Boundary

What counts as a financed emission

IFRS S2's December 2025 amendments permit an entity to limit its Scope 3 Category 15 measurement to financed emissions only IFRS S2 amendments, Dec 2025.

"Loans and investments" is the boundary: loans, project finance, bonds, equity investments, and undrawn loan commitments IFRS S2 amendments PDF.

For asset managers it also includes emissions attributed to assets under management; derivatives may be excluded.

The maths

The ten asset classes and their denominators

Every financed-emissions figure uses an attribution factor: outstanding exposure divided by the investee's total value, multiplied by the investee's own emissionsPCAF Standard, Part A, 3rd edition.

  • Listed equity and corporate bonds — EVIC (enterprise value including cash), no cash deduction
  • Business loans and unlisted equity — total equity plus debt
  • Project finance — share of total project equity plus debt
  • Commercial real estate — property value at origination
  • Mortgages — property value at origination
  • Motor vehicle loans — total value at origination; assume 100% if unknown
  • Sovereign debt — PPP-adjusted GDP, attribution factor capped at 1
  • Sub-sovereign debt — new in the Third Edition; PPP-adjusted GDP of the sub-sovereign region
  • Use-of-proceeds structures — new in the Third Edition
  • Securitisation and structured products — new in the Third Edition

The Third Edition also adds guidance on undrawn loan commitments — not a new asset class, but an optional IFRS-aligned reporting line explicitly meant to bridge a gap with IFRS S2PCAF Standard, Part A, 3rd edition.

December 2025

What the Third Edition changed

PCAF updated Part A on 2 December 2025 PCAF, 2 December 2025.

Existing methodologies were not changed by the update — it adds three new asset classes and clarifies guidance PCAF Standard, Part A, 3rd edition.

One further change: avoided emissions are no longer covered inside the Project Finance asset class — institutions are directed to PCAF's separate Financed Avoided Emissions guidance instead PCAF Standard, Part A, 3rd edition.

Provenance

Not every class carries the GHG Protocol's mark

Part A's first edition (November 2020) was reviewed by the GHG Protocol as conforming with its Scope 3 Category 15 standard GHG Protocol Scope 3 Standard.

The GHG Protocol has since closed that review service, so only the original six asset classes carry the mark — the sovereign, sub-sovereign, use-of-proceeds and securitisation classes do not PCAF Standard, Part A, 3rd edition.