A Guide to Partnership for Carbon Accounting Financials for the Aviation Sector

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The Partnership for Carbon Accounting Financials (PCAF) was established in 2015 by Dutch banks and investors to provide financial institutions with a standardised framework for measuring and reporting greenhouse gas emissions from financial activities. PCAF expanded to North America in 2018 and further scaled up globally in 2019, attracting members from diverse regions.

PCAF’s growing membership base and global presence highlight its significance as a leading initiative in promoting transparency and accountability in measuring financed emissions.

PCAF’s primary goal is to harmonise GHG accounting methods globally, enabling consistent measurement and disclosure of emissions associated with loans and investments. This concerted effort aligns closely with the objectives outlined in the Paris Agreement, advancing global efforts towards mitigating climate change.

Our guide includes:

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PCAF built upon the GHG Protocol

The Partnership for Carbon Accounting Financials (PCAF) is built upon the foundation of the Greenhouse Gas Protocol, which serves as the global standard for measuring greenhouse gas emissions. Specifically, PCAF aligns with the GHG Protocol through its Global GHG Accounting and Reporting Standard.

The PCAF Standard builds on the GHGP’s five core principles:

  • Completeness: Account for and report on all GHG emission sources and activities within the inventory boundary, including aviation emissions.
  • Consistency: Use consistent methodologies to allow for meaningful performance tracking of emissions over time, including aviation emissions.
  • Relevance: Ensure the GHG inventory appropriately reflects the GHG emissions of the company and serves the decision-making needs of users, including aviation emissions.
  • Accuracy: Ensure that the quantification of GHG emissions is systematically neither over nor under actual emissions, as far as can be judged, and that uncertainties are reduced as far as practicable, including aviation emissions.
  • Transparency: Address all relevant issues in a factual and coherent manner, based on a clear audit trail, including aviation emissions. Disclose any relevant assumptions and make appropriate references to the accounting and calculation methodologies and data sources used, including aviation emissions.

These principles ensure that the standard provides a comprehensive and reliable framework for assessing and disclosing greenhouse gas emissions within the financial industry.


What is the PCAF Standard?

PCAF’s Global GHG Accounting and Reporting Standard (often referred to as PCAF Standard) developed for the financial industry.

It enables financial institutions to measure and report greenhouse gas emissions associated with their loans and investments.

The PCAF standard consists of three key parts:

  • Financed Emissions:
    Focuses on measuring greenhouse gas emissions linked to investments and loans made by financial institutions. It falls under Scope 3 emissions category 15 (Investment) emissions, addressing indirect emissions from activities not owned or controlled by the reporting entity. The PCAF standard provides emissions calculation frameworks across seven asset classes.
    The asset classes to measure and disclose their financed emissions are:

    1. Listed equity and corporate bonds
    2. Business loans and unlisted equity
    3. Project finance
    4. Commercial real estate
    5. Mortgages
    6. Motor vehicle loans
    7. Sovereign debt
  • Facilitated Emissions: Focuses on the indirect greenhouse gas emissions caused by financial institutions’ activities, providing insights into the broader environmental impact facilitated by financial investments.
  • Insurance-Associated Emissions:
    Focuses on the greenhouse gas emissions associated with insurance activities within the financial sector, allowing for the evaluation and reporting of emissions related to insurance services provided by financial institutions.


Who Does PCAF Apply To?

PCAF applies to financial institutions globally, including superannuation funds, investment managers, banks and insurers, with the aim of assessing their environmental impact and aligning their strategies with decarbonisation goals. PCAF allows them to manage risks, identify decarbonisation opportunities, and align their strategies with global climate goals.


The PCAF Standard and Aviation

PCAF’s focus on aviation primarily centres on financed emissions, which are the greenhouse gas (GHG) emissions associated with the assets and activities financed by financial institutions.

Utilising the PCAF reporting framework provides financial institutions managing aviation assets with a systematic approach to measure, disclose, and manage their financed emissions.

It is important to note that financed emissions from loans outside of commercial real estate (CRE), mortgages, and motor vehicle loans are not currently classified by PCAF. However, PCAF guidance indicates that this classification may evolve over time if financial institutions request additional accounting rules and guidance for other sectors like financial products for shipping or aviation.

