Partnership for Carbon Accounting Financials North America (PCAF NA) aims to lead and inspire other financial institutions, measure what matters, drive loans and investments, and meet goals to reduce greenhouse gas (GHG) emissions. GHG emissions accounting (or carbon accounting) is the cornerstone of responsible corporate climate activity.
Measuring the GHG emissions of loans and investments enables a financial institution to improve risk management, identify opportunities associated with its GHG impact, and address stakeholders’ needs on transparency and climate change. There is no established methodology in North America to accurately account for the GHG emissions from a financial institution’s lending and investment activities (scope 3 emissions). These loans and investments make up the majority of a financial institutions’ emissions impact and subsequently these organizations’ contribution to global climate change.
In the Netherlands, fourteen financial institutions started the Partnership for Carbon Accounting Financials (PCAF Netherlands) in 2015, just prior to the Paris Climate Summit (COP21), and agreed to jointly develop open-source methodologies to measure the GHG emissions of their loans and investments. 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.
The carbon accounting methodology developed in this report is the first iteration of a North America-focused approach. This report builds on the PCAF Netherlands approach and tailors it to the US and Canada, which differ in terminology, data availability, and the types of loan and investment activities. It is created by and for financial institutions that aim to lead and inspire other financial institutions.
PCAF NA developed methodologies to calculate the GHG emissions of loans and investments in six asset classes. Per asset class, the methodology uses publicly available data sources and emission factors to estimate the GHG emissions associated to a financial institution’s portfolio. Data used are as specific as possible (e.g., based on geographic location and characteristics of (the asset) and sector averages are used to fill gaps. Per asset class, a data quality scoring from 1 to 5 is applied to identify data quality improvement and enable financial institutions to improve data over time.