Partnership for Carbon Accounting Financials (PCAF) Reporting

What is PCAF?

The Partnership for Carbon Accounting Financials (PCAF) is an industry-led global initiative by a group of Dutch banks led by the ASN Bank. PCAF provides financial institutions, including banks, with a standardised approach to measuring and disclosing financed emissions. This type of greenhouse gas (GHG) emission is associated with investment, loan, and capital activities, and they fall under scope 3, Category 15 of the GHG Protocol.

Why is PCAF important?

PCAF was built for finance-related emissions accounting and disclosure of measurable, consistent, and publicly accountable data. For most financial institutions, financed and facilitated emissions account for over 99% of their total GHG inventory. Even the world’s major banks have invested more than USD 8.7 trillion in fossil fuels ever since the Paris Agreement was signed in 2015.

The present situation shows operational sustainability measures, renewable energy procurement, and low-carbon office infrastructure are not enough to address this GHG emissions issue. And since the greatest impact of financial institutions comes from where they direct capital, PCAF comes in to address this issue.

PCAF’s Key Milestones

PCAF has been active for more than a decade, expanding from a domestic initiative to a global standard for finance emissions accounting.

2015: PCAF was founded.
2019: PCAF launched globally, expanding beyond its original Dutch membership to financial institutions across continents.
2020: PCAF published the Global GHG Accounting and Reporting Standard for the Financial Industry, or the PCAF Standard.
2025: PCAF updated the PCAF Standard, refining methodologies and expanding reporting metrics and asset classes.
2026: PCAF has more than 730 financial institutions as signatories at the early part of the year.

How was PCAF established?

PCAF started as a domestic initiative by Dutch financial institutions responding to a government call for banks to lead the transition to a low-carbon economy.

By 2019, 28 banks affiliated with the Global Alliance for Banking on Values had adopted the approach, expanding the coalition across continents. The initiative’s two founding objectives were (1) to publish a global GHG accounting standard, achieved in November 2020, and (2) to recruit more than 250 financial institutions to measure and disclose their financed emissions. Both targets have since been exceeded.

PCAF now operates regional implementation teams across Africa, Asia-Pacific, Europe, Latin America, and North America. Each team works to translate the global methodology into locally applicable guidance.

What is the PCAF Standard?

The PCAF Standard is organised into three parts. The December 2025 update was a substantial expansion that added new asset classes, refined methodologies, and new reporting metrics across all three parts. Each part aligns with the GHG Protocol’s Scope 3, Category 15 requirements.

Part A: Financed Emissions

Financed emissions are the measurement and disclosure of GHG emissions associated with loans and investments across asset classes. The PCAF Standard initially covered six asset classes. The December 2025 update of Part A expanded the scope to ten classes:

Listed equity and corporate bonds
Business loans and unlisted equity
Project finance
Commercial real estate
Mortgages
Motor vehicle loans
Sovereign debt
Use of Proceeds (UoP) structures
Securitisations and structured products
Sub-sovereign debt or bonds and loans from public authorities below the national level

Each asset class has its own calculation methodology. Asset selection is based on the PCAF Global Core Team, which identified the most common classes held by financial institutions worldwide. The PCAF-financed emissions standard requires institutions to disclose what percentage of their total portfolio is covered by the asset classes included in their financed emissions inventory, along with reasons for any exclusions.

The 2025 update also introduced Fluctuation Analysis to account for changes driven by market price volatility and Inflation Adjustment to correct economic emission intensity calculations over time. New forward-looking metrics were added: Expected Emissions Reductions (EER) and Expected Avoided Emissions (EAE). Financed avoided emissions can now be reported, though they must remain separate from the scope 1, 2, and 3 inventory.

Part B: Facilitated Emissions

GHG emissions associated with activities related to capital market issuance are called facilitated emissions. This type of emission includes underwriting stocks and bonds. Unlike a lender, an underwriter doesn’t hold the asset. Since it only facilitated the deal, PCAF attributes this indirect role to only a portion of the related emissions. These must be reported separately from financed emissions.

Part C: Insurance-Associated Emissions

Insurance-associated emissions are from insurance underwriting, including commercial lines and personal motor lines. In 2025, PCAF added project insurance under the risks of construction and erection policies and treaty reinsurance.

How is the PCAF Standard implemented?

The core calculation logic of the PCAF Standard follows what it calls the “follow the money” principle. This pertains to tracing the flow of money from a financial institution to the specific loans and investments it finances. That same institution is then responsible for a proportional share of the borrower’s GHG emissions.

The attribution factor is the institution’s share of the borrower’s total value. The calculation varies by asset class, but every financed emissions number comes from the same formula, which is an attribution factor multiplied by the borrower’s or investee’s emissions.

When the borrower is publicly traded:

Attribution factor = Outstanding amount ÷ Enterprise Value Including Cash (EVIC)

When the borrower is privately held:

Attribution factor = Outstanding investment ÷ Total equity + debt

The factor is then multiplied by the borrower’s total emissions to arrive at the institution’s financed emissions for that stake.

Both equity and debt contribute to financing the borrower, so PCAF treats them as equally responsible for the resulting emissions. This also keeps emissions from being claimed twice, first by the equity holder and then by a debt holder financing the same company.

The baseline metrics of absolute financed emissions must be reported, broken down by asset class or sector. Scope 3 financed emissions must be reported separately from scopes 1 and 2. Avoided emissions and removal credits must also be disclosed separately.

