The Partnership for Carbon Accounting Financials (PCAF), a global collaboration of 70 financial institutions with total financial assets of more than USD 10 trillion, is publicly releasing a standard to provide financial institutions with shared methodologies and rules for measuring and disclosing the greenhouse gas emissions of their loans and investments.
Developed by a group of 16 banks and investors worldwide, the standard will ensure a common set of robust carbon accounting methods to assess and track the emissions financed by loans and investments.
The Global Carbon Accounting Standard is based on carbon accounting methods already being used in several countries by banks and investors affiliated with the Partnership for Carbon Accounting Financials. The PCAF Core Team behind this work includes a wide group of financial institutions: ABN AMRO, Access Bank, Amalgamated Bank, Banco Pichincha, Bank of America, Boston Common Asset Management, Crédit Coopératif, FirstRand Ltd., FMO, KCB, LandsBankinn, Morgan Stanley, Produbanco, ROBECO, Triodos Bank and Vision Banco.
Carbon accounting of financial portfolios is the annual measurement and disclosure of GHG emissions financed by loans and investments at a fixed point in time in line with financial accounting periods. Carbon accounting methods are based on the Greenhouse Gas Protocol.
“Until now, there was no global, harmonized way for financial institutions to measure and disclose their financed emissions. But today, banks and investors across the globe have access to a standardized approach to measure the climate impact of lending and investment portfolios” said Giel Linthorst, Executive Director of PCAF and Director at Guidehouse.
“The Standard is a key tool in the arsenal for financial institutions because it helps banks and investors measure their financed emissions, which is the starting point to the process of aligning financial flows with the goals of the Paris Agreement” said Ivan Frishberg, of Amalgamated Bank and Chair of PCAF North America regional team.
Beyond assessing, tracking and reporting financed emissions, a consistent and harmonized approach to portfolio carbon accounting gives financial institutions the information required to set climate targets and asses climate transition risks. As such, the Global Carbon Accounting Standard feeds into the work of other climate initiatives, such as the Carbon Disclosure Project (CDP), Science Based Target initiative (SBTi) and the Task Force on Climate-related Financial Disclosures (TCFD).
“The Standard provides the means to close a critical gap in the measurement of emissions financed by the financial industry. The disclosure of absolute financed emissions equips stakeholders with a metric for understanding the climate impact of loans and investments and is an excellent starting point for tracking its progress towards Paris-alignment” said Tjeerd Krumpelman of ABN AMRO and member of the PCAF Steering Committee.
PCAF is running a public consultation on the Standard from 3 August to 30 September 2020, and seeks feedback from financial institutions, policy makers, regulators, data providers, NGOs, consultants and other interested parties on the robustness and applicability of the methodologies in the Standard. The consultation will be run via webinars and an online feedback survey. The final version of the Standard will be published in November of 2020.
Download the Global Carbon Accounting Standard and participate in the stakeholder consultation: