This partnership will allow PCAF and CDP to combine their resources and networks to promote the PCAF Standard and to increase assessment and disclosure of financed emissions amongst financial institutions globally. Through its goal of capacity building, this collaboration aims to help financial institutions to better understand their climate impact and exposure to carbon-intensive industries.

The assessment and disclosure of financed emissions gives financial institutions insight into their portfolios’ carbon footprints and alignment with global climate goals. In line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), PCAF and CDP provide accessible steps to calculating and disclosing financed emissions.

Almost all financial institutions’ climate impact and risk is driven by the activities they finance in the wider economy, with CDP research finding that financed emissions are 700 times greater than operational emissions. However, only a quarter of financial institutions disclosing to CDP report their portfolio emissions. Through this collaboration, CDP and PCAF hope to see a growth in the number of financial institutions reporting financed emissions in line with the PCAF Standard, and through CDP’s Financial Services Climate Change Questionnaire, to fill the critical data gap in climate reporting.

“I’m very pleased to partner with CDP to drive consistent climate-related disclosure globally. Scope 3 financed emissions measurement and disclosure of financial institutions is an essential step. It’s great to see that CDP has integrated this into their Financial Services Questionnaire. By collaborating with CDP, we can support financial institutions globally with measurement and disclosure of their climate impact.” Giel Linthorst, Executive Director, PCAF

PCAF and CDP will work together to develop and provide workshops, reports, and case studies for their respective networks of financial institutions. The material will focus on accounting and TCFD-aligned reporting of financed emissions, line with the PCAF Standard. Case studies will be used to demonstrate how the PCAF Standard along with CDP’s disclosure platform have been beneficial to other financial institutions’ understanding of climate risks and opportunities.

In addition, CDP will enhance its Full GHG Emissions Dataset in 2021 to provide a Data Quality Score for each emissions figure contained within the dataset, in line with PCAF’s Data Quality Scoring system. The CDP Full GHG Emissions Dataset contains reported and modelled emissions figures of over 7,200 companies.

“Through capital flows and portfolio alignment with net-zero, the financial sector has a pivotal role to play in realizing a net-zero and nature positive economy. However, financial institutions that fail to disclose their financed emissions risk underestimating the climate-related impact of their portfolios. Robust and transparent disclosure of financed emissions provides the market with a baseline assessment of climate-related risks, as well as crucial data to track progress toward the net-zero transition.
CDP is delighted to partner with PCAF to help financial institutions measure their overall climate impact and to meet the ever-greater need for robust data in this area.” Claire Elsdon, Joint Global Director of Capital Markets at CDP