Banks represent most of the available capital globally and since the Paris Climate Agreement the largest banks have still invested nearly $2 trillion into the fossil fuel sector. This is equivalent to $2.4 billion for every working 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 banking industry, and the financial sector in general, 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 will develop an open-source global carbon accounting standard for financial institutions.
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 have adapted the PCAF carbon 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 sector can facilitate the transition in line with the Paris Climate Agreement.
As a first step in this direction, harmonized and transparent carbon 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 carbon accounting activities in the Netherlands and North America, ABN AMRO, Amalgamated Bank ASN Bank, Global Alliance for Banking on Values (GABV) and Triodos Bank have decided to launch a global initiative to develop a global carbon accounting standard and increase the number of financial institutions applying this standard to over 100 institutions globally, and ultimately to make carbon accounting common practice within the financial sector.
PCAF is open to any financial institution and therefore it has developed carbon accounting methodologies that apply to any financial institution. The following asset classes are currently covered by the methodology: sovereign bonds, listed equity, project finance, mortgages, commercial real estate, corporate debt, corporate/SME loans, automobile loans and indirect investments.
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. Next to banks, the globalization of PCAF will also focus 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 eco-system 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 100 financial institutions globally, 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
The Steering Committee of PCAF is comprised of the institutions that initiated the globalization of the PCAF initiative, which include: ABN AMRO, Amalgamated Bank, ASN Bank, Global Alliance for Banking on Values (GABV) and Triodos Bank. The Steering Committee members are responsible for leading the progress towards achieving the mission and objectives of PCAF.