Global standard gives banks, asset owners and asset managers a tool for measuring and reporting greenhouse gas (GHG) emissions associated with loans and investments. With the “Built on Greenhouse Gas Protocol” mark, the PCAF Standard becomes the global reference for GHG accounting for financials.
The Partnership for Carbon Accounting Financials (PCAF) launched the Global GHG Accounting and Reporting Standard for the Financial Industry at a virtual event during London Climate Action Week. Banks, asset managers and asset owners now have access to a free, standardized, robust and clear way of measuring and reporting GHG emissions tied to lending and investment portfolios.
The Global GHG Accounting and Reporting Standard is available at: carbonaccountingfinancials.com/standard
The methodology is being launched as the global financial industry is increasing its focus on climate change impacts and as shareholders, regulators and stakeholders are pressuring the sector to take a more proactive role in supporting solutions in partnership with governments and civil society. At the same time, financial institutions have a significant opportunity, as trillions in capital will be required in the shift towards a low-carbon economy.
Over the past 12 months, 16 financial institutions have teamed up to create the PCAF Standard: ABN AMRO (Netherlands), Access Bank (Nigeria), Amalgamated Bank (United States), Banco Pichincha (Ecuador), Bank of America (United States), Boston Common Asset Management (United States), Crédit Coopératif and its subsidiary Ecofi (France), FirstRand Ltd. (South Africa), FMO (Netherlands), KCB (Kenya), Landsbankinn (Iceland), Morgan Stanley (United States), Produbanco (Ecuador), Robeco (Netherlands), Triodos Bank (Netherlands), and Visión Banco (Paraguay).
The PCAF Standard provides methods to measure financed emissions of six asset classes: listed equity and corporate bonds, business loans and unlisted equity, project finance, commercial real estate, mortgages and motor vehicle loans.
The launch of the PCAF Standard comes after a public consultation and gathering feedback from financial institutions, sustainable finance stakeholder groups, policy makers, data providers, consultants and civil society organizations.
Ivan Frishberg, Director of Impact Policy, Amalgamated Bank:“Stakeholder engagement was vital to develop the Standard with early and widespread buy-in. Not only was the collaboration among financial institutions effective, but also the engagement with all stakeholders throughout the year, including the public consultation. At Amalgamated Bank, we are proud to be part of this transparent, credible and robust process to create the Standard.”
As part of the PCAF initiative, 87 financial institutions, representing $17.8 trillion in total assets, have committed to measuring and reporting the greenhouse gas emissions associated with loans and investments. The PCAF Standard is a key resource for them – and the wider financial sector – in advancing their climate goals.
Peter Blom, CEO of Triodos Bank and Chair of the Global Alliance for Banking on Values: “Financial institutions recognize that measuring financed emissions is a catalyst for action, regardless of their size, business model or where they are in the world. GHG accounting provides crucial information to assess the resilience of portfolios to climate-related risks and identifies opportunities to finance the decarbonization that’s so urgently needed for the transformation to a net zero emissions society.”
Audrey Choi, Chief Sustainability Officer at Morgan Stanley: “PCAF’s methodology will be a key tool to measuring carbon emissions, enabling climate risk management, and helping drive low carbon product development.”
The PCAF Standard received the “Built on GHG Protocol Mark” from the GHG Protocol, the supplier of the world’s most widely used greenhouse gas accounting standards.
PCAF will continue to work with financial institutions providing technical support to implement the Standard globally. In 2021, PCAF will develop additional asset class methods and publish case studies in the Standard.
Giel Linthorst, Executive Director of PCAF Secretariat and Director at Guidehouse: “The launch of this first ever global standard is a key milestone. The PCAF Standard is a foundational piece for many other climate initiatives. We are very grateful to the 16 financial institutions that worked intensively together, supported by the PCAF Secretariat, to create this Standard. Now it is our task to implement it in order to achieve greater transparency and accountability of the financial sector.”