Banks represent most of the available capital globally and since the Paris Climate Agreement the largest banks have still invested more than $4.6 trillion into the fossil fuel sector. This is equivalent to $1.8 billion for every day since the end of 2015, with no downward trend and no assessment of the carbon impact of that finance.
Given the scale of the climate challenge and the crucial role of the financial industry in facilitating the net zero carbon transition, the Partnership for Carbon Accounting Financials was created.
PCAF is a global partnership of financial institutions that work together to develop and implement a harmonized approach to assess and disclose the greenhouse gas (GHG) emissions associated with their loans and investments.
The harmonized accounting approach provides financial institutions with the starting point required to set science-based targets and align their portfolio with the Paris Climate Agreement. PCAF enables transparency and accountability and has developed an open-source global GHG accounting standard for financial institutions, the Global GHG Accounting and Reporting Standard for the Financial Industry.
In 2015, fourteen Dutch financial institutions created PCAF, under the leadership of ASN Bank. The initiative was launched via a Dutch Carbon Pledge calling on the negotiators at the Paris Climate Summit in 2015 to take ambitious steps while the committed financial institutions take their share in delivering an essential shift to a low carbon economy, starting with measuring and disclosing the GHG emissions of their loans and investments.
Since then, more financial institutions from the Netherlands have joined forces to develop and implement open-source methodologies to measure the GHG emissions of all asset classes within their loans and investments portfolios.
In 2018, PCAF expanded to North America. Led by Amalgamated Bank, 12 financial institutions adapted the PCAF GHG accounting methodologies to the North American context. And on 4th of March 2019, leaders of 28 banks of the Global Alliance for Banking on Values (GABV) decided to assess and disclose the GHG emissions of their loans and investments by using the PCAF approach.
Due to the increasing interest of financial institutions worldwide in transparent and harmonized assessment of the GHG emissions of their loans and investments, ABN AMRO, Amalgamated Bank, ASN Bank, Global Alliance for Banking on Values (GABV) and Triodos Bank decided to launch the global initiative. The globalization of PCAF addresses banks and investors across the world.
Addressing the urgent challenge of climate change is more pressing now than ever. To limit global warming to 1.5°C above pre-industrial levels, all sectors of society need to decarbonize and collectively reach to net zero emissions by 2050. The financial industry can facilitate the transition in line with the Paris Climate Agreement.
As a first step in this direction, harmonized and transparent greenhouse gas (GHG) accounting becomes an imperative. Measuring and disclosing the GHG emissions associated with the lending and investment activities of financial institutions is the foundation to create transparency and accountability, and to enable financial institutions to align their portfolio with the Paris Climate Agreement.
[…] Defining effective metrics and target setting approaches for financial institutions is a critical step. The Science Based Targets Initiative is working towards a platform for financial sector targets aligned with the Paris Agreement’s goals, and collaborations such as PCAF are an important way for institutions to get started.
Chris Weber, Global Climate & Energy Lead Scientist WWF
Building on the GHG accounting activities in the Netherlands and North America, ABN AMRO, Amalgamated Bank ASN Bank, Global Alliance for Banking on Values (GABV) and Triodos Bank decided to launch a global initiative to develop a global GHG accounting standard and increase the number of financial institutions applying this standard to over 250 institutions globally, and ultimately to make GHG accounting common practice within the financial industry.
PCAF is open to any financial institution and therefore it has developed GHG accounting methodologies that apply to any financial institution. The following asset classes are currently covered by the methodology: listed equity & corporate bonds, business loans and unlisted equity, project finance, mortgages, commercial real estate and motor vehicle loans.
As banks represent most of the available capital globally and play a crucial role in facilitating the transition, PCAF is set to collaborate with banks worldwide. In addition to banks, the globalization of PCAF also focuses on investors (i.e. pension funds, asset owners and managers). We encourage investors to join the initiative and commit to assess and disclose their GHG emissions associated with their portfolio.
PCAF recognizes that these financial actors play an important role in the financial ecosystem to drive change and transition towards a low-carbon society in line with the Paris Climate Agreement.
By starting with a global group of willing financial institutions, capitalizing on their network and engaging with other influential actors (e.g. NGOs, UN, governments, regulators, etc.), the PCAF initiative aims to grow the number of commitments to over 250 financial institutions globally by 2022, including large mainstream institutions.
[…] What I like about PCAF is its flexibility. It is open source and there is enough guidance there right now for financials to get started. It is comprehensive; it covers many different asset classes and knows how to start with imperfect data and how to work on increasing data accuracy. As of now it is not a turnkey solution, but it allows financial institutions to start on their journey measuring and lowering financed emissions.
Nicolette Bartlett, Global Director of Climate Change, CDP
PCAF is a non-profit entity, led by the Board of Directors that monitors and steers the progress towards achieving the overall objectives and ambition of PCAF. The governance and operating model of PCAF as well as the roles and responsibilities of the key stakeholder group members are stipulated in the PCAF Governance document.
