2e = � × Building emissions kgCO2e
Building value $
All clients
Building exposure $
Financed physical area (Sq.m) = � × Building floor area (Sq.m)
Building value $
All clients
Financed emissions (kgCO2e)
Physical−based intensity (kgCO2e/Sq.m) =
Financed physical area (Sq.m)

Example
Inputs:
• $100,000 residential mortgage loan
• $121,000 building value
• floor area 28 Sq.m
• emissions 1500 kgCO2e

$100,000
Financed emissions = × 1,500 kgCO2e = 1,240 kgCO2e
$121,000
$100,000
Financed physical area = × 28 Sq.m = 23 Sq.m
$121,000
1,240 kgCO2e
Physical−based intensity (kgCO2e/Sq.m) = = 54 kgCO2e/Sq.m
23 Sq.m

Reference pathway
Standard Chartered, as a UK headquartered Group with our residential mortgage portfolios
predominantly in Asia, is one of the first banks to set a target on our residential mortgage
portfolio across multiple countries. As such, we have used multiple country-specific CRREM
scenarios to benchmark our portfolios in each market. While we have a set a single group-
level target, the nature of the residential real estate market means all decarbonisation
actions will take place at the local level.
We have set our target range at the ambitious end of the public commitments made by
governments and power companies in the countries where we operate. This currently sits
above the global CRREM pathway to 2030. We will continue to reviewour reduction
pathway in line with increases in the level of ambition of those external commitments.

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Standard Chartered | Net zero approach

Shipping
Shipping is key to facilitating global trade, the sector is estimated to contribute 2% of total
global CO₂ (IEA, 2023). The sectoral emissions predominantly arise from the combustion of
fuel in ships’ engines. The primary lever for decarbonising the shipping sector is through
accelerating the uptake and technological development of low and zero-emission
alternative fuels.

Poseidon Principles
Standard Chartered is a signatory of the Poseidon Principles (PP), a global framework for
financial institutions to assess and report the climate-related alignment of their financed
shipping portfolio. Committing to the PP means that Standard Chartered intends to reduce
our shipping financed emissions according to a PP trajectory by 2050. The PP determine the
decarbonisation pathways to follow, including forward looking trajectory scenarios, as
developed by the International Maritime Organization (IMO).
In 2022 Standard Chartered aligned to the IMO 2050 trajectory outlined below. However, in
2023 PP replaced the IM0 2050 with a ‘minimum’ and ‘striving’ trajectory, the bounds of the
new pathways are set out below under ‘IMO Revised Strategy’. The new scenarios adopted
by the PP are more stringent than the previous trajectory and signify the ambitions to
decarbonise the sector. As such, we are now aligned to the IMO Revised Strategy
trajectories, for further details please refer to PP Resolution MEPC.377(80).

Table 5: IMO trajectories Reduction ambition

compared to base year 2008

PP trajectory Emission boundary 2030 2040 2050 Net zero by 2050

IMO 2050 TTW CO2 28% 39% 50% No

IMO Revised Strategy

WTW CO2e 20% 70% 100% Yes
(minimum)

IMO Revised Strategy

WTW CO2e 30% 80% 100% Yes
(striving)

Value chain boundary

Standard Chartered applies PP methodology for the shipping sector. The scope for
measuring financed emissions includes ship operators and ship owners with vessels that fall
under the purview of the IMO (i.e., vessels >5,000 gross tonnage and a ship type
classification that has been submitted to the IMO’s Data Collection System for Fuel
Consumption (DCS) (Poseidon Principles, 2023). For clarification of classification on ship
types or individual ships, please refer to:
• StatCode Ship Type Coding System document, and
• IMO Global Integrated Shipping Information System

30
Standard Chartered | Net zero approach

Emissions boundary
In line with the latest draft technical guidance from PP (2024) our shipping emissions were
updated from operational emissions (“tank-to-wake”) to full lifecycle emissions (“well-to-
wake”). As such, Scope 1 and Scope 3 emissions are calculated.

