The first global standard for measuring and reporting financed greenhouse gas emissions was unveiled Wednesday by the Partnership for Carbon Accounting Financials.
PCAF is an industry-led initiative to help financial institutions assess and disclose the greenhouse gas emissions from their loans and investments through GHG accounting.
According to PCAF, nearly 90 financial institutions with a collective $17.8 trillion in assets have committed to measuring and reporting the greenhouse gas emissions associated with their financial activity and more financial institutions are committing to ensuring that their loans and investments align with a net-zero emissions target by 2050.
The Global GHG Accounting and Reporting Standard for the Financial Industry allows for measuring financed emissions of six asset classes:
- Listed equity and corporate bonds.
- Business loans and unlisted equity.
- Project finance.
- Commercial real estate.
- Motor vehicle loans.
It was developed over the past year with 16 financial institutions, including in the U.S., Amalgamated Bank, Bank of America, Morgan Stanley and Boston Common Asset Management. Other institutions were ABN AMRO, FMO, Triodos Bank and Robeco in the Netherlands, Banco Pichincha and Produbanco in Ecuador, Credit Cooperatif and its subsidiary Ecofi in France, FirstRand Ltd. in South Africa, KCB in Kenya), Landsbankinn in Iceland) and Vision Banco in Paraguay.
There was also a public consultation with sustainable finance stakeholder groups, policymakers, data providers, consultants and civil society organizations.
PCAF will provide technical support to help the financial institutions implement the standard, and next year will develop additional asset class methods and case studies.
The new standard will also help support many other climate initiatives, said Giel Linthorst, executive director of PCAF Secretariat and director at Guidehouse, PricewaterhouseCoopers' U.S. public sector business.