The Steering Committee of PCAF was originally comprised of the institutions that initiated the globalization of the PCAF initiative: ABN AMRO, Amalgamated Bank, ASN Bank, Global Alliance for Banking on Values (GABV), and Triodos Bank. Through the filing of a non-profit entity in January 2023, PCAF has become a non-profit entity with the Steering Committee transforming into the Board of Directors. The current Board of Directors comprises the following members:
Justine is the carbon and biodiversity specialist in the Environmental, Nature & Climate Risk team at FirstRand. A driven environmental sustainability practitioner, Justine works on carbon accounting including financed emissions, portfolio alignment and climate change risks; biodiversity accounting and nature risks; and climate and nature related disclosures. Justine is the co-chair of the PCAF Africa working group, and strives to promote collaboration, learning and capacity building in fellow African financial institutions along their financed emissions and climate mitigation journeys. She brings this regional and emerging markets view to the PCAF Board to ensure that regionally specific contexts are considered in the global frameworks and methods being developed.
Dinesh Dulal works for NMB Bank Ltd, where he currently leads the Sustainable Banking Department. He is an experienced banker having worked for more than two decades in the Nepalese banking sector. Over his career, he has primarily been involved in sustainable energy project financing, including both on-grid and off-grid projects, agriculture financing, microfinancing for providing financial access to unbanked populations, and financing CSR initiatives. He is also representing NMB Bank on the board of NMB Microfinance, which is a subsidiary microfinance institution of NMB Bank focused on financial inclusion.
Ivan Frishberg is Chief Sustainability Officer at Amalgamated Bank where he leads impact and shareholder engagement programs. As a commercial banker, Ivan has been instrumental in rallying bank sector commitments to combat climate change. Under Ivan’s leadership, Amalgamated has taken a global leadership role at UNEP FI in developing guidance for how banks will set targets to reduce their financed emissions through the Net Zero Banking Alliance. Ivan is on the Steering Group of the NZBA and the Advisory Panel for the Glasgow Finance Alliance for Net Zero. Ivan also steered the way to make Amalgamated Bank the first U.S. bank to commit to the Science Based Targets Initiative (SBTi) and the first bank to set portfolio wide targets under the United Nations guidelines for target setting.
As Global Head of Sustainability for Naspers-Prosus group, Prajña is responsible for overseeing the transition of a diverse investment portfolio to Net Zero. Her personal experience covers multiple countries, contexts and cultures – including campaigning for an international environmental NGO, building credible integrated reporting at an international bank, financing and working with entrepreneurs in Africa and Asia on clean energy solutions and currently building a portfolio of companies all leading their own ESG journeys. In these roles she has had to bridge different contexts and regions, and stimulate exchange between several jurisdictions in building larger support for climate action and universally adopted international standards. Across all of this work, Prajña has strived to catalyze real change within the financial ecosystem.
Tjeerd Krumpelman was the Global Head of Reporting, Regulations and Stakeholder Management at ABN AMRO until March 2024, where he was part of the Management Team of ABN AMRO’s Sustainability Centre of Excellence for the last decade. Tjeerd has more than 20 years’ experience in the banking sector and has been a PCAF Board member since 2019.
James Niven is Chief Operations and Programs Officer at the Global Alliance for Banking on Values (GABV), a network of the world’s leading independent, values-based banks. James is a communications professional with experience in business, government and non-governmental organizations. James previously worked for the UK Home Office’s National Criminal Intelligence Service, Voluntary Service Overseas and for the British Council in New Zealand. He worked for almost 20 years at pan-European values-based bank, Triodos Bank, including as Head of Marketing and Communications in the UK, International Head of Corporate Affairs and International Head of Impact Assessment and Reporting. James was part of the group of Dutch financial institutions that first developed the PCAF methodology and, through the GABV, develop it into the international initiative it is now.
Peter Sandahl is the Head of Climate & Environment and the Deputy Head of Group Sustainability at Nordea Group. Peter has broad experience in shaping global standards for carbon accounting, net zero alignment and transition planning for financial institutions. Besides his role as a board member in PCAF, he is a member of the Steering Group in the UN-convened Net Zero Banking Alliance (NZBA) and has assignments in the Science Based Target initiative (SBTi) and the Glasgow Financial Alliance for Net Zero (GFANZ).
Alison is a climate specialist in Lloyds Banking Group’s Centre of Excellence in Environmental Sustainability which plays a pivotal role in driving sustainability ambition and practice. Her responsibilities span financed emissions, target setting, and system strategy development across Energy, Transport, Built Environment and Agriculture. Alison also actively engages with external initiatives such as NZBA and PCAF. Alison has been a long-standing supporter of PCAF since its inception and previously co-chaired the PCAF UK group. Her diverse background includes experience in financial institutions, university research and innovation, and government environmental policy. Additionally she has served as a board director and a charity trustee.
