Commercial, GHG Emissions - November 24, 2020
New emissions reporting standard addresses carbon footprint of lending and investment
The Partnership for Carbon Accounting Financials (PCAF) announced Nov. 18 that it released the first global standard for measuring and reporting emissions associated with loans and investments.
This standard, launched during London Climate Action Week, will give banks, asset managers and asset owners access to a free, standardized way to report emission tied to their lending and investment portfolios. The PCAF Standard looks at six asset classes for measuring financed emissions: listed equity and corporate bonds, business loans and unlisted equity, project finance, commercial real estate, mortgages and motor vehicle loans.
“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,” Peter Blom, CEO of Triodos Bank and Chair of the Global Alliance for Banking on Values, said in a statement. “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.”
So far, 86 financial institutions, representing $17.5 trillion in total assets have committed to measuring and reporting emissions tied to loans and investments. In 2021, PCAF will develop additional asset class methods and begin publishing case studies.
This new standard was created to address the growing role that financial capital plays in the shift toward a low-carbon economy and is the result of a 12-month collaboration between 16 financial institutions around the world, four of which are based in the United States: Amalgamated Bank, Bank of America, Boston Common Asset Management and Morgan Stanley.