Partnership for Carbon Accounting Financials
PCAF (Partnership for Carbon Accounting Financials) is a globally recognised standard that enables banks, insurers and investors to measure and disclose the greenhouse gas emissions of their loan and investment portfolios – known as financed emissions – in a consistent way.
The Partnership for Carbon Accounting Financials (PCAF) is an industry-led initiative, driven by financial institutions, that has developed an open and globally harmonised standard for measuring and disclosing the greenhouse gas emissions associated with financial services. At its core lies the concept of financed emissions: the share of a borrower's or investee's emissions that is attributed to the lending or investing institution. PCAF thereby translates the logic of the Greenhouse Gas Protocol – in particular Scope 3, Category 15 "Investments" – into a workable methodology for the financial sector.
Methodologically, PCAF assigns each financed position an attribution factor that relates the outstanding amount of financing to the enterprise value or total balance sheet of the financed company; multiplied by that company's emissions, this yields the financed emissions to be attributed. The standard covers several asset classes – including business loans and unlisted equity, listed equity and corporate bonds, project finance, commercial real estate, mortgages and motor vehicle loans – and defines a specific attribution formula for each. A central quality feature is the PCAF data quality score (score 1 to 5), which makes transparent whether a calculation is based on verified actual emissions or on coarser estimates derived from revenue or activity data.
For German and European financial institutions, PCAF carries significant regulatory weight, because financed emissions account for by far the largest part of their carbon footprint and must be disclosed under the CSRD and the ESRS E1 standard as well as within the EU Taxonomy and the SFDR. PCAF provides the methodological basis for quantifying portfolio Scope 3 emissions consistently, setting science-based climate targets and underpinning a credible transition plan. The calculation is data-intensive and assurance-relevant: institutions must document their assumptions, data sources and quality scores in order to pass the external assurance of the sustainability statement (limited and, in future, reasonable assurance).
Legal Basis
PCAF Global GHG Accounting and Reporting Standard for the Financial Industry (Part A); GHG Protocol (Scope 3, Category 15 "Investments"); CSRD (Directive (EU) 2022/2464) in conjunction with ESRS E1 Climate Change; SFDR (Regulation (EU) 2019/2088)
Practical Example
The sustainability officer of a mid-sized regional bank is preparing its first CSRD-mandated disclosure under ESRS E1. Because the bank's own Scope 1 and Scope 2 emissions from buildings and fleet are small, she focuses on the financed emissions of the loan portfolio. For corporate banking she calculates the PCAF attribution factor per exposure from the outstanding loan amount and enterprise value, while for the mortgage portfolio she uses energy performance certificates and floor-area data. Where verified emissions data is missing, she falls back on sector-specific emission factors and documents a PCAF data quality score for each position. The result forms the baseline for a science-based target and, once assured, feeds into the sustainability statement.