The PCAF attribution formula determines what share of a company's emissions a financier takes on as its own. Financed emissions equal the company's emissions multiplied by the attribution factor: the ratio of the outstanding amount to EVIC (for listed companies) or to the sum of equity and debt (for unlisted companies).
Basic formula
financed emissions = attribution factor × company emissions
attribution factor = outstanding amount / denominator
The denominator depends on the type of company:
- listed company: EVIC (enterprise value including cash), that is, market capitalization plus debt, with no deduction for cash;
- unlisted company: balance-sheet equity + debt.
The idea is that everyone who finances a company, shareholders and lenders alike, jointly “owns” its emissions in proportion to their contribution. Add up the shares of all financiers and you get 100% of the company's emissions, with no double counting within an asset class.
The formula applies to corporate instruments. For mortgages, commercial real estate, motor vehicle loans and sovereign debt, the denominator is different; see PCAF asset classes.
Worked example: an unlisted company
A bank has made a loan to a company. The company's emissions were calculated from its records; for this example, we use factors of 0.726 kg CO₂e/kWh for grid electricity (an estimated value) and 2.04 kg CO₂e/m³ for natural gas.
Annual input data:
| Indicator | Value |
|---|---|
| Grid electricity | 5,000,000 kWh |
| Natural gas | 1,000,000 m³ |
| Equity | 25 million |
| Debt (all loans and borrowings) | 35 million |
| Our bank's loan (outstanding balance) | 15 million |
Step 1. Company emissions.
- Scope 2: 5,000,000 × 0.726 = 3,630,000 kg = 3,630 t CO₂e.
- Scope 1: 1,000,000 × 2.04 = 2,040,000 kg = 2,040 t CO₂e.
- Total Scope 1 + 2: 5,670 t CO₂e.
Step 2. Attribution factor.
15 / (25 + 35) = 15 / 60 = 0.25.
Step 3. Financed emissions.
0.25 × 5,670 = 1,417.5 t CO₂e.
The bank reports 1,417.5 t CO₂e for this position. Because the emissions were calculated from the company's physical activity rather than taken from its own report, the data quality score here is 3; see the 1–5 scale.
Worked example: a listed company
A fund holds 25 million in shares and bonds of a listed company. The company's EVIC is 500 million, and its Scope 1 + 2 emissions, according to its own report, are 200,000 t CO₂e.
Attribution factor = 25 / 500 = 0.05. Financed emissions = 0.05 × 200,000 = 10,000 t CO₂e.
Common mistakes
- Wrong denominator. Dividing by market capitalization alone, or by debt alone, overstates the financier's share.
- Mismatched dates. The outstanding amount, EVIC and emissions must refer to comparable periods; the standard sets the rules for choosing dates.
- Mixing scopes. State explicitly which of the company's emission scopes are included. For more on boundaries, see Scope 1, 2 and 3.
- Currency. The outstanding amount and the denominator must be in the same currency.
Sensitivity to market value
For listed companies, EVIC depends on share prices. If market capitalization rises, the attribution factor falls, and financed emissions fall with it, even though the company emits just as much as before. That is why, when analyzing portfolio trends, it is worth looking at both the companies' absolute emissions and their carbon intensity.
How it works in the platform
- The PCAF contour is still in development and marked “Soon”: the platform does not yet calculate attribution or financed emissions.
- A company can already take care of Step 1, its own emissions: in Data entry, Scope 1 and 2 emissions are calculated from monthly records for each facility, and every record shows the methodology applied from the platform's reference catalog.
- The administrator creates the annual company report in DOCX or PDF on the organization's GHG page (reached from Facilities). It can be shared with the bank as a ready basis for the calculation.
Frequently asked questions
What is EVIC?
EVIC (enterprise value including cash) is the value of a company including its cash: the market value of its shares plus its debt. It is used as the denominator for listed companies.
Should the company's Scope 3 be included?
The standard calls for disclosing the Scope 1 and 2 emissions of investee companies and, depending on the sector, their Scope 3 emissions. Check the specific requirements against the current edition of PCAF.
What if the bank's share comes out above 100%?
That signals an error in the data: the outstanding amount cannot exceed the company's equity and debt. Check the dates and whether the debt data is complete.