GHG boundary
We previously reported our financed emissions from the shipping sector in CO2, now in line
with the latest draft technical update from the PP (2024) we report our emissions in CO2e.

Calculation methodology
Standard Chartered measures the climate alignment of our shipping portfolios with
reference to the PP technical guidance.

Annual efficiency ratio (AER)

AER is a physical intensity measure for every ship financed by Standard Chartered that
meets the IMO criteria based on distance travelled, fuel consumed and its deadweight
tonnage (Poseidon Principles, 2023).
Σi Ci
AERVessel =
Σi dwt Di

Where:
• AER is reported in unit gram of CO2e per tonne-mile (gCO2e/dwt-nm) for all voyages
performed over a calendar year
• Ci is the GHG emissions for voyage = fuel consumption x emission factor of each fuel
type
• dwt = deadweight at maximum summer draught of the vessel
• Di = the distance travelled in voyage i

Alignment delta (AD)

AD is a variant on the physical emissions intensity approach, it was developed by PP for
measuring heterogenous shipping portfolios. The AD per ship is calculated by comparing
the difference between a ship’s measured AER and the AER prescribed by the relevant PP
decarbonisation trajectory by ship type and weight. If a ship’s AD is zero or negative that
means it contributes to meeting PP and IMO decarbonisation goal, and vice versa if the AD
is positive. The portfolio AD is the average sum of the individual comparisons across the
portfolio, weighting by exposure to each client.
AERVessel − Required AER Vessel
ADVessel =
Required AER Vessel

Exposure to vessel
ADPortfolio = � (ADVessel × )
Total portfolio exposure

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Standard Chartered | Net zero approach

Where:
• required AER of vessel is based on type and size to determine the relevant reference
pathway
• exposure in this sector is asset-backed and specifically only the amount lent against the
vessel and not the client as a whole
Please refer to the Poseidon Principles Technical Guidance Version 4.2 (2023) for a worked
example.

Reference pathway
Refer to Table 5 above for details of the reference pathway.

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Standard Chartered | Net zero approach

Steel
Steel is a critical material. It is essential to the functioning of the global economy from the
production of the world’s vehicles and household appliances to buildings and infrastructure.
As such, the steel sector is the largest source of industrial CO2 emissions and accounts for
roughly 7% of global CO₂ emissions (IEA, 2023). This is largely due to the sector’s reliance on
metallurgical coal as the primary fuel source for ironmaking via blast furnaces. We have
identified four technological levers for decarbonising steel production:
• scrap-based Electric Arc Furnace (EAF)
• Natural Gas-based Direct Reduction Plant and EAF (NG-DRI EAF)
• Hydrogen Direct Reduction Plant and EAF (H-DRI EAF)
• Blast Furnaces for reducing iron ore / Basic Oxygen Furnaces for smelting with post-
combustion Carbon Capture and Storage (BF-BOF-CCS)
The implementation and timing of the levers varies on an asset-by-asset basis. Assessing
local conditions is a crucial starting point towards understanding the most likely
decarbonisation pathway. With global demand projected to grow 30% by 2050,
decarbonising the steel sector is simultaneously one of the greatest challenges and
opportunities between now and 2050.

Sustainable STEEL Principles (SSP)

This framework was developed by a group of five international banks and facilitated by the
Centre for Climate-Aligned Finance at RMI, in consultation with over 80 representatives
from industry, NGOs and other institutions. It represents a crucial step towards standardised
reporting in CO2 for the steel sector, enabling financial institutions to objectively compare
steelmakers performance. Committing to the five SSPs (2022) means that Standard
Chartered intends to:
1. annually measure and report the climate-related alignment of our steel lending
portfolio according to the SSP guidance and methodology
2. annually publish portfolio climate alignment scores, a brief narrative, and the percent
of our portfolio represented by emissions reduction targets
3. source data from clients, or from an approved third-party data provider
4. engage with our clients to maximise real economy impact by advancing emissions
reductions in line with 1.5°C
5. be a leader by setting steel portfolio targets informed by the SSP, updating the SSP as
data evolves

Value chain boundary

The majority of GHG emissions from the steel sector are related to the steel production
process. Standard Chartered reports our steel financed emissions with reference to the
‘Fixed System Boundary’ set out by the SSP. As such, all emissions resulting from ironmaking,
steelmaking are within scope and collected on a best-efforts basis.

33
Standard Chartered | Net zero approach

Emissions boundary
Scope 1 and Scope 2 emissions are calculated for steel producers. We aim to accurately
report Scope 3 emissions associated to the sector in the future as data quality and
availability improves.

GHG boundary
Standard Chartered reports our financed emissions in CO2 as this the most material GHG
produced in the production of steel. The measurement is consistent with the SSP
methodology.

Data sources
In addition to the generic data sources outlined in the ‘data input’ section above, our client
emissions and production data for the steel sector is sourced from CRU’s Emissions Analysis
database.

Calculation methodology
In setting our emissions baseline and target, we have measured our steel portfolio emissions
with an intensity metric (tCO2/t steel). This intensity metric is commonly used by
stakeholders in the steel sector and is a useful comparison against peers. Additionally, the
metric incorporates an attribution factor to derive our share of real-world emissions in the
steel sector. Overall, our choice of an intensity metric for the steel sector is to recognise the
urgent need to decarbonise the steel production process, whilst balancing the growing
demand of steel in emerging economies.
Client exposure $
Financed emissions (tCO2) = � × Client emissions (tCO2)
Company value $
All Clients
Client exposure $
Financed production (t steel) = � × Client production (t steel)
Company value $
All Clients
Financed emissions tCO2
Emission intensity (tCO2/t steel) =
Financed production t steel

Example
Inputs:
• $0.15 billion general lending
• company value of $20 billion
• total asset production of 20 Mt steel
• total asset emissions of 40 MtCO2

34
Standard Chartered | Net zero approach

$0.15 billion
Financed emissions = × 40 MtCO2 = 0.30 MtCO2
$20 billion

$0.15 billion
Financed production = × 20 Mt Steel = 0.15 Mt steel
$20 billion

0.30 MtCO2
Production−based intensity = = 2.00 tCO2/t steel
0.15 Mt steel

Reference pathways
We have set our steel sector target range with reference to the Mission Possible
Partnership’s Technology Moratorium (MPP TM), which is a 1.5°C low overshoot scenario
prepared by a body of experts drawn from climate science, finance, policy, and industry
(MPP, 2022). The upper bounds of our reference pathway is an regional MPP TM scenario
that reflects the geographical mix of our steel portfolio.

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Standard Chartered | Net zero approach

Thermal coal mining

We have adopted an absolute financed emissions reductions for thermal coal mining. Our
thermal coal mining portfolio continues to decrease in line with contractual commitments
and our coal revenue thresholds as detailed in our position statements. No new thermal
coal use of proceeds loans have been provided.
Per our position statements we will not provide financial services (effective from March 2022
onwards) directly towards:
• new thermal coal mining projects
• thermal coal mine expansions
• infrastructure dedicated to thermal coal mining projects
• acquisitions of standalone thermal coal mines

Additionally, we will only provide financial services to clients who:

• by 2024, are less than 80% dependent on thermal coal (based on % revenue)
• by 2025, are less than 60% dependent on thermal coal (based on % revenue)
• by 2027, are less than 40% dependent on thermal coal (based on % revenue)
• by 2030, are less than 5% dependent on thermal coal (based on % revenue)

Just Energy Transition Partnerships (JETP)

Standard Chartered is participating in the JETP programmes as a mobiliser and provider of

capital in alignment with our commitments as a member of the Glasgow Financial Alliance
for Net Zero (GFANZ). Transitioning away from coal-fired power is a crucial requirement to
net zero and is a key target for the JETPs. Where Standard Chartered has provided
financing under a JETP or coal decommission structure, we will ringfence this funding and
financed emissions from other high carbon sectors as ‘coal decommissioning’.

