Financial leaders join fights against climate change

The PCAF standard to disclose financed emissions inspires more and more banks, insurers, investors and other financial institutions to take climate action.

Stephanie Van Breedam
February 9, 2023

PCAF Standard: Towards Green Financing

In this 3-part series, we show how the finance sector moves from ambition to action on greenhouse gas emissions. Get immersed, get inspired.

Set up in 2015, the Partnership for Carbon Accounting Financials (PCAF) counts over 300 banks, insurance companies, investors and other financial institutions worldwide. They all commit to PCAF  to assess and disclose the greenhouse gas emissions they finance through loans and investments – aka financed emissions. And you can too.

source: https://www.cdp.net/en/research/global-reports/financial-services-disclosure-report-2020

Aligning with Paris Climate Agreement

In 2015, a group of 14 Dutch financial institutions created PCAF, under the leadership of ASN Bank. Concerned by the scale of climate change, they decided the time had come to step up. After all, investors and banks, which represent most of the available capital globally, were carelessly financing our fossil fuel-dependent economy. Turning a blind eye to this overwhelming responsibility was no longer justifiable. We all gambled on fossil fuels for decades and we lost. No more. The industry-driven initiative expanded to North America in 2018 and went global in 2019.

Only by rethinking our financial ecosystem can we transition towards a low-carbon society.

PCAF’s main objective is enabling financial institutions to align their portfolio with the Paris Climate Agreement, which wants to limit global warming to 1.5°C above pre-industrial levels. A first step in this direction is measuring and disclosing greenhouse gas (GHG) emissions associated with lending and investment activities.

A standard for transparent GHG accounting and reporting

Responding to the industry’s demand for a global, standardized approach, PCAF developed the Global GHG Accounting and Reporting Standard for the Financial Industry. It provides detailed methodological guidance to measure and disclose GHG emissions associated with six asset classes:

#1 Listed equity and corporate bonds (e.g. common stock)

#2 Business loans and unlisted equity (e.g. credit used for capital expenditures)

#3 Project finance (e.g. loans to build a bridge)

#4 Commercial real estate (e.g. loans to purchase retail space)

#5 Mortgages (e.g. loans for a new house)

#6 Motor vehicle loans (e.g. loans to buy a new company car)

In the future, PCAF may add more asset classes. But this foundation already allows financial institutions to thoroughly assess their portfolio as well as perform scenario analysis, set targets, inform actions and disclose progress. This then translates into 6 benefits of disclosing your financed emissions, which we share in this blog post.

Good to know: the standard not only enables carbon accounting for generated emissions, but also for avoided emissions (e.g. through investments in energy-efficient projects) and removed emissions (e.g. through investments in reforestation projects).

No data, no excuse

Although the concept of financed emissions is straightforward, calculating them is much less so. It requires data from a wide range of other businesses and organizations, many of which may not be actively measuring their carbon footprint.

Data blind spots, however, are no longer a dealbreaker. While PCAF recognizes that collecting quality data is a huge challenge, it should not be used as an excuse for inertia. The partnership claims that, in many cases, using estimated or proxy data to fill in the blanks works just as well to identify carbon-intensive hotspots in lending and investment portfolios. Moreover, PCAF’s guidance includes a data-quality scoring matrix. This encourages improvements to data quality in the medium and long term.

Financing a just transition

For financial institutions, emissions from loans and investments are often the most significant part of their GHG emissions. Only by measuring these scope 3 emissions can they materialise their carbon footprint and redirect funds. With the capacity to tap into vast volumes of mainstream private finance, financial institutions play a significant role on the world’s path to climate neutrality. And we’re glad to see that things are taking a turn for the better.

Wondering how disclosing your financed emissions benefits you?

Based on some real-life examples from renowned financial institutions, we’ve distinguished 6 clear benefits. Read more.

Already convinced and ready to start tracking your own financed emissions?

Futureproofed has just the right climate tech platform.

➤   Book a demo

   

Talk to an expert

Related articles

The latest news, technologies, and resources from our team.