PCAF and CDP collaborate closely to enable transparent disclosures allowing stakeholders to better understand the climate impact of financial institutions’ portfolios. CDP’s disclosure framework integrates The Global GHG Accounting and Reporting Standard for the Financial Industry into its Climate Change Questionnaire for Financial services, which asks for disclosure of Scope 3 portfolio emissions.
PCAF partners with RMI’s Center for Climate-Aligned Finance to advance the goal of enabling low-carbon transitions for key global industries. This collaborative engagement supports the development of sector-specific data to improve implementation of the Global GHG Accounting and Reporting Standard in banks, asset managers and asset owners; facilitate the engagement of financial institutions with their customers; and support programs that advance the quality of the data systems and approaches available for financial institutions to support effective measurement and alignment.
PCAF and CIBAFI partner to enable Islamic banks to measure and disclose the greenhouse emissions financed by loans and investments. Jointly, they are developing bespoke guidance for Islamic banks to build capacities in the measurement of financed emissions.
PCAF is partnering with CRREM and GRESB in 2021 to provide investors and banks with the guidance they need to measure and report on their financed emissions from real estate. This partnership is meant to help financial institutions formulate, set, and implement forward-looking targets in relation to their financed emissions.
The Green Climate Fund is an observer to the process of developing the Global GHG Accounting and Reporting Standard for the Financial Industry. PCAF proactively informs the Green Climate Fund and involves them in the development process of the Standard, giving them the opportunity to provide input and feedback.
PCAF is partnering with GRESB and CRREM in 2021 to provide investors and banks with the guidance they need to measure and report on their financed emissions from real estate. This partnership is meant to help financial institutions formulate, set, and implement forward-looking targets in relation to their financed emissions.
PCAF and JIM collaborate to improve financed emissions estimates in developing countries. By making the JIM available to PCAF participating banks, it can be used to fill the gap in GHG emissions data for corporate lending portfolios in developing countries when real data is lacking or incomplete.
PCAF and KoSIF have partnered to support financial institutions in South Korea to measure and disclose the financed emissions of their portfolios. The PCAF-KoSIF coalition is set to build capacities on PCAF standard implementation for the measurement of financed emissions in a Korean context.
PCAF and the Mongolian Sustainable Finance Association (MSFA) partner to enable MSFA and its members to advance their ambitions and decarbonize their investments in line with the Paris Agreement. MSFA aims to introduce PCAF standards in the financing activities of all 11 commercial banks, 10 major micro-finance institutions, asset managers, insurance companies, the Development Bank of Mongolia, and the Mongolia Mortgage corporation.
PCAF has partnered with NRDC China to enable Chinese financial institutions to measure and disclose the greenhouse gas emissions financed by their loans and investments. This collaboration aims to develop region-specific guidance for Chinese financial institutions.
PCAF is collaborating with the Paris Aligned Investment Initiative (PAII) to advance the development of PCAF’s GHG accounting methodology so that it can be used to effectively underpin the Net Zero Investment Framework (NZIF) going forward. The PAII already points to PCAF as the leading GHG accounting approach to underpin the NZIF.
The UN-convened Net-Zero Asset Owner Alliance (NZAOA) is represented on the PCAF Steering Committee by Nordea Life & Pension. The NZAOA is an international group of 37 institutional investors (as of 30 April 2021) with $5.7 trillion in assets under management delivering on a bold commitment to transition their investment portfolios to net-zero GHG emissions by 2050. The Alliance was initiated by Allianz, Caisse des Dépôts, La Caisse de dépôt et placement du Québec (CDPQ), Folksam Group, PensionDanmark, and SwissRe. Since then, Alecta, AMF, CalPERS, Nordea Life and Pension, Storebrand, and Zurich have joined as founding members. Aviva, AXA, CNP Assurances, David Rockefeller Fund, Fonds de Réserve pour les Retraites (FRR), Generali, the Church of England and more have joined the growing group.
PCAF and SBTi collaborate to enable financial institutions to align their lending and investment portfolios with the Paris Agreement’s mitigation goals. Financial institutions that decide to set science-based targets using the sector decarbonization approach (SDA) can use PCAF to measure their financed emissions for baselining and tracking of progress against targets.
PCAF and the Verein für Umweltmanagement und Nachhaltigkeit in Finanzinstituten e.V. (VfU) have partnered to roll out GHG portfolio accounting in the D/A/CH/Li (German-speaking) region of Europe. This collaboration supports financial institutions in Germany, Austria, Switzerland and Liechtenstein to measure and disclose their financed emissions.
PCAF developed an accredited partner program to meet the growing demand from financial institutions committing to use the PCAF Standard to measure and disclose emissions associated with their financial activities and the corresponding need to collaborate with third-party businesses supporting this activity. The accredited partner program is a collaboration between PCAF and the service providers to support consistent, comparable, and high-quality disclosures and is designed for consultancies, data providers, and software providers operating in this space. The model offers these service providers access to the PCAF Academy, the PCAF Database and Technical Assistance in the application of the PCAF Standard, along with other benefits.
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