PCAF — Partnership for Carbon Accounting Financials
PCAF is the standard methodology for calculating financed emissions (Scope 3 Cat 15) — covering equity, business loans, mortgages, and project finance.
Definition
PCAF (Partnership for Carbon Accounting Financials) is an industry-led initiative that publishes the Global GHG Accounting and Reporting Standard for the Financial Industry. It is a widely recognised methodology for financial institutions to calculate financed emissions — the GHG emissions associated with their lending and investment activities.
Financed emissions sit in Scope 3 Category 15 (Investments) under the GHG Protocol Corporate Value Chain Standard.
Asset-class methodology
PCAF defines an asset-class-specific approach. Common attribution patterns:
| Asset class | Attribution approach |
|---|---|
| Listed equity and corporate bonds | Investee emissions × (FI’s outstanding investment / investee enterprise value) |
| Business loans and unlisted equity | Investee emissions × (FI’s outstanding loan / total equity + debt) |
| Project finance | Direct attribution of project emissions to the FI’s share of project debt + equity |
| Mortgages | Building-specific emissions × (FI’s outstanding mortgage / property value) |
| Motor vehicle loans | Vehicle-specific emissions × (FI’s outstanding loan / asset value) |
| Commercial real estate | Building emissions × (FI’s outstanding loan / property value) |
Data quality scoring
PCAF defines a five-level Data Quality Score (1 = highest quality based on verified emissions and outstanding amounts; 5 = proxy estimates based on sector averages). The data quality score is itself a required disclosure alongside the absolute financed-emissions number — important for the assurance conversation, since an inventory built primarily on Score 4 / 5 data is a fundamentally different assurance proposition from one built on Score 1 / 2 verified data.
PCAF in the Indian context
PCAF is the de-facto methodology used by Indian banks publishing financed-emissions inventories. The RBI Draft Disclosure Framework on Climate-related Financial Risks (February 2024) contemplates financed-emissions disclosure by industry and asset class for SCBs, AIFIs, and applicable NBFCs — and references the development of an Indian accounting approach interoperable with PCAF.
Related terms
- Scope 3 Emissions — the broader category framework
- BRSR for Banks and NBFCs — sector-specific guide