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PCAF
Today, the Partnership for Carbon Accounting Financials (PCAF) launched an update to its Global Greenhouse Gas Accounting and Reporting Standard for the Financial Industry (“Standard”) for Financed Emissions (Part A) and Insurance-Associated Emissions (Part C). In addition, PCAF introduced a supplemental guidance on Financed Avoided Emissions and Forward-Looking Metrics (“supplemental guidance”). These enhanced frameworks empower financial institutions worldwide to expand their ability to transparently measure and disclose the greenhouse gas (GHG) emissions associated with their financial activities. The updated Standard and guidance reflect PCAF’s ongoing commitment to harmonize GHG accounting across the financial sector.
PCAF understands that financial institutions manage diverse portfolios consisting of many types of financial instruments including loans, investments, insurance products and others. Calculating GHG emissions of these portfolios is complex. The updated PCAF Standard add several new methods to cover more financial instruments and address the diversity in financial portfolios. PCAF’s existing methodologies have not been changed. The new methods close gaps, enabling institutions to account for emissions across relevant exposures.
The updates to the PCAF Standard were developed by industry-led working groups consisting of over 100 experts, made up of representatives from PCAF signatories with global representation. The standard development process was led by PCAF’s Core Team, the signatory group responsible for governing the Standard.
“This update reflects the collective expertise and commitment by our global community of signatories,” said Hetal Patel, Head of Sustainable Investment Research, Phoenix Group and PCAF’s Core Team Chair. “By enhancing the Standard with new methods and guidance, we’re helping financial institutions create a more comprehensive and complete view of the emissions impact of their activities and exposure to associated risks.”
This update expands the scope of the PCAF Standard by introducing innovative methods that enable financial institutions to measure and disclose emissions linked to their portfolios. These updates reflect growing demands from financial institutions.
“Complete, transparent, and consistent accounting methods are the foundation of credible financial GHG emission disclosures,” said Caspar Noach, PCAF’s Technical Director. “This update to the Standard reflects our commitment to helping financial institutions and their stakeholders improve transparency and make better-informed decisions.”
The update includes new methods and clearer guidance, making it easier to track emissions across more financial product types. More specifically, the updated Standard includes:
- Four new financed emissions methodologies for use of proceeds structures, securitizations and structured products, sub-sovereign debt, and an optional reporting on undrawn loan commitment according to IFRS S1 & S2.
- Recommendations developed in response to feedback on the 2024 Inventory Fluctuation discussion paper.
- A document providing guidance and guardrails when separately reporting financed avoided emissions and forward-looking emission metrics to capture future impact.
- Two new insurance-associated emissions methodologies for treaty reinsurance and project insurance.
While these methods are available for use today, PCAF recognizes that financial institutions need time to integrate them into their systems and disclosures. Institutions may set a feasible timeline, provided that they transparently disclose the share of their current portfolio included and excluded, along with clear justifications for any exclusions.
PCAF’s continuous development of new methodologies to broaden the scope of GHG accounting reflects its commitment to meeting industry demand. As the global standard-setter for GHG accounting of Scope 3 Category 15 emissions, PCAF provides financial institutions with a platform to collaborate and improve GHG methodologies for the industry, forming a community focused on shared knowledge and action.