Value chain boundary

Entities engaged with the upstream extraction of thermal coal.

Emission boundary
Scope 1 and 2 emissions are calculated for thermal coal producers
Scope 3 emissions are solely the end use of product (i.e., combustion). This is attributed to
counterparties with production activities

GHG boundary
All GHG emissions are considered with a CO2e value measured.

36
Standard Chartered | Net zero approach

Data sources

In addition to the generic data sources outlined in the ‘data input’ section above, our clients’
production data is downloaded from the Wood Mackenzie data analytics ‘Lens’ platform.
The production figure is multiplied by a coal combustion emission factor to calculate the
Scope 3 ‘use of sold product’ emissions.

Calculation methodology
In setting our emissions baseline and target, we have measured our thermal coal portfolio
emissions on an absolute emissions basis.
Client Exposure $
Financed emissions= � × Client emissions tCO2e
Company Value $
All clients

Example
Inputs:
• $0.015 billion general lending
• Company value of $2 billion
• total Scope 1 and Scope 2 emissions: 10 MtCO2e
• total Scope 3 emissions: 80 MtCO2e
$0.015 billion
Financed emissions Scope 3 = × 80 MtCO2e = 0.6 MtCO2e
$2 billion

$0.015 billion
Financed emissions Scope 1 and 2 = × 10 MtCO2e = 0.08 MtCO2e
$2 billion

Financed emissions Total = 0.6 MtCO2e + 0.08 MtCO2e = 0.68

MtCO2e

Reference pathway
The thermal coal mining portfolio is a run-down book, we have a target to reduce absolute
emission by 85% by 2030. In addition to the emissions target we have financial restrictions
per our position statements as outlined above in the background section.

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Standard Chartered | Net zero approach

Facilitated emissions
During 2022, Standard Chartered joined PCAF to support the development of a
methodology to measure facilitated emissions associated with the arranging of capital
markets issuances. In line with PCAF recommendation, we report our facilitated emissions
separate from financed emissions due to the difference in nature of these activities across
two key dimensions:
1. financed emissions account for on-balance sheet exposure from direct lending and
investments while facilitated emissions represent emissions from off-balance sheet
activities where financial institutions support the issuance of capital markets
instruments
2. capital market facilitation leads to a temporary association with a transaction, which
takes the form of a flow activity. By contrast, direct financing usually leads to a financial
institution holding the transaction for years on its balance sheet, which classifies as a
stock activity

Issuance boundary
Our calculation covers the issuance of corporate bonds and excludes:
• asset-backed securities
• short-term bonds (less than 1.5 years to maturity)13
• bonds issued by government or financial institutions
• green, Social and Sustainability tagged bonds

Additionally, due to the timing of PCAF’s finalised guidance our 2021 facilitated emissions
baseline excludes all syndicated loans14.

Value chain boundary

The sector definition for facilitated emissions calculation covers a wider range of companies
compared to financed emissions because we have not performed any value chain
exclusions.

Emission boundary
The analysis aggregates facilitated emissions across all sectors, accounting for client’s
Scope 1 Scope 2 emissions. In addition, we have included upstream and downstream Scope
3 emissions for O&G, thermal coal mining and automotive manufacturing, in line with
current PCAF guidance. We will continue to expand our Scope 3 coverage against PCAF’s
required phase-in period as market data and our internal data improves.

GHG boundary
All GHG emissions are considered with a CO2e value measured.