Corporate Carbon Footprint: How to calculate and reduce your company’s carbon emissions

Your corporate carbon footprint is an important first step to understanding your company’s impact on the planet. Learn what a carbon footprint is, how to calculate it, and the steps to carbon reduction in your company.
Stef Vervaet
June 25, 2024

Carbon sequestration for smarter climate action

In our relentless pursuit to support cities in their battle against climate change, we are thrilled to unveil the latest addition to our dashboard graph: carbon sequestration data.
Ides Peeters
June 5, 2024

How carbon sequestration fits into your city’s climate plan

Explore how carbon sequestration transforms your city's climate goals. Learn its benefits for cleaner air, economy, and sustainability. Dive in now!
Ides Peeters
April 23, 2024

Corporate Sustainability Strategy: How To Develop It

A corporate sustainability strategy helps ensure that a business adapts to the sustainable economy of the future.
Steven Van Praet
April 21, 2024

The ABCs of Carbon Accounting | Futureproofed

What exactly is carbon accounting, why should you care, and how do you start ? Here’s everything you need to know (including a 7-step plan).
Siemon Peeters
March 30, 2024

PCAF: how to kickstart your journey

Kickstart your PCAF journey in 3 steps: determine your asset class, collect the relevant data, and then measure financed emissions. Read how we help.
Stef Vervaet
March 27, 2023

Why sustainability is an incredible business opportunity

Sustainability brings economic opportunities, plain and simple. And it strengthens the ties with all your stakeholders. Here’s how that works.
Stephanie Van Breedam
February 21, 2023

PCAF: 6 benefits of disclosing your financed emissions

Discover 6 benefits of disclosing you financed greenhouse gas emissions with the PCAF standard. Innovation, trust, compliance and more: here's you benefit.
Stephanie Van Breedam
February 9, 2023

Corporate Carbon Tax: The Impact On Business

A corporate carbon tax is looming on the horizon. This is what businesses need to know to prepare.
Stef Vervaet
October 4, 2022

50 global cities join in a unique collaboration between Futureproofed and WWF

50 cities, including Jakarta, Paris, Quito, Lund, Louisville and Istanbul, representing 80 million inhabitants are joining FutureproofedCities as part of the WWF’s One Planet City Challenge (OPCC). Collaboration is key to helping cities globally make the climate transition. Driving climate action is complex - and the best digital tools can help cities kickstart change
Serge de Gheldere
January 27, 2022

Crypto and climate change (guest blog by Diana Diaz Castro)

Guest writer Diana Diaz Castro discusses how to lower the impact of crypto on the climate, through innovative projects and measures.
Diana Diaz Castro
July 2, 2021

City Business Climate Alliance: Boosting Momentum For Climate Action

A city-business climate alliance offers solutions to accelerate climate action in cities. It opens up new opportunities for innovation and economic growth
Sander Graumans
April 27, 2021

European Green Deal: Setting The Course For A Sustainable Future

In this article we digest the complex policies and actions in a simple overview of the European Green Deal. We look at the goals, and impact on businesses.
Mieke Priem
April 20, 2021

D’Ieteren Immo: A sustainable real estate company driven by innovation

We’re proud to have partnered with D'Ieteren Immo to transform their sustainable real estate vision into a strategy and actionable steps.
Stephanie Van Breedam
April 9, 2021

Science Based Targets: moving towards a zero-carbon future

Science Based Targets is an initiative to help corporates reach a zero-carbon future and limit global warming through science-driven goals.
Mieke Priem
March 26, 2021

Climate Change Is An Equality Issue

Climate change will impact the very social fabric of our societies - potentially undoing the progress we have made in making the world a mor
Siemon Peeters
March 9, 2021

SDGs for businesses: What are sustainable development goals?

Learn about Sustainable Development Goals, and how the impact of climate change is woven into all 17 SDGs. SDGs offer businesses huge growth
Siemon Peeters
February 17, 2021

💰 How to finance climate adaptation measures

Cities struggle to finance their climate action adaptation measures and often have to work around common challenges like low financial retur
Antonio Arce Romero
February 2, 2021

A Medium City's Plan Of Action For Climate Change

Prioritizing climate actions is difficult, like in a growing city of 25k to 200k inhabitants. What are the profitable measures with significant CO2 impact?
Antonio Arce Romero
March 25, 2020

Climate Change Adaptation Strategies For Cities In 5 Steps

Do you feel that your city should start working on climate change adaptation strategies? Let us guide you through this 5-step journey.
Antonio Arce Romero
February 5, 2020
Man working at desk
Olivia Rhye
20 Jan 2024

UX review presentations

How do you create compelling presentations that wow your colleagues and impress your managers?
Man pinning images on wall
Olivia Rhye
20 Jan 2024

UX review presentations

How do you create compelling presentations that wow your colleagues and impress your managers?
Desk with computer
Olivia Rhye
20 Jan 2024

UX review presentations

How do you create compelling presentations that wow your colleagues and impress your managers?

Choose Futureproofed

Equip your business or city with the expertise and tools needed to build a more resilient and sustainable future.