Skip to main content
Back to Glossary
Definition

PCAF Standard Definition

The PCAF Standard assigns financial activities to methods for measuring and disclosing emissions associated with loans, investments, capital-markets facilitation, and insurance underwriting.

What is the PCAF Standard?

PCAF's Global GHG Accounting and Reporting Standard for the Financial Industry gives financial institutions common methods for emissions linked to financial activities. Part A covers financed emissions from loans and investments.

Part B covers facilitated emissions, meaning emissions allocated to a bank's role in arranging a primary securities issue or syndicated loan. Part C covers insurance-associated emissions, meaning emissions allocated to underwriting insurance and reinsurance.

Why does the PCAF Standard matter to you?

A bank, asset manager, insurer, auditor, regulator or investor may ask which PCAF edition and Part you used, which asset classes you included, how much of the portfolio you covered and why you excluded anything. A portfolio company may instead receive a data request from the institution doing the calculation.

Choosing the wrong Part can place the same financial relationship in the wrong inventory. Part A Chapter 6.1 says institutions that use the Standard shall publish at least annually, state portfolio coverage and justify exclusions. A PCAF claim therefore needs the calculation files and the public disclosure to agree.

How does the PCAF Standard work?

Classify the financial activity before choosing a formula or data source. For Part A, Figure 5-1 first asks whether the exposure is debt or equity and whether the money is tied to named assets or projects, called the use of proceeds. It then asks whether the exposure is securitized, meaning packaged into securities, and what assets sit underneath it. For covered exposures, the answers lead to one of ten asset-class methods; other branches identify activities outside Part A.

The December 2025 third edition added methods or guidance for use-of-proceeds structures, securitizations and structured products, sub-sovereign debt and optional reporting on undrawn loan commitments. Chapter 6.1 uses “shall” for minimum requirements and “should” for recommendations. Publishing a weighted data-quality score is a “should,” or the institution should explain why it cannot; if Scope 3 is reported, its weighted score shall be separate from the Scope 1 and 2 score.

What mistakes should you avoid?

  • Choosing a method from the borrower's industry instead of the financing activity and the flow of money.
  • Combining a held loan, a capital-markets arranging role and an insurance policy under one Part.
  • Presenting a “should” recommendation as compulsory or overlooking a “shall” requirement.
  • Claiming complete coverage without the portfolio percentage, excluded activities and reasons for exclusion.

Is the PCAF Standard mandatory?

No single rule makes every financial institution use PCAF. A regulator, reporting standard, investor mandate, contract or internal policy may create the requirement. Record that trigger and the edition used. If an institution says its disclosure follows PCAF, it must meet the applicable “shall” clauses or explain what it did not fulfil.

What should a portfolio company send for a PCAF request?

Send the reporting year, Scope 1, Scope 2 and relevant Scope 3 totals, the organizational boundary, meaning the companies and sites included, and the assurance status, meaning whether an independent reviewer checked the figures. Add exclusions and the calculation method. The financial institution classifies the financing and applies the PCAF method.

Does PCAF set emissions-reduction targets?

No. Part A accounts for and reports emissions connected to finance; it does not set performance targets. A PCAF inventory can inform a target, but a lower attributed total alone does not prove that a borrower reduced real-world emissions.

Example

Suppose one financial group has three relationships with a hypothetical private packaging manufacturer in Turkey at 31 December 2025. Its bank holds a EUR 12 million general-purpose term loan that is not tied to a named asset. Its investment bank was lead bookrunner for 20% of a EUR 30 million public corporate-bond issue. Its insurer wrote a commercial property policy covering the factory.

The loan belongs in Part A. Figure 5-1 leads to the business loans and unlisted equity method because the company is private and the loan has no named use of proceeds. The bond-arranging role belongs in Part B: public corporate-debt issuance is in scope, and the bank's 20% share exceeds Part B's 5% facilitator threshold. The property policy belongs in Part C's commercial-lines method.

Scoping check: three activities map to three Parts. If the group has implemented only the Part A method, its internal work tracker covers 1 / 3 = 33.3% of these activities by item count. It must not present 33.3% as Part A portfolio coverage, which is the percentage of total loans and investments covered, with limitations and exclusions disclosed. No emission factor is used because this example tests classification, not an emissions calculation.

Where it comes up

PCAF Part A Figure 5-1 financing-flow decision tree and ten asset-class methodsPCAF Financed Emissions Standard, third edition, Chapter 5, Figure 5-1, pp. 33-38Official sourcePCAF Part A Chapter 6 annual public reporting, coverage, exclusions and shall-versus-should languagePCAF Financed Emissions Standard, third edition, Chapter 6.1, pp. 161-169Official sourcePCAF Part B public debt facilitation and 5% underwriting thresholdPCAF Part B Appendix: Specification of Product Scope, facilitator roles and product-scope table, pp. 2-4Official sourcePCAF Part C commercial-lines insurance scopePCAF Insurance-Associated Emissions Standard, second edition, Chapter 5.1 and Table 5.1-1, pp. 32-35; Chapter 5.2, p. 37Official source

Related terms

Financed emissions

Financed emissions are the share of a borrower's or investee's gross GHG emissions allocated to a bank, fund or asset owner through the loans and investments it holds.

Responsible Investing

Responsible investing considers environmental, social and governance information when investors allocate capital, manage holdings and use their influence to pursue stated financial objectives and, where applicable, sustainability objectives.

PCAF data quality score

A PCAF data quality score ranks the inputs behind financed-emissions estimates from 1, the highest quality, to 5, the lowest, based on whether data are verified, reported, physically measured or economically estimated.

Portfolio carbon footprint

A portfolio carbon footprint sums the GHG emissions attributed to investments and usually divides that total by portfolio value to report tonnes of carbon dioxide equivalent per million invested.

Sources

Last verified 2026-08-19

Ready to start?

Tell us what you need.

Bring us the sustainability request, reporting deadline, or strategy question you are facing. We will read it and suggest a practical first step, and the first conversation is free.

Get in touch
PCAF Standard Definition | Keslio