Carbon Intelligence for Banks financing Aviation –The Increasing Strategic Value of Scope 3

September 12, 2025

Corporate strategy in Banks is seeing the targeting of increased green lending. This is driving internal competition between lending sectors for access to funds, in turn putting greater demands on sustainability insights that can support business cases for new opportunities.

Systemic Financial Risk

Climate regulation may be shifting in emphasis due to changing political priorities, but the underlying reality is constant: climate change constitutes a systemic financial risk. For banks financing the aviation sector, this risk is enduring and material. Climate-related factors pose significant threats to asset values, revenue streams, and long-term portfolio resilience, whether from physical impacts such as increased lightning strikes and turbulence to transition risks such as stranded assets, supply chain disruption and evolving regulatory requirements. These risks are not isolated; they are converging globally, amplifying their financial relevance.

Consequently, lenders and investors are reassessing credit policies, capital allocation, and pricing decisions through the lens of credible climate strategies. For aviation finance, the implications are clear: the sector’s ability to demonstrate robust climate alignment will increasingly determine access to capital and the cost of borrowing. Carbon performance of financed assets has become inseparable from credit risk, asset valuation and capital allocation. The ability to identify, capture, and manage Scope 3 emissions for the asset classes is fundamental to securing the finance that can unlock new business opportunities.

Insights supported by data are key

In parallel, regulatory and market pressures globally are converging on transparency and accountability, and this same carbon data is required for mandatory climate reporting. The International Sustainability Standards Board (ISSB), through IFRS S2, mandates the disclosure of material Scope 3 emissions. IFRS S2 requires an entity to disclose information about climate-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term (collectively referred to as ‘climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects’)[1]. In the EU, CSRD Wave 1 2024 requires banks to provide granular, audit-ready data on financed emissions and portfolio alignment. In the United States, the SEC’s climate disclosure rules and the Federal Reserve’s climate scenario analyses are driving similar expectations for robust Scope 3 data, while jurisdictions such as the Australia, Hong Kong, Japan, Malaysia are advancing their own frameworks aligned to IFRS S2, with mandatory reporting underway or starting imminently.

This global regulatory architecture is reshaping how banks must operate. Leadership increasingly expects climate risks to be integrated into governance, credit decisioning, pricing, and portfolio management. Failure to capture and manage Scope 3 data risks underestimating exposure to transition risks, including policy shifts, operational constraints, stranded assets, and reputational damage. This is particularly true of aviation, where most carbon risk is outside the direct operational boundaries of the airlines themselves, such as fuel production, leased fleet operations, and passenger and freight travel.

Trusted Data Partner

At Fexco Group we have been a trusted partner to banks since we were founded in 1981, providing Fintech services designed to meet the strictest IT security and compliance needs, or as we simply put it, to be “bank grade”. PACE is built upon the same understanding of our bank clients’ needs. For the bank, this data-first model transforms compliance into insight. The same dataset that feeds disclosure requirements also enables risk-adjusted portfolio steering, more accurate credit pricing, and proactive client engagement. It provides insights that allow risk and strategy teams to model the financial impacts of carbon-related risks such as potential policy changes, operational constraints, or asset value erosion – and to integrate those insights into RAROC (Risk-Adjusted Return on Capital) models, capital allocation decisions, and origination strategies. PACE is a matrix-based data architecture where core emissions and ESG data points act as the foundational building blocks for the bank’s global reporting, risk, and strategic frameworks. It defines the minimum viable data set by counterparty and asset class, outlines governance and control mechanisms for assurance, and demonstrates how emissions data can be embedded into strategy, underwriting, and portfolio management.

In an era where carbon performance directly influences access to capital, cost of financing, and client relationships, the ability to transform Scope 3 emissions insights into actionable strategy is not just a compliance exercise—it is a strategic differentiator for banks seeking competitive advantage in a carbon-constrained world.

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