Morgan Stanley is the first U.S. bank to publicly disclose how much its loans and investments contribute to climate change.
The Partnership for Carbon Accounting Financials announced Monday that Morgan Stanley joined the organization and its steering committee as part of the commitment.
Along with helping the partnership address the challenge of measuring financed emissions, the bank will help PCAF develop a global accounting standard for all financial institutions to use to measure and reduce their climate impacts.
PCAF was launched globally in 2019 to standardize carbon accounting for the financial sector, helping asset owners and managers assess and disclose greenhouse gas emissions financed by financial institutions' loans and investments. PCAF has 66 formal members that represent more than $5.3 trillion in assets.
The coming year is critical in aligning the finance sector with the goals of the Paris Agreement, said Giel Linthorst, PCAF secretariat executive director, in a statement. PCAF's methodology is being used in several markets for measuring financed emissions — emissions associated with investments in equity, bonds and project finance — in the financial sector and will soon be published as a global methodology. Morgan Stanley has been part of that initiative.
"We are excited to join PCAF and to support the important work they are leading to build a methodology for global banks' efforts to track and measure climate change risks," said Audrey Choi, Morgan Stanley's chief sustainability officer and CEO of the Morgan Stanley Institute for Sustainable Investing, in the statement.
Danielle Fugere, president of shareholder advocacy group As You Sow, criticized U.S. banks for not addressing emission financing but said in the statement that Morgan Stanley's commitment "shows that banks can and must do this work to reduce the risk that the climate crisis poses to banks and to the entire economy."