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The Benefits of using the PCAF Standard

Using the PCAF standard to report greenhouse gas emissions associated with loans and investments include:

  • Decarbonisation Targets: PCAF reporting facilitates the establishment of decarbonisation targets by accurately measuring and disclosing financed emissions. This aligns with global initiatives aimed at achieving net-zero emissions.
  • Climate-Related Risk Management: Through measuring and reporting greenhouse gas emissions linked to financial activities, institutions can identify climate-related risks and opportunities. This enhances strategic decision-making and risk management practices.
  • Transparency and Accountability: PCAF reporting promotes transparency and accountability within the financial sector regarding its climate impact. By disclosing indirect emissions, institutions build credibility and trust among stakeholders.
  • Improved Decision-Making: Accurate measurement of financed emissions via PCAF provides insights into the emissions profile. This empowers institutions to make informed decisions regarding emission reduction and transitioning to a low-carbon economy.


Reporting Financed Emissions under PCAF

PCAF members, are required within three years of signing the commitment letter, financial institutions are expected to make their first disclosure of financed emissions. Across all asset class by tracing financial flows and utilising PCAF methodologies.

Measuring financed emissions is a cornerstone for PCAF, as it establishes the baseline emissions crucial for scenario analysis and target establishment, informs climate initiatives, and facilitates precise reporting on environmental impact.

Measurement requirements for Financed Emissions

Absolute emissions (minimum)

Absolute emissions, per PCAF, denote the total GHG emissions of an asset class or portfolio. Reporting absolute emissions offers a concise and thorough insight into the carbon footprint linked to a financial institution’s investments and lending activities. Quantifying absolute emissions allows institutions to accurately assess their portfolio’s environmental impact and monitor progress toward emission reduction targets.

Emissions Intensity (optional)

This metric helps financial institutions understand the carbon intensity of their portfolio and can be reported on an asset class, sector, or portfolio level. The decision to report on emissions intensity depends on the institution’s goals, data availability, and the level of detail they want to provide in their reporting.

Reporting on emissions intensity include:

  • Physical Emission Intensity: Physical emission intensity compares the emission intensities of different portfolios per monetary unit. It involves dividing absolute emissions by value of the physical activity or output  expressed as tCO2e/MWh, tCO2e/tonne product produced.
  • Economic Emission Intensity: Focuses on understanding the carbon emissions generated by economic activities within a portfolio. It involves dividing absolute emissions by the loan or investment in EUR or USD, expressed as tCO2e/€M or tCO2e/$M loaned or invested. This metric helps in evaluating the carbon intensity of investments in sectors like manufacturing and transportation.
  • Weighted Average Carbon Intensity (WACI): WACI is a metric recommended by PCAF that provides a weighted average of the carbon intensity across different asset classes or sectors within a portfolio. It gauges the portfolio’s exposure to emission-intensive companies, denoted as tCO2e/€M or $M company revenue. This metric helps in understanding the overall carbon intensity of investments and identifying areas for carbon footprint reduction

Attribution factor

The attribution factor is a key component in determining financed emissions by proportionally allocating emissions to specific loans or investments within financial institutions.

By calculating and using this factor accurately, institutions can track their environmental impact effectively, make informed decisions regarding climate actions, and ensure precise reporting on financed emissions.

How to calculate the Attribution factor?

It is calculated by dividing the total share in the company outstanding by the ‘total debt + equity’ of the company.

How to calculate financed emissions?

To calculate financed emissions, this attribution factor is then multiplied by the emissions of the borrower or investee.

Data Quality scoring for Financed Emissions

PCAF data quality scoring framework for financial institutions to assess and report financed emissions accurately, emphasising the importance of reliable data sources and transparent reporting practices.

Here is a breakdown of how the data quality scoring hierarchy applies to financed emissions:

  • Reported and Verified Emissions: The highest quality data for bank lending, with a score of 1, is reported and verified emissions from company disclosures. This type of data is considered the most reliable and accurate source of emissions information for assessing financed emissions under PCAF.
  • Estimated Emissions Inferred Through Physical Activity: The second and third highest-ranked data for estimating financed emissions are inferred through physical activity. This involves using observed energy consumption (score 2) or volume of production from an asset (score 3) to derive emissions estimates based on verified emissions factors. This method provides a structured approach to estimating emissions accurately.
  • Emissions Estimates Based on Economic Activity Data: Scores 4 and 5 represent estimates based on economic activity data, such as company revenues (score 4) or asset turnover ratios (score 5). These estimates derive emissions based on assumptions regarding emissions factors for the sector per unit of revenue, offering insights into the environmental impact of financial activities.


