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Twelve Dutch financial institutions – the Platform for Carbon Accounting Financials (PCAF) – have agreed to work together to jointly develop open source methodologies to measure the carbon footprint of their investments and loans. By measuring and disclosing this information they expect to develop more effective strategies that help contribute to a low carbon society, in the hope that other institutions will follow suit.
PCAF was launched via a Dutch Carbon Pledge calling on the negotiators at the Paris Climate Summit in 2015 to take on board the role that investors and financial institutions can play in delivering an essential shift to a low carbon economy. If it’s successful the group will create a more transparent approach to assessing the carbon footprint for stakeholders inside and outside the Dutch financial industry.
Developing a carbon accounting methodology for financed emissions
The PCAF members’ plan was to develop within two years a common, transparent methodology that would enable financial institutions to set targets for carbon emissions and to measure the extent to which these targets were achieved. The recently published report describes such methodologies for listed equities, project finance, government bonds, mortgages, corporate finance and real estate. The report is in the public domain. The PCAF members hope this will encourage other financial institutions to adopt these methodologies.
Creating a common methodology is challenging given the wide variety of possible approaches and the large number of methodologies that have been developed in recent years. For that reason the platform has deliberately been limited to a relatively small number of member institutions in the hope that this will increase the chances of success. However, a sounding board, open to other institutions in The Netherlands, is also in place to benefit from expertise outside this core group. The members of the platform are ABN AMRO, Achmea Investment Management, Actiam, APG, ASN Bank, FMO, MN Services, PGGM, Stichting Pensioenfonds Metaal en Techniek (PMT), Stichting Pensioenfonds van de Metalektro (PME), Triodos Bank and de Volksbank. The platform is Chaired by ASN Bank.
PCAF continues for at least two years. The members also intend to share best practices, address dilemmas and work together on improving the methodologies. They are furthermore going to promote the developed methodology internationally. PCAF is also part of the Dutch Sustainable Finance Platform, chaired by the Dutch Central Bank (DNB).
Over the past two years, PCAF members have worked together to define and harmonise carbon footprinting methodologies for six asset classes:
- Government bonds
- Listed Equity
- Project Finance
- Commercial Real Estate
- Corporate Debt: Bonds and SME Loans
Based on a set of overarching accounting principles, the direct and indirect emissions (scope 1, 2 and 3 if available and relevant) of clients are attributed to the financial institution. This report presents the carbon footprinting methodologies per asset class in more detail.
Download the report by clicking on the image on the left.