What is PCAF?
The Partnership for Carbon Accounting Financials (PCAF) is a global network of financial institutions, investors, and other stakeholders committed to developing and promoting a common approach to carbon accounting for the finance industry.

Partnership for Carbon Accounting Financials (PCAF)

The Partnership for Carbon Accounting Financials (PCAF) is a global network of financial institutions, investors, and other stakeholders committed to developing and promoting a common approach to carbon accounting for the finance industry. The initiative was launched in 2017 by five financial institutions – the Norwegian Government, storebrand, Triodos Bank, Amundi, and Arabesque S-Ray.

PCAF methodologies include a GHG accounting approach across 7 asset classes

  • listed equity and corporate bonds
  • business loans and unlisted equity
  • project finance
  • commercial real estate
  • mortgages
  • motor vehicle loans
  • sovereign debt

Measuring financed emissions enables financial institutions to understand the risks and opportunities in their portfolios.

What’s the goal?

To help financial institutions assess and disclose the greenhouse gas (GHG) emissions from their loans and investments through GHG accounting so they can make better decisions regarding investments.

Who does it apply to?

PCAF was created by the financial industry, for the financial industry. It is a powerful tool for financial institutions to measure and report their GHG emissions in a standardised way.

When does PCAF come into effect?

PCAF is not a regulatory obligation in itself, however, some regulations that require companies to disclose their carbon accounting will find PCAF a useful tool.

Is it mandatory?

No

How do you become compliant with PCAF?

PCAF categorises the data that financial institutions use to calculate their financed emissions by score. Data is ranked from 1 to 5, with 1 being the most reliable and 5 reflecting low-quality data.

Being “compliant” with PCAF does not imply having the best data quality score. In fact, having “bad data” doesn’t mean you’re a bad actor. Most organizations start with proxy data, which is low quality yet informative.

Proxy data is based on regional economic averages. These averages are several steps removed from specific, real, primary data. However, they do serve a strategic purpose.

Starting with proxy data helps you understand where to focus your data quality efforts in your portfolio. You will get insights into the carbon hotspots, which will tell you where to focus decarbonisation efforts first [bang for buck sort of thing]. And where you focus decarbonisation efforts should be where you collect primary data first.

You’ll begin to collect that primary data and now you can start making informed decisions around decarbonisation, from target setting to implementation.

How we can help

Start by understanding your portfolio using economic proxy data. You’ll have low-quality data scores, but that’s where everyone starts.

With Bloom, we will help you understand the hotspots in your portfolio by leveraging proxy data. From here, we will work with you to develop a primary data collection strategy rooted in where the largest decarbonisation benefits can be realised.

With this information, we can leverage our digital software tools to engage in primary data collection on the asset classes that make strategic sense. For financial institutions, reducing emissions across your portfolio is a journey – and we’ll be with you from day 1.

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