Partnership for Carbon Accounting Financials
An increasing number of financial institutions have started to measure the carbon footprints of their investments and loans. They can use the measurement methodology of the Partnership for Carbon Accounting Financials (PCAF) and in this way contribute to a carbon-neutral economy.
What the PCAF does
Eighteen Dutch financial institutions with managed assets totalling EUR 2 trillion have joined the Partnership for Carbon Accounting Financials (PCAF). Together, they have developed a methodology to measure carbon emissions of loans and investments. This allows financial institutions to:
- establish the carbon footprint of each of their investments and loans and use this information in their reporting
- align their portfolios with the Paris Climate Agreement.
- Measurement methodology for carbon emissions
PCAF launched this uniform methodology in 2015. It measures the carbon footprint of six types of assets: equity, project finance, government bonds, mortgage loans, corporate finance and commercial real estate. The PCAF methodology has been continuously expanded and improved, and also applies to other types of loans and investments. The latest report offers financial institutions concrete guidance on how to work with the PCAF methodology.
PCAF: a global movement
Led by Amalgamated Bank, the Dutch PCAF initiative expanded to North America in 2018. A group of North American banks translated the measurement methodology developed by PCAF the Netherlands (PCAF NL) to their own specific situation. On 23 September 2019, PCAF became a global movement. By the end of this year, PCAF wants to have achieved the following ambitions:
- introducing a global standard for measuring carbon emissions of loans and investments in accordance with the GHG Protocol
- increasing the number of members to more than one hundred worldwide
Ultimately, measuring the impact of carbon emissions using the PCAF methodology should become a common practice in the financial sector. At present, 65 financial institutions from all over the world have joined and committed themselves to the agreement to measure and disclose their carbon emissions. They represent total assets worth USD 4.5 trillion.
Dutch financials in PCAF
PCAF NL was launched in 2015 at the initiative of ASN Bank during the Paris Climate Summit. Eleven Dutch financial institutions immediately joined. PCAF NL now has 18 Dutch members. Recently, BNG Bank, NWB Bank and NIBC joined the partnership. The other PCAF NL members are ABN AMRO, Achmea Investment Management, ACTIAM, APG, ASN Bank, a.s.r., FMO, MN, PME, PMT, Rabobank, Robeco, Triodos Bank,Van Lanschot Kempen and Volksbank. PCAF NL is a working group of the Dutch Sustainable Finance Platform. It is chaired by ABN AMRO's Tjeerd Krumpelman. Mark Schenkel runs the PCAF NL secretariat.
An important next step in the development of PCAF is the use of insights from the assessment of greenhouse gas emissions to set science-based targets. Based on these targets, financial institutions can contribute to the efforts of maintaining global temperature rises within safe levels.