100+ Financial institutions - $ 43 + Trillion in total assets

Best practice example: First Steps in the Carbon Accounting Journey

Coastal Enterprises, Inc. Business Loans

A New Approach for Quantifying Portfolio Emissions

CEI decided to join the PCAF to better understand carbon accounting generally and to understand the carbon profile of its loan portfolio specifically. Most of the businesses we work with do not have the capacity or resources to determine their own carbon footprint, so PCAF provides a mechanism for us to do that with a relatively simple methodology. As a member of PCAF North America, we co-lead the development of the business loans asset class methodology and helped shape the what we hope will become a standard for not only CEI’s accounting practices but for the finance sector.

Leveraging the Resources at Hand

As an initial step in institutionalizing portfolio carbon accounting at our organization, CEI hosted an Environmental Fellow from Bowdoin College who applied the PCAF methodology to CEI’s small business loan portfolio. For the time being, we have limited our focus to small business loans and have not addressed commercial real estate or equity. Despite having limited resources to dedicate at this stage, these initial calculations have already helped us understand the methodology and reveal trends in the data.

Evolving Accounting Practices Alongside PCAF

We expect the scope and accuracy of our work to increase over time. The PCAF emission factor database will incorporate additional and more specific emission factors. Additionally, in 2021 CEI will be upgrading its loan servicing software. This should enable us to integrate the required data points for PCAF so that we can collect the data up front that we’re not already collecting (e.g., asset turnover ratios) as we can integrate the key data points into the loan workflow.