PCAF Releases Updated GHG Standard Covering New Financial Instruments

The Partnership for Carbon Accounting Financials (PCAF) has launched an updated Global Greenhouse Gas Accounting and Reporting Standard for the Financial Industry, adding new methodologies to cover a broader range of financial instruments including use of proceeds structures, securitisations and treaty reinsurance. The standard is used by 680 financial institutions representing over $100 trillion in assets and is referenced in both IFRS S2 and the CSRD's ESRS.

PCAF's updated standard introduces four new financed emissions methodologies covering use of proceeds structures, securitisations and structured products, sub-sovereign debt, and optional reporting on undrawn loan commitments under IFRS S1 and S2. It also adds two new insurance-associated emissions methodologies for treaty reinsurance and project insurance. New recommendations address the impact of inventory fluctuations on financed emissions measurement, responding to feedback from a 2024 PCAF discussion paper. The existing standard's methodologies remain unchanged, with the new methods closing gaps and expanding coverage across diverse financial portfolios.

The update is significant for Indian banks, insurance companies and asset managers who are increasingly subject to international sustainability reporting expectations, whether through portfolio companies' CSRD obligations, RBI green finance frameworks or alignment with SEBI's Business Responsibility and Sustainability Report (BRSR) requirements. As India's financial sector deepens its engagement with global capital markets, adoption of internationally recognised financed emissions accounting standards like PCAF provides the comparability and credibility that foreign investors and regulators require. Separate supplemental guidance on financed avoided emissions and forward-looking metrics also expands reporting optionality for institutions seeking to communicate portfolio-level transition progress.

PCAF said the updates reflect growing demand from financial institutions struggling to measure emissions across diverse and complex portfolios. The new guidance on financed avoided emissions and forward-looking metrics is designed to complement mandatory financed emissions disclosure rather than replace it, providing guardrails for institutions that want to report separately on positive portfolio impacts. The revised standard is available on the PCAF website and is expected to be progressively incorporated into regulatory sustainability reporting frameworks as jurisdictions continue to align domestic standards with IFRS S2.

Key figure — $100 trillion in financial assets represented