The methodology is 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. The standard can be downloaded here.
Catalyst for action
Triodos Bank was among 16 financial institutions* that created the accounting standard. “Financial institutions recognise 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”,saysPeter Blom, CEO of Triodos Bank and Chair of the Global Alliance for Banking on Values (GABV), which is also involved in the development of the standard.
Paris climate goals
Triodos Bank supports the world’s transition to a low-carbon and climate-friendly future, in line with the Paris climate goals to limit the temperature increase to at the most 1.5 degrees Celsius. To contribute to this future, financial institutions need to know what their carbon footprint is of their loans and investments. If financial institutions know what the emissions are, they can be transparent about their climate impact and it will help them set climate targets.
Triodos Bank started using the PCAF methodology in its own business in 2018 for about 68 percent of its portfolio. One year later Triodos Bank has - for the first time - measured the emissions of its entire portfolio of loans and direct investments.
Asset classes
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 comes after a public consultation and gathering feedback from financial institutions, sustainable finance stakeholder groups, policy makers, data providers, consultants and civil society organisations.
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.
GHG Protocol
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.
*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).