18 Aug 2020 Morgan Stanley, Citi and Bank of America join PCAF and commit to measuring greenhouse emission of loans and investments
MorganStanley, Citi and Bank of America have joined the Partnership for Carbon Accounting Financials, a global group composed of 70 financial institutions representing more than $10 trillion in assets, which aims to provide financial institutions with a common methodology to assess and measure greenhouse gas emissions.
Morgan Stanley, Citi, Bank of America and NatWest Group have announced that they will track CO2 emissions of their loans and investments, committing to disclosing the climate change impact of their financings. The banks have joined the Partnership for Carbon Accounting Financials (PCAF), a global group composed by 70 financial institutions representing more than $10 trillion in assets, which is developing the Global Carbon Accounting Standard (GCAS) based on GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
Citi and Bank of America are the group’s latest and largest members by assets, as well as its biggest polluters. According to the Rainforest Action Network, Citi and Bank of America ranked as the third and fourth-highest financers of fossil-fuel companies, with $187.7 and $156.9 billion respectively lent between 2016 and 2019.
The aim of the PCAF is to provide financial institutions with a common methodology to assess and measure greenhouse emissions (GHG) financed by loans and investments, enabling the alignment of the financial sector with the United Nations’ Paris Agreement on Climate Change and the transition towards a decarbonized society.
Differently from the Taskforce on Climate-related Financial Disclosures (TCFD) which offers a voluntary framework for measuring and disclosing climate risks, the PCAF wants to create a formal and global methodology that financial institutions can use to assess carbon emissions, with the potential to allow for a more consistent and detailed reporting in the sector. Through the GCAS, the PCAF provides guidance for six classes of assets: listed equity and bonds, business loans, project finance, commercial real estate, mortgages, and motor vehicle loans.
The PCAF is currently undergoing a public consultation on the robustness and applicability of the carbon accounting standard. The consultation is open from the 3rd of August to the 30th of September 2020 and aims to collect feedback from all interested parties. The final version of the GCAS is expected to be released in November 2020.
For further information, see the following links:
- https://www.businessgreen.com/news/4018017/morgan-stanley-pledges-measure-co2-impact-loans-investments
- https://www.bankingdive.com/news/citi-bank-of-america-morgan-stanley-carbon-disclosure-group/582592/
- https://www.bloomberg.com/news/articles/2020-07-29/citi-to-measure-disclose-emissions-tied-to-lending-portfolio?cmpid=socialflow-twitter-business&utm_source=twitter&utm_campaign=socialflow-organic&utm_content=business&utm_medium=social&linkId=95458665
- https://carbonaccountingfinancials.com/global-carbon-accounting-standard
- https://carbonaccountingfinancials.com/consultation-signup
- https://www.ran.org/bankingonclimatechange2020/
- http://www.gabv.org