Over 50 banks and other financial institutions representing nearly $3 trillion in assets announced on Monday they will assess and disclose the impact their loans and investments will have on climate change using common carbon accounting standards.
They launched the Partnership for Carbon Accounting Financials (PCAF), an industry-wide effort to standardize how companies measure the carbon footprints of their investments, at a time when activists and stakeholders are pressuring the financial sector to pull back from heavily polluting fossil fuel projects.
“Knowing the emissions of their loans and investments means banks can be transparent with their stakeholders,” said Peter Blom, CEO of Dutch bank Triodos. “They can make informed decisions that limit the negative impact, and increase the positive impact, of their financial decisions on the climate.”
The banks hope the framework will become a benchmark for the financial sector as institutions and banks try to meet the goals of the Paris Climate Agreement.
It has been adopted by several Dutch banks, including ABN AMRO, which found out by using the PCAF framework that residential mortgages were one of the areas of highest carbon impact. The bank used this information to promote mortgages with incentives for energy efficiency, Kees van Dijkhuizen, CEO of ABN AMRO, said in a statement.
“Our experience in the Netherlands is that measuring and tracking climate impact drives concrete action and change,” he said.