Thursday, 5 December 2024.
Last December 3, PCAF launched a public consultation on new methodologies for a Global GHG Accounting and Reporting Standard, for financial institutions measuring and reporting scope 3 category 15 emissions.
Scope 3 category 15 emissions are the GHG emissions associated with a company's investments, as you can read here, GHG Protocol itself.
Financed emissions are a key metric for financial institutions in understanding their climate-related transition risk.
But what is PCAF?
The acronym stands for Partnership for Carbon Accounting Financials, a global financial industry-led initiative to standardize the measurement and disclosure of financed emissions. As such, it supports the adaptation of financial operations and asset class management in the transition to a low-carbon economy.
The group was formed in 2015 in the Netherlands and as of today, 130+ financial institutions in 40 countries are part of PCAF, representing US$ 40+ trillion in total assets. Click here to check which financial institutions from your country support the PCAF efforts. There are even some disclosures for download.
The group launched the Global GHG Accounting and Reporting Standard for the Financial Industry in 2020 and in this first version covered specific accounting rules for the following asset classes:
Listed equity and corporate bonds
Business loans and unlisted equity
Project finance
Commercial real estate
Mortgages
Motor vehicle loans
After a survey internally conducted with its signatories in 2023, several inputs were received and revised by a Core Team, formed by members of the following organizations: Commonwealth Bank of Australia, Metrics Credit Partners, Phoenix Group, EIG, Mizuho Financial Group, PIMCO, HSBC, Morgan Stanley, Swiss Re, ING, NMB Bank, United Bank for Africa, Itaú Unibanco and Nordea Group.
The outcome is this new public consultation, composed by two documents:
New guidance and methods (109 pages)
New methods (45 pages)
In this second document, two new lines of business are being proposed to incorporate the standard:
project insurance
treaty reinsurance
Click at the image below for the public consultation itself, which will be open until 28 February 2025.
Public consultations, specially global like this one, can gather ample expert feedback and enhance credibility of the outcome.
