Helping Financial Institutions Curb Climate Change

In response to growing recognition that financial institutions play a key role in shaping the future of the planet, a standard recently launched by the Partnership for Carbon Accounting Financials (PCAF) is helping financial institutions more effectively measure and report emissions stemming from loans and investments. 

In an article for CFO, Giel Linthorst, director at Guidehouse and executive director of the PCAF secretariat, said the standard—the Global GHG Accounting and Reporting Standard for the Financial Industry—underscores the impact financial institutions have in addressing the climate crisis and achieving a decarbonized society. 

“It has often been said that ‘You can’t manage what you can’t measure.’ This is especially true in the financial sector,” he said. “Nearly every transaction—from individual residential mortgages to commercial real estate loans, to electricity generation project finance, to equity and debt offerings—has potential implications for GHG emissions."

Linthorst said the standard highlights the power that financial institutions, including banks, asset owners, and managers, have to redirect capital to sustainable technologies and solutions and to companies doing the most to prepare for a net-zero emissions economy.

“Given the considerable differences in the types of financial institutions, the nature of their loans and investments, and the GHG implications of those activities, a uniform and transparent reporting standard is an essential first step toward decarbonizing the global economy,” he said.