13 PCAF’s Facilitated Standard did not explicitly provide guidance on short duration, the exclusion of short maturities

was applied due to the potential fluctuation it would introduce to the portfolio.
14 In 2024 we will perform an analysis of the syndication book to understand the population that is not also

underwritten by us. This will become the starting point for considering the inclusion of syndicated loans. 38
Standard Chartered | Net zero approach

Calculation methodology
Our calculations reflect the latest guidance document described in PCAF’s ‘The Global GHG
Accounting and Reporting Standard Part B: Facilitated Emissions’ published in December
2023.
We computed our facilitated emissions using the formula below and applying a weighting
factor of both 33% and 100%.

Facilitated emissions (tCO2e)

Facilitated amount $
= � × Weighting factor % × Client emissions (tCO2e)
Company value $
All clients

Where:
• facilitated Amount ($) = total amount raised ($) × volume attributable to us (%)
• company value = for listed companies this is the EVIC of the respective client. For private
companies this is the sum of the total company equity and debt when no market value
for equity is available
• weighting factor = 33%
• annual emissions = the total in-scope emissions of the issuer
• c = the issuing company

Example
Inputs:
• sector = O&G
• total amount raised = $0.15 billion
• league table credit volume attributable to Standard Chartered = 50%
• company value = $10 billion
• weighting factor = 33%
• Scope 1 and Scope 2 emissions = 15 MtCO2e
• Scope 3 = 1 MtCO2e

$0.15 billion × 50%

Facilitated emissions= × 33% × 16 MtCO2e
$10 billion

Facilitated emissions= 0.04 MtCO2e

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Standard Chartered | Net zero approach

Conclusion

We remain committed to the transparent disclosure of our methodology to facilitate

comparison, engagement and discussion amongst stakeholders on meaningful pathways
to achieve net zero. We will monitor our approach and publish amendments to our White
Paper as necessary in accordance with scientific guidance and sector-agreed
methodologies as updated from time to time. We will continue to operate in a manner that
seeks to promote sustainable economic growth in our markets, recognising that this
ambition will be subject to the specific market risks and challenges presented by climate
change.

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Standard Chartered | Net zero approach

Acronyms
AD Alignment delta

AER Annual efficiency ratio

Blast furnaces for reducing iron ore / basic oxygen furnaces for smelting with post-
BF-BOF-CCS
combustion carbon capture and storage

CCGT Combined Cycle Gas Turbine

CCS Carbon Capture and Storage

CCUS Carbon Capture, Utilisation and Storage

CO2e Carbon Dioxide Equivalent

CRE Commercial Real Estate

CRREM Carbon Risk Real Estate Monitor

E&P Exploration & production

EAF Electric Arc Furnace

EV Electric Vehicle

EVIC Enterprise Value Including Cash

GCCA Global Cement and Concrete Association

GFANZ Glasgow Financial Alliance for Net Zero

GHG Greenhouse Gas

GL General Lending

H-DRI EAF Hydrogen Direct Reduction Plant and EAF

IEA International Energy Agency

IEA APS International Energy Agency Announced Pledges Scenario

IEA NZE International Energy Agency Net Zero Emissions by 2050 Scenario

IL Investment loans

IMO International Maritime Organization

IMO Existing International Maritime Organization Existing Scenario

IMO rev. min. International Maritime Organization Revised Minimum Scenario

IMO Striving International Maritime Organization Striving Scenario

IPCC Intergovernmental Panel on Climate Change

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Standard Chartered | Net zero approach

JETP Just Energy Transition Partnerships

LDV Light-duty Vehicle

LNG Liquefied Natural Gas

MPP Making Possible Partnership

MPP Mission Possible Partnership

MPP STS Making Possible Partnership Steel Transition Strategy

MPP TM Making Possible Partnership Steel Technology Moratorium Scenario

MSCI Morgan Stanley Capital International

MWh Megawatt Hour

NG-DRI EAF Natural Gas-based Direct Reduction Plant and EAF

NGO Nongovernmental Organization

NZBA Net Zero Banking Alliance

O&G Oil and Gas

OEM Original Equipment Manufacturer

Paris As defined by the United Nations and adopted at the UN Climate Conference on 12
Agreement December 2015

