More than 50 financial institutions representing $2.9 trillion in assets have pledged to unveil the carbon impact of the investments and loans on Monday.
The announcement came hours prior to the UN climate action summit convened by Antonio Guterres got arrived in New York.
The cohort of banks, including the US Amalgamated Bank and also the Dutch ASN and Triodos Banks, will assess and disclose the greenhouse gas emissions generated by their financial products included in the industry-led initiative Partnership for Carbon Accounting Financials (PCAF).
While the sum is but part from the $386 trillion-high global stock of monetary capital, it represents the single largest carbon disclosure initiative within the financial sector. It also marks the very first time the financial sector will apply a global carbon accounting standard, with methods previously specific to the US or Netherlands.
The PCAF will enable investors to judge whether their portfolios are suitable for the Paris Agreement, which aims to limit warming to “well below” 2C making “finance flows in line with a pathway towards low greenhouse gas emissions and climate-resilient development”.
The methodology will affect a wide range of assets, including sovereign bonds, listed equity, mortgages, real estate and company debt.
“PCAF enables the financial industry to take meaningful, collective and global action to combat global warming,” head of Triodos bank Peter Blom said. “Knowing the emissions of the loans and investments means banks can be transparent using their stakeholders. They are able to better understand and manage the risk of the climate emergency for his or her business. And, crucially, they can make informed decisions to limit the negative impact, and boost the positive impact, of their financial decisions on the climate.”
“Our experience in the Netherlands is that measuring and tracking climate impact drives concrete action and change,” Kees van Dijkhuizen CEO from the Dutch ABN AMRO said. “At ABN AMRO, PCAF helped us understand that our 800,000 residential mortgages are among the areas which have the greatest carbon impact. With that knowledge, we now promote mortgages that incentivize customers to take energy efficiency measures. Climate action like that isn't just great for business – but is really a duty to the clients, the planet, and to generations to come.”
Founded throughout the Paris Agreement in 2023, PCAF has assessed $1.2 trillion price of assets since 2023.