PCAF collaboration with other initiatives

As discussed already, PCAF has partnered with GHG Protocol to provide investors and banks with the guidance they need to measure and report on their financed emissions.

Other key PCAF collaborations include:

  • CRREM and GRESB: PCAF partners with CRREM and GRESB in 2021 to aid investors and banks in quantifying and establishing future-oriented objectives pertaining to their financed emissions.
  • Green Climate Fund: The Green Climate Fund is an observer to the process of developing the Global GHG Accounting and Reporting Standard for the PCAF.
  • Joint Impact Model: PCAF collaborates with the Joint Impact Model to improve financed emissions estimates in developing countries.
  • SBTi and TCFD: PCAF collaborates with SBTi and TCFD to enable financial institutions to align their lending and investment portfolios with the Paris Agreement
  • Carbon Disclosure Project: PCAF is partnering with CDP to improve the quality of emissions disclosures and promote the standardisation of the accounting of financed emissions.
  • NZBA: PCAF is partnering with the UN-convened Net-Zero Asset Owner Alliance (NZAOA) to advance the development of PCAF’s GHG accounting.
  • CAF: Partnering with CAF, PCAF focuses on driving low-carbon transitions in global industries through sector-specific data development, standard implementation, customer engagement, and data system enhancement.
  • CSRD and ESRS Frameworks: PCAF’s standards complement CSRD and ESRS by providing detailed methods for measuring emissions across various investment categories. While CSRD and ESRS emphasise ‘double materiality,’ PCAF specifically addresses emissions associated with financial activities, ensuring a comprehensive approach to sustainability reporting in the financial sector.


PCAF Timeline:

  • 2015: PCAF was founded by a group of banks and investors based in the Netherlands.
  • 2018: PCAF expanded into the United States.
  • 2019: PCAF scaled globally.
  • 2020: The group released the PCAF Standard.
  • 2021: PCAF’s Global GHG Accounting and Reporting Standard for the Financial Industry was developed.
  • 2023: In March, PCAF had 373 registered firms using the methodology.
  • 2024: PCAF announced areas for standard development, focusing on new GHG methodologies to meet the financial sector’s needs in transitioning to a sustainable system. Further exploratory work will be conducted for future standard development cycles.



In summary, PCAF provides the finance industry with a standardised methodology for precisely measuring and disclosing greenhouse gas emissions associated with financial activities.
Aligned with pivotal initiatives and targets such as GHG Protocol, TCFD, CDP, SBTi, NZBA, and GFANZ, PCAF ensures consistency, credibility, and transparency in emissions reporting.

By empowering financial institutions to effectively manage risks, establish decarbonisation objectives, PCAF will help a meaningful role in driving sustainability within the financial sector.

While it is important to note PCAF currently focuses on emissions from commercial real estate (CRE), mortgages, and motor vehicle loans, but not from other types of loans. PCAF’s guidance have recognised the potential for expanding this classification to include sectors such as aviation.

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Why Join PCAF?

By joining PCAF, institutions can work with other banks and investors at regional or country levels to improve their GHG accounting practices. They will receive guidance on disclosing financed emissions and be recognised as “Disclosed” on PCAF’s platform after making their emissions disclosure.

Who governs PCAF?

PCAF is governed by a global Core Team comprising diverse members representing all regions and types of signatories. This team leads the development of new GHG accounting standards for the financial industry, ensuring that the methodologies meet the evolving needs of the international financial sector in transitioning towards a more sustainable system. The Core Team prioritises areas for standard development based on criteria such as materiality and demand from signatories.

What is Double Counting in GHG Accounting?

Double counting in GHG accounting occurs when emissions are counted more than once during the calculation of financed emissions, leading to inaccuracies in reporting.

For instance, this issue may arise when multiple companies have stakes in a joint operation and apply different consolidation methods. If Company A and Company B each account for emissions from the same joint operation using distinct consolidation approaches, it can lead to the risk of double counting.

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