Non-profits partner to boost financed emissions reporting

December 17, 2021

The Partnership for Carbon Accounting Financials (PCAF) and CDP have teamed up to boost the capacity of financial institutions to measure and disclose their financed emissions.

The collaboration will combine the two groups’ resources and networks to promote the PCAF Standard while increasing the assessment and disclosure of the financed emissions of global financial institutions.

CDP research has found that financed emissions are 700 times greater than operational emissions, while just a quarter of financial institutions disclosed their portfolio emissions.

The CDP, in its collaboration with PCAF, said it was hopeful that the numbers of those reporting emissions in line with the PCAF Standard would increase and fill the gap in climate reporting.

“Through capital flows and portfolio alignment with net-zero, the financial sector has a pivotal role to play in realising a net-zero and nature-positive economy,” said Claire Elsdon, joint global director of capital markets at CDP. “However, financial institutions that fail to disclose their financed emissions risk underestimating the climate-related impact of their portfolios.

“Robust and transparent disclosure of financed emissions provides the market with a baseline assessment of climate-related risks, as well as crucial data to track progress toward the net-zero transition.”

PCAF and CDP will develop and provide workshops, reports, and case studies for their respective networks of financial institutions. The material will focus on accounting and TCFD-aligned reporting of emissions, in line with the PCAF Standard.

“Scope 3 financed emissions measurement and disclosure of financial institutions is an essential step,” said Giel Linthorst, executive director of PCAF. “It’s great to see that CDP has integrated this into their Financial Services Questionnaire. By collaborating with CDP, we can support financial institutions globally with measurement and disclosure of their climate impact.”

The partnership is the latest in a series of collaborations between data companies and standard setters. The Climate Disclosure Standards Board, an initiative of CDP, and the Value Reporting Foundation, which oversees the Sustainability Accounting Standards Board are set to merge by June 2022.