The Partnership for Carbon Accounting Financials (PCAF) announced that it has publicly released its new standard for financial institutions to measure and disclose the greenhouse gas emissions impact of investments and loans.
Giel Linthorst, Executive Director of PCAF and Director at Guidehouse, said:
“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.”
The PCAF is a global collaboration of 70 financial institutions representing total financial assets of more than $10 trillion. The organization has recently announced the addition of prominent North American members, including Bank of America and Morgan Stanley.
The new Global Carbon Accounting Standard was developed by 16 global banks and investors, including 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. It was developed with the aim to create a common set of robust carbon accounting methods to assess and track the emissions financed by loans and investments. The standard is based on carbon accounting methods already being used in several countries by banks and investors affiliated with the PCAF.
In addition to assessing and disclosing emissions data, the introduction of the standard is expected to enable financial institutions to better set climate targets and asses climate transition risks from their activities. To this end, the new 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).
Ivan Frishberg, of Amalgamated Bank and Chair of PCAF North America regional team, said:
“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.”
Tjeerd Krumpelman of ABN AMRO and member of the PCAF Steering Committee, added:
“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.”
PCAF has opened a public consultation on the new standard, which will run through September 30, 2020, seeking feedback from financial institutions, policy makers, regulators, data providers, NGOs, consultants and other interested parties. The final version of the standard is expected to be released in November 2020.