The Partnership for Carbon Accounting Financials (PCAF) is initiating a coalition focused on enhancing the measurement and disclosure of carbon emissions within the UK financial services sector.
This coalition features prominent organizations such as Natwest, Lloyds Banking Group, Investec, and Nationwide, and is led by the international branch of investment manager Federated Hermes.
PCAF aims to standardize carbon accounting practices across financial services. The methodologies developed will be utilized by the coalition to provide accurate measurements of carbon emissions in the UK market.
The initiative seeks to facilitate the sharing of best practices, improve the quality of data, and further develop methodologies related to carbon accounting. “The strength of PCAF lies in collaboration,” states Giel Linthorst, executive director. “We all face challenges regarding data quality, and only through collaboration with a diverse array of financial institutions and governmental bodies can we ensure better data access.”
To tackle data quality issues, PCAF is implementing a scoring system that evaluates the data provided by institutions. “Some financial organizations rely on proxy-estimated data, which aids in formulating a strategy to enhance data quality over time, supported by this quality scoring,” Linthorst adds.
PCAF asserts that its open-source initiative, offered at no cost, will enable banks to assess the greenhouse gas emissions associated with their lending portfolios and align their strategies with the objectives of the Paris Climate Agreement.
Mark Carney, the former governor of the Bank of England and an observer to PCAF, highlights the coalition’s critical role in integrating carbon emissions into financial decision-making. “For financial institutions, this entails evaluating not just the emissions from their own operations but also those produced by the companies they invest in and lend to.”