PCAF Partnership for Carbon Accounting Financials

PDL Product Development Loan

PP Poseidon Principles

PPA Power Purchase Agreement

RMI Rocky Mountain Institute

S&P Standard & Poors

SAFF Sustainable Aluminium Finance Framework

SBTi Science-based Targets Initiative

T&D Transmission & Distribution

TPI Transition Pathway Initiative

TTW Tank-to-Wake

WLTP Worldwide Harmonised Light Duty Driving Test Procedure

WTW Well-to-Wake

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Standard Chartered | Net zero approach

References

EIB (2023), Project Carbon Footprint Methodologies

GCCA (2023), Global Cement and Concrete Association, Getting to Net Zero. Available from:
https://gccassociation.org/concretefuture/getting-to-net-zero/
GHG Protocol (2011), Corporate Value Chain (Scope 3) Standard
IEA (2020), Energy Technology Perspectives 2020
IEA (2023). International Energy Agency World Energy Outlook 2023
IEA (2023b), The O&G Industry in Net Zero Transitions
IEA (2023c), Low-Emission Fuels - Energy System. Available at: https://www.iea.org/energy-system/low-
emission-fuels
IFRS (2023), S2 Climate-related Disclosures
International Aluminium (2021), Pathways to 2050. Available at: https://international-
aluminium.org/resource/aluminium-sector-greenhouse-gas-pathways-to-2050-2021/
Mission Possible Partnership (2022), Making Net-Zero Steel Possible
Mission Possible Partnership (2023): Making Net-Zero Aluminium Possible
PCAF (2022), The Global GHG Accounting and Reporting Standard for the Financial Industry, Part A: Financed
Emissions. Second Edition.
PCAF (2023), The Global GHG Accounting and Reporting Standard for the Financial Industry, Part B: Facilitated
Emissions.
Poseidon Principles (2023), Technical Guidance Version 4.2.
Poseidon Principles (2023b), Signatories - Poseidon Principles for Financial Institutions. Available at:
https://www.poseidonprinciples.org/finance/signatories/
SAFF (2023), Sustainable Aluminium Finance Framework
SSP (2022), The Sustainable STEEL Principles
UK Department for Energy Security and Net Zero (2023), Government Greenhouse Gas Conversion Factors for
Company ReportingWorld Energy Council (2022), ‘Trilemma Index 2022’

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Standard Chartered | Net zero approach

Disclaimer
Forward-looking statements
The information included in this document may contain ‘forward-looking statements’ based upon
current expectations or beliefs as well as statements formulated with assumptions about future
events. Forward-looking statements include, without limitation, projections, estimates, commitments,
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meaning to any of the foregoing. Forward-looking statements may also (or additionally) be
identified by the fact that they do not relate only to historical or current facts.

By their very nature, forward-looking statements are subject to known and unknown risks and
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to differ materially from those expressed or implied in the forward-looking statements. Readers
should not place reliance on, and are cautioned about relying on, any forward-looking statements.

There are several factors which could cause the Group’s actual results and its plans and objectives to
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technology failures involving the Group; changes in tax rates or policy; future business combinations
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extent that any forward-looking statements contained in this document are based on past or current
trends and/or activities of the Group, they should not be taken as a representation that such trends
or activities will continue in the future.

No statement in this document is intended to be, nor should be interpreted as, a profit forecast or to
imply that the earnings of the Group for the current year or future years will necessarily match or
exceed the historical or published earnings of the Group. Each forward-looking statement speaks
only as of the date that it is made. Except as required by any applicable laws or regulations, the
Group expressly disclaims any obligation to revise or update any forward-looking statement
contained within this document, regardless of whether those statements are affected as a result of
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Please refer to the Annual Report and the financial statements of the Group for a discussion of
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plans and objectives, to differ materially from those expressed or implied in any forward-looking
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Financial instruments
Nothing in this document shall constitute, in any jurisdiction, an offer or solicitation to sell or purchase
any securities or other financial instruments, nor shall it constitute a recommendation or advice in
respect of any securities or other financial instruments or any other matter.

