Estimating scope 3 emissions in the global investment network

Abstract This study presents a network-based approach to measure investment-related scope 3 emissions at a global scale, revealing overlooked patterns of carbon accountability. Traditional accounting methods typically assign emissions based on direct ownership shares, yet these fail to capture the extensive chains of influence that characterize modern financial systems. Building on our earlier analysis of the Japanese market, we expand to a dataset of over 6.4 million firms worldwide, tracing how investment flows link financial institutions to carbon-intensive activities across multiple industries and countries. Our findings show that conventional methods significantly underestimate the investment-derived scope 3 emissions of financial intermediaries. Large asset managers and trust banks, for instance, emerge as central nodes with far higher investment-derived emissions than previously reported. At the same time, industrial firms, traditionally viewed as principal emitters, see their attributed emissions decrease once network effects are considered. These results suggest that focusing on direct emitters alone overlooks key leverage points in the financial sector that can drive systemic emissions reductions. By uncovering how carbon accountability propagates through global investment networks, this work offers a more accurate foundation for regulators, investors, and policymakers seeking to align financial flows with net-zero objectives.