Origin

What PCAF is

PCAF is an industry-led partnership of banks, insurers and investors that developed a common method for measuring the emissions tied to lending and investmentPCAF.

Its output, the Global GHG Accounting and Reporting Standard for the Financial Industry, has become the reference method that regulators and reporting standards point to PCAF Standard.

PCAF updated Part A and Part C, and added new supplemental guidance, on 2 December 2025PCAF, 2 December 2025.

Existing methodologies were not changed by that update — it adds methods and clarifies guidancePCAF Standard, Part A, 3rd edition.

It is built directly on the GHG Protocol, operationalising the otherwise abstract Scope 3 Category 15 for financial institutions GHG Protocol Scope 3 Standard.

That alignment is why a PCAF-calculated figure slots into an IFRS S2 disclosure without translation IFRS S2.

Structure

The three parts of the standard

PCAF is published in three parts, because a financial institution's carbon shows up in three different ways PCAF Standard:

  • PCAF Part A — Financed emissions: the emissions of assets a firm holds on balance sheet, such as loans and investments
  • PCAF Part B — Facilitated emissions: the emissions tied to capital-markets transactions a firm arranges but does not hold, such as bond underwriting
  • PCAF Part C — Insurance-associated emissions: the emissions of the activities an insurer underwrites

Underwriting emissions are Category 15 emissions, but they do not meet IFRS S2's definition of financed emissions IFRS S2 amendments, Dec 2025 — the ISSB considered and declined to require their disclosure, for the same reason it declined to require facilitated-emissions disclosure from investment banks.

Most institutions start with Part A because it covers the bulk of the balance sheet; banks with capital-markets arms add Part B, and insurers add Part CPCAF Standard.

The sector pages for banks and insurers show how the parts combine in practice.

The maths

Attribution factors and asset classes

PCAF's financed-emissions method works through an attribution factor: the institution's outstanding exposure to a company divided by that company's total valuePCAF Standard, Part A.

The investee's emissions are multiplied by that factor to give the attributed total.

The denominator differs by asset class, which is why Part A's Third Edition (2 December 2025) sets out ten of them, each with its own rulePCAF Standard, Part A, 3rd edition:

  • Listed equity and corporate bonds — denominator is enterprise value including cash (EVIC), with no cash deduction
  • Business loans and unlisted equity — denominator is total equity plus debt
  • Project finance — attribution by share of total project equity plus debt
  • Commercial real estate — denominator is property value at origination
  • Mortgages — denominator is property value at origination
  • Motor vehicle loans — denominator is total value at origination
  • Sovereign debt — denominator is PPP-adjusted GDP, with the attribution factor capped at 1
  • Sub-sovereign debt — new in the Third Edition; denominator is 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

Because some denominators are market values, financed-emissions figures move with valuations as well as with real decarbonisation — a point reporters are expected to explainGHG Protocol.

Honesty built in

The data-quality score

PCAF requires every financed-emissions figure to carry a data-quality score from 1 to 5, so the reader can see how much is measured and how much is estimatedPCAF Standard.

The three-option hierarchy behind the score is constant — reported, then physical activity, then economic activity — but the numeric score attached to each option is asset-class specific: the same data option can carry a different score in a different class, so there is no single universal 1–5 table.

  • Option 1 — reported: verified actual emissions score 1, unverified reported emissions score 2
  • Option 2 — physical activity data: the investee’s own physical activity data
  • Option 3 — economic activity data: revenue and sector emission factors

UK SRS S2 expects this kind of transparency about estimation and its limitsIFRS S2.

Institutions should publish a weighted-average score, weighted by outstanding amount rather than by emissions, or explain why they cannot PCAF Standard, Chapter 6.