Accounting Standards

PCAF launches carbon accounting coalition

The Partnership for Carbon Accounting Financials (PCAF), an industry-led partnership to standardise carbon accounting for the financial sector, has launched a UK coalition to further promote measurement and disclosure of carbon emissions in the sector.

Initiated and chaired by the International business of Federated Hermes, and following a collaborative structure first created in the Netherlands, PCAF said participants in the UK will help “enhance cooperation”.

Initial members of the UK coalition are the International business of Federated Hermes, Triodos Bank UK, NatWest Group, Lloyds Banking Group, CDC Group, Investec plc, Ecology Building Society and Nationwide Building Society.

The body said it will focus on applying PCAF’s methodologies for measuring financed emissions in a UK context, sharing best practices, working on data quality improvements and performing research on further method development.

Giel Linthorst, executive director of PCAF secretariat and director at Guidehouse, said: “The UK has always been a leader in the financial industry. I’m very pleased to see that this PCAF UK coalition is similarly taking a leading role as well. Stronger and national collaboration is crucial within PCAF to enable PCAF participants to improve their data quality and steer their portfolio in line with the Paris Agreement.”

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Mark Carney, as the prime minister’s finance adviser for COP26 (UN Climate Change Conference) and observer to PCAF, said: “To achieve net zero we need a whole economy transition – every company, every bank, every insurer and investor will have to adjust their business models, develop credible plans for the transition and implement them.

“For financial firms, that means reviewing more than the emissions generated by their own business activity.

He added: “They must measure and report the emissions generated by the companies they invest in and lend to. PCAF’s work to standardise the approach to measuring financed emissions is an important step to ensuring that every financial decision takes climate change into account.”

Since its launch last September, the initiative now holds 77 financial institutions with over 13 trillion USD in assets. The group is also “rapidly expanding” across North America, Latin America, Europe, Africa and Asia-Pacific.

Bevis Watts, CEO of Triodos Bank UK, said: “As a founder of PCAF we are pleased to see it move towards becoming the industry standard. It is critical we find a common global methodology for reporting on financed emissions to ensure robust disclosure, to provide a platform for science-based target setting and a give clear choice in how people choose to save and invest their money.”

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