The Partnership for Carbon Accounting Financials (PCAF) has released an update to its Global Greenhouse Gas Accounting and Reporting Standard for the Financial Industry, adding new methodologies for financed emissions (Part A) and insurance-associated emissions (Part C). PCAF has also issued new supplemental guidance covering financed avoided emissions and forward-looking metrics.
The updated frameworks are intended to help financial institutions measure and disclose greenhouse gas emissions linked to a wider range of financial activities, reflecting the growing demand for more comprehensive Scope 3 reporting across the sector.
PCAF said the revisions recognise the complexity of calculating emissions from diverse financial portfolios, which may include loans, investments and insurance products. While existing methodologies remain unchanged, several new methods have been introduced to fill gaps and enable reporting across more asset types.
The revisions were developed by working groups comprising more than 100 experts from PCAF signatories worldwide and overseen by the organisation’s Core Team.
“This update reflects the collective expertise and commitment by our global community of signatories,” said Hetal Patel, Head of Sustainable Investment Research at Phoenix Group and Chair of PCAF’s Core Team. “By enhancing the Standard with new methods and guidance, we’re helping financial institutions create a more comprehensive and complete view of the emissions impact of their activities and exposure to associated risks.”
Caspar Noach, PCAF’s Technical Director, said: “Complete, transparent, and consistent accounting methods are the foundation of credible financial GHG emission disclosures.”
Key additions include:
- Four new financed-emissions methodologies covering use-of-proceeds structures, securitisations and structured products, sub-sovereign debt, and optional reporting of undrawn loan commitments under IFRS S1 and S2.
- Updated recommendations following feedback on PCAF’s 2024 discussion paper on inventory fluctuations.
- New guidance on reporting financed avoided emissions and forward-looking emissions metrics.
- Two additional insurance-associated emissions methodologies for treaty reinsurance and project insurance.
PCAF said institutions may adopt the new methods on their own timelines, provided they disclose which parts of their portfolios are included or excluded and justify any omissions.
The organisation said continuous updates to its methodologies reflect industry demand and its role as a global standard-setter for Scope 3 Category 15 emissions accounting in the financial sector.
