PCAF stands for "Partnership for Carbon Accounting Financials". It is an initiative founded by the industry to promote transparency and consistent reporting on the efforts of financial institutions to achieve the climate goals of the Paris Agreement. In April 2021, the PCAF published its Strategic Framework for Adaptation to the Paris Agreement, which consists of a list of climate finance initiatives to help financial institutions align their efforts with the implementation of the Paris Agreement during the various phases of the transition period and to strengthen their efforts.
As a prerequisite for conducting scenario analysis, setting strategic targets and monitoring progress in portfolio adjustment and decarbonization, it is of utmost importance that financial institutions are able to assess and disclose the GHG* emissions of their loans and investments. For this reason, PCAF has developed a freely accessible ("open-source") and harmonized global GHG accounting standard for the various financial market participants, which consists of three parts. Part A (updated version: December 2022) consists of the methodological approach to disclosing information on financed emissions for seven classes of assets as well as recommendations on how to mitigate such emissions. Part B focuses on the methodologies for assessing and disclosing GHG emissions related to capital market transactions and was still due for publication in early 2023. Finally, Part C (to be published in November 2022) deals with insurance-related emissions and provides guidance on the measurement and reporting of GHG emissions associated with (re)insurance transactions. To date, 350 financial institutions (total assets: 88.1 trillion dollars) have joined the initiative and committed to disclosing their greenhouse gas emissions in accordance with the PCAF standard.
*GHG = greenhouse gas