Additionally, if a bank provides 10% of a company’s total financing, that bank also accounts for 10% of that company’s emissions. The method is consistent across asset classes, which prevents double-counting and guarantees comparable disclosures.

What are PCAF scores?

One of PCAF’s credibility features is its scoring system for data quality. The PCAF Standard acknowledges that emissions data for loans and investment portfolios is often incomplete, estimated, or based on proxies. Rather than hiding that limitation, PCAF scores the quality of the data underlying each financed emissions calculation on a scale from 1 to 5.

Score 1 is the highest quality: third-party verified emissions data reported directly by the investee. Score 5 is the lowest: broad sector-average estimates with minimal company-specific input.

The general structure across all asset classes follows three data tiers, listed in order of preference:

Reported emissions: Data reported directly by the borrower or investee
Physical activity-based emissions: Calculated from actual energy use, production output, or similar primary data
Economic activity-based emissions: Estimated from revenue, asset value, industry averages

Institutions must disclose a weighted average data quality score across their portfolio, with the score for scope 3 financed emissions reported separately from scope 1 and scope 2. The goal is to improve data quality from counterparties over time and move toward a score of 1, the highest quality on PCAF’s 1-5 scale.

Note, too, that PCAF Scores vary by asset class. Commercial real estate and mortgages, for example, use building-level energy data rather than company financials, so their scoring criteria differ from listed equity or business loans. Institutions should consult the asset class-specific tables in the Standard for detail.

Which organisations and initiatives does PCAF partner with?

PCAF was designed to be interoperable with other major climate frameworks, not to replace them.

GHG Protocol

The PCAF Standard conforms to the GHG Protocol guidelines and follows the scope 3, Category 15 requirements. The five core GHG Protocol principles, completeness, consistency, relevance, accuracy, and transparency, run through the PCAF methodology.

GHG Protocol and PCAF: What is the difference?

The GHG Protocol is the global standard for measuring and managing GHG emissions across all sectors, while the PCAF is sector-specific.

The GHG Protocol identifies what falls under scope 3, Category 15, investment activities, and sets the general accounting framework. PCAF then fills in how financial institutions should calculate those emissions in practice, with methodologies tailored to each asset class.

TCFD and ISSB

The TCFD officially recommends PCAF for measuring financed emissions, and the U.S. SEC has named PCAF as one of three recognised international reporting standards. As jurisdictions adopt ISSB‘s IFRS S2, which requires Scope 3 Category 15 reporting, PCAF provides the methodology that makes that compliance possible.

Science-Based Targets Initiative (SBTi)

PCAF provides the baseline financed emissions data that financial institutions need to set science-based targets using SBTi‘s sectoral decarbonisation approach. Without a PCAF-measured baseline, credible SBTi targets for financial institutions are not possible.

CSRD and SFRD

PCAF enables financial institutions to meet Scope 3 disclosure requirements under both the EU’s Corporate Sustainability Reporting Directive (CSRD) and the Sustainable Finance Disclosure Regulation (SFDR).

CDP

The data frameworks of both PCAF and CDP have been aligned since 2022. CDP’s Full GHG Emissions Dataset can now incorporate PCAF Data Quality Scores for listed equity and corporate bonds. PCAF is also CDP’s recommended methodology in its financial sector questionnaire.

PACTA

Where PCAF handles measurement and disclosure, the Paris Agreement Capital Transition Assessment (PACTA) supports the next steps: scenario analysis, target-setting, and portfolio alignment with the Paris Agreement.

What are the benefits of joining PCAF?

Risk visibility: Measuring financed emissions creates a portfolio-level view of carbon exposure. That data is directly useful for stress-testing, capital allocation decisions, and identifying high-emission concentrations before they become regulatory or market problems.
Regulatory readiness: PCAF methodologies satisfy Scope 3, Category 15 requirements under the GHG Protocol and align with ISSB, CSRD, and SFDR disclosure demands. For financial institutions operating across multiple jurisdictions, a single PCAF-based methodology reduces duplication.
Target-setting: Science-based targets for financial institutions depend on a measured emissions baseline. PCAF provides that foundation. It also aligns with SBTi guidance so that targets can be credibly validated.
Peer network and resources: Signatories access the PCAF Academy for technical training, a curated emissions factor database, and a global peer network of institutions working through the same methodology challenges. There is no cost to join or to use the Standard’s methodologies. The emissions factor database is exclusive to signatories.

How can financial institutions join PCAF?

The process for becoming a PCAF signatory follows five steps:

1. Review

Start by reviewing the PCAF website to understand the Standard’s scope, asset classes, disclosure requirement signatories, and regional implementation structure that applies to the institution.

2. Submit a Commitment Letter

Companies need to submit a commitment letter pledging to measure and disclose financed emissions in line with the PCAF Standard. The letter can be signed by any authorised representative. The institution decides the scope of coverage—one asset class, one sector, or the full portfolio. First disclosure is required within three years of signing.

3. Join a Regional Implementation Team

Companies should then be part of a respective regional implementation team (Latin America, North America, Africa, Europe, or Asia-Pacific). Regional teams provide peer guidance and help adapt the global methodology to local contexts.

4. Assess Financed Emissions

After enlisting and collaborating with a regional team, the next step is assessing and evaluating financed emissions using PCAF methodologies. Signatories receive introductory technical support with no cost.

5. Disclose Financed Emissions

The last step is the disclosure of financed emissions in annual reports and other public materials. Once disclosed, the institution’s status on PCAF’s website changes from “committed” to “disclosed”.

How Presgo Supports PCAF Target-Setting and Reporting

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