The Partnership for Carbon Accounting Financials (PCAF) announced today the launch of 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.

Additionally, the PCAF announced that the new Standard has received the “Built on GHG Protocol Mark” from the GHG Protocol, the supplier of the world’s most widely used greenhouse gas accounting standards.

The PCAF is a global collaboration of 86 financial institutions, representing $17.5 trillion in total assets. In joining the initiative, members have committed to measuring and reporting the greenhouse gas emissions associated with loans and investments.

The new Global GHG Accounting and Reporting Standard was developed by 16 global banks and investors, including 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 Standard provides methods to measure financed emissions of six asset classes, including listed equity and corporate bonds, business loans and unlisted equity, project finance, commercial real estate, mortgages and motor vehicle loans.

The PCAF stated that the new 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. The organization also noted that these issues are creating significant opportunities for financial institutions, as trillions in capital will be required in the shift towards a low-carbon economy.

Ivan Frishberg, Director of Impact Policy, Amalgamated Bank, said:

“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.”

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, following the release of the draft version of the standard in August 2020.

Peter Blom, CEO of Triodos Bank and Chair of the Global Alliance for Banking on Values, said:

“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, said:

“PCAF’s methodology will be a key tool to measuring carbon emissions, enabling climate risk management, and helping drive low carbon product development.”

According to the PCAF, the organization will continue to work with financial institutions providing technical support to implement the Standard globally, and in 2021, PCAF intends to develop additional asset class methods and publish case studies in the Standard.

Giel Linthorst, Executive Director of PCAF Secretariat and Director at Guidehouse, said:

“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.”