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Standard Chartered | Net zero approach

Basis of Preparation and Caution Regarding Data Limitations

This section is specifically relevant to, amongst others, the sustainability and climate models,
calculations and disclosures throughout this report.

The information contained in this document has been prepared on the following basis:

i. certain information in this document is unaudited;

ii. all information, positions and statements set out in this document are subject to change without
notice;

iii. the information included in this document does not constitute any investment, accounting, legal,
regulatory or tax advice or an invitation or recommendation to enter into any transaction;

iv. the information included in this document may have been prepared using models,
methodologies and data which are subject to certain limitations. These limitations include: the
limited availability of reliable data, data gaps, and the nascent nature of the methodologies and
technologies underpinning this data; the limited standardisation of data (given, amongst other
things, limited international coordination on data and methodology standards); and future
uncertainty (due, amongst other things, to changing projections relating to technological
development and global and regional laws, regulations and policies, and the current inability to
make use of strong historical data);

v. models, external data and methodologies used in information included in this document are or
could be subject to adjustment which is beyond our control;

vi. any opinions and estimates should be regarded as indicative, preliminary and for illustrative
purposes only. Expected and actual outcomes may differ from those set out in this document (as
explained in the “Forward-looking statements” section above);

vii. some of the related information appearing in this document may have been obtained from
public and other sources and, while the Group believes such information to be reliable, it has not
been independently verified by the Group and no representation or warranty is made by the
Group as to its quality, completeness, accuracy, fitness for a particular purpose or
noninfringement of such information;

viii. for the purposes of the information included in this document, a number of key judgements and
assumptions have been made. It is possible that the assumptions drawn, and the judgement
exercised may subsequently turn out to be inaccurate. The judgements and data presented in
this document are not a substitute for judgements and analysis made independently by the
reader;

ix. any opinions or views of third parties expressed in this document are those of the third parties
identified, and not of the Group, its affiliates, directors, officers, employees or agents. By
incorporating or referring to opinions and views of third parties, the Group is not, in any way,
endorsing or supporting such opinions or views;

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Standard Chartered | Net zero approach

whilst the Group bears primary responsibility for the information included in this document, it does
not accept responsibility for the external input provided by any third parties for the purposes of
developing the information included in this document;

x. the data contained in this document reflects available information and estimates at the relevant
time;

xi. where the Group has used any methodology or tools developed by a third party, the application
of the methodology or tools (or consequences of its application) shall not be interpreted as
conflicting with any legal or contractual obligations and such legal or contractual obligations
shall take precedence over the application of the methodology or tools;

xii. where the Group has used any underlying data provided or sourced by a third party, the use of
the data shall not be interpreted as conflicting with any legal or contractual obligations and such
legal or contractual obligations shall take precedence over the use of the data;

xiii. this Important Notice is not limited in applicability to those sections of the document where
limitations to data, metrics and methodologies are identified and where this Important Notice is
referenced. This Important Notice applies to the whole document;

xiv. further development of reporting, standards or other principles could impact the information
included in this document or any metrics, data and targets included in this document (it being
noted that ESG reporting and standards are subject to rapid change and development); and

xv. while all reasonable care has been taken in preparing the information included in this document,
neither the Group nor any of its affiliates, directors, officers, employees or agents make any
representation or warranty as to its quality, accuracy or completeness, and they accept no
responsibility or liability for the contents of this information, including any errors of fact, omission
or opinion expressed.

You are advised to exercise your own independent judgement (with the advice of your professional
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The Group, its affiliates, directors, officers, employees or agents expressly disclaim any liability and
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All rights reserved.

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February 2024