Wells Fargo’s methodology endeavours to apply certain design choices universally across all sectors. For example, the decision to include both the financing it provides clients through lending activities and the financing it facilitates through debt and equity capital market activities applies to all currently covered sectors.
With respect to capital markets facilitation, Wells Fargo’s methodology includes 100% of origination activities that directly fund company operations (i.e., equity capital markets and debt capital markets, including high-grade securities, high-yield securities, and term loan transactions), but does not include advisory activities (such as mergers and acquisition advisory activity), commodities activity, or derivatives. Wells Fargo also has not included assets that it holds in its investment portfolio and affiliated venture capital and private equity partnerships or that it holds in connection with secondary trading and market-making activities. When multiple financial institutions facilitate the same capital markets transaction, Wells Fargo attributes 100% of its pro rata share.
Capital markets facilitation activity has inherent volatility. To address the impacts of this volatility and better match the tenor of the capital to its reported activity, Wells Fargo amortises its capital markets facilitation activities over a five-year period using a straight-line method. Moreover, to avoid underestimating its capital markets facilitation activities in the baseline year (2019), and the following five years (until 2024), its methodology uses a “look back” to include amortised data from 2015 forward (Wells Fargo 2022, 2023).
Read more on Wells Fargo’s net-zero targets here.
This case study was originally published in the Net-Zero Banking Alliance’s Target Setting for Capital Markets Activities report (October 2024).
Disclaimer: NZBA shares case studies to promote member banks’ awareness of new approaches, tools, products, services, and transactions related to financing the transition to net zero. Featuring a case study naming a particular bank does not represent an endorsement of all actions from that bank.