CDP and PCAF Align Reporting Standards to Streamline Financial Institution Emissions Disclosure

CDP and the Partnership for Carbon Accounting Financials have aligned their reporting frameworks for the 2024 disclosure cycle, simplifying how financial institutions measure and disclose emissions associated with their lending and investment portfolios. Financed emissions are on average 750 times larger than financial institutions' direct operational emissions, making transparent portfolio-level disclosure a critical tool for climate risk management.

Nearly 600 financial institutions reported environmental data through CDP in 2023, a 73% increase from the number that participated when the Financial Services sector questionnaire launched in 2020. PCAF is adopted by more than 500 institutions globally as the standard for measuring and disclosing GHG emissions associated with loans, investments and insurance (Scope 3, Category 15). The CDP-PCAF alignment simplifies the disclosure process for institutions that are signatories to both frameworks, harmonising questions on financed, facilitated and insurance-associated emissions.

The ISSB's IFRS S2 disclosure standard and the Basel Committee on Banking Supervision's consultation on climate-related financial risk both underscore the growing importance of portfolio impact metrics for regulatory compliance. The alignment between CDP and PCAF supports financial institutions in meeting these requirements while contributing data to GFANZ-related net-zero commitments and Investor Agenda Climate Action Plans. Streamlined reporting is also designed to improve data quality and comparability — inputs that regulators, supervisors and capital allocators increasingly require to assess systemic climate risk.

CDP and PCAF jointly hosted a capacity-building webinar ahead of the 2024 cycle to explain how CDP questions correspond to PCAF Standard requirements. The partnership is part of CDP's broader harmonisation strategy, which includes alignments with the ISSB S2 standard, the TNFD framework, the SEC climate rule and the ESRS. For Indian financial institutions with international business or green bond issuance, the PCAF standard is increasingly relevant as global investors and multilateral development banks require consistent portfolio emissions data as a condition of capital access.

Key figure — Financed emissions average 750 times larger than FIs' direct operational emissions