Climate research provider and environmental disclosure platform CDP and the Partnership for Carbon Accounting Financials (PCAF) announced today a new collaboration, aimed at enhancing financial institutions’ capacity to measure and disclose their financed emissions.

According to CDP, financing activities represent by far the greatest aspect of financial institutions’ climate impact, with finance emissions approximately 700 greater than operational emissions. A significant data gap exists in this area, with only a quarter of financial institutions that disclose to CDP reporting on their financed emissions.

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Claire Elsdon, Joint Global Director of Capital Markets at CDP, said:

“Through capital flows and portfolio alignment with net-zero, the financial sector has a pivotal role to play in realizing a net-zero and nature positive economy. However, financial institutions that fail to disclose their financed emissions risk underestimating the climate-related impact of their portfolios. Robust and transparent disclosure of financed emissions provides the market with a baseline assessment of climate-related risks, as well as crucial data to track progress toward the net-zero transition.”

Founded in 2015, the PCAF is a global partnership of more than 180 financial institutions, representing over $56 trillion in total assets, with a mission to develop and implement a harmonized approach to assess and disclose the greenhouse gas (GHG) emissions associated with loans and investments. 

In November 2020, the PCAF launched the Global GHG Accounting and Reporting Standard for the Financial Industry, designed to provide a standardized, robust and clear way for banks, asset managers and asset owners to measure and report the GHG emissions impact of their loans and investment portfolios.

Under the new partnership, the organizations will combine their resources and networks to promote the PCAF Standard and to increase assessment and disclosure of financed emissions amongst financial institutions globally. The collaboration will also see CDP and PCAF work together to develop and provide workshops, reports, and case studies for their respective networks of financial institutions. CDP will also enhance its annual quality reviewed GHG modelled emissions dataset to provide a data quality score for emissions figures contained in the dataset, in line with PCAF’s Data Quality Scoring system.

Giel Linthorst, Executive Director, PCAF, said:

“I’m very pleased to partner with CDP to drive consistent climate-related disclosure globally. Scope 3 financed emissions measurement and disclosure of financial institutions is an essential step. It’s great to see that CDP has integrated this into their Financial Services Questionnaire. By collaborating with CDP, we can support financial institutions globally with measurement and disclosure of their climate impact.”