Financed emissions are the greenhouse gas (GHG) emissions of the companies and projects that a bank or investor finances through loans, bonds and equity investments, counted in the share attributable to that financier. The common method for measuring them is set by the PCAF (Partnership for Carbon Accounting Financials) Global GHG Accounting and Reporting Standard. Its Part A deals specifically with financed emissions, and the 3rd edition was published in December 2025.
Why a financial institution measures other companies' emissions
A bank's own emissions (office electricity, heating, company vehicles) are usually small. Most of a financial institution's climate footprint sits in its portfolio. In GHG Protocol terms, this is Scope 3 Category 15, “Investments” (for more on the categories, see Scope 3: the 15 categories).
Measuring financed emissions serves several purposes:
- seeing which sectors and clients shape the portfolio's carbon profile;
- assessing transition risks: carbon-intensive borrowers are more exposed to rising carbon prices and to requirements such as CBAM;
- setting emission reduction targets for the portfolio and tracking progress against them;
- responding to climate disclosure requests from investors, regulators and partners.
How the calculation works
The PCAF logic is simple: a financier is accountable for the share of a company's emissions that matches its share of the company's total financing. The basic formula is:
financed emissions = (outstanding amount / (equity + debt)) × company emissions
For listed companies, the denominator is EVIC (enterprise value including cash). The formula is walked through with a numerical example in Attribution formula.
Attribution rules differ by asset class: business loans, listed equity and bonds, project finance, mortgages and others. See PCAF asset classes.
Data quality
For every portfolio position, PCAF requires a data quality score on a scale from 1 to 5. A score of 1 is the best: verified emissions data disclosed by the company itself. A score of 5 is the roughest: emissions estimated from economic activity, for example from the loan amount and a sector-average factor. The weighted average score shows how reliable the figure is for the portfolio as a whole.
What this means for borrowers
If your company borrows from a bank, the bank's request for emissions data is a direct consequence of PCAF. The better your data, the better the data quality score the bank can assign and the less it has to rely on conservative sector assumptions. Banks typically ask for:
- annual Scope 1 and Scope 2 emissions, preferably calculated under the GHG Protocol or ISO 14064-1;
- the underlying data: electricity, heat and fuel consumption;
- details of verification, if the inventory has been verified;
- revenue and financing structure, if the bank calculates its share itself.
A company with a GHG inventory in hand can have a substantive conversation with its bank instead of being assessed “by sector”.
How it works in the platform
- The PCAF contour is still in development and marked “Soon”: the platform does not yet calculate financed emissions for a portfolio.
- For borrowers, the platform already helps today: in Data entry you enter fuel and energy for each facility month by month, the platform calculates Scope 1 and 2 emissions, and supporting documents (invoices, certificates of completion, photos of meter readings) are attached to the records.
- The company's annual totals are shown in GHG analytics, and the administrator creates the annual company report in DOCX or PDF on the organization's GHG page (reached from Facilities). You can share this report with your bank.
- Scope 3 Category 15, “Investments”, is not part of GHG accounting: a separate service is planned for it.
Frequently asked questions
Is PCAF mandatory for banks?
PCAF is a voluntary industry standard that financial institutions choose to join. It can become mandatory through national disclosure requirements or the terms set by international partners; for the current picture, see regulatory documents.
How do financed emissions differ from Scope 3?
They are not a separate scope but the way a financial institution calculates Scope 3 Category 15, “Investments”. PCAF specifies exactly how a client's emissions are split between its financiers.
What if a borrower does not measure its emissions?
The bank estimates the emissions from physical or economic indicators and assigns a poorer data quality score. Over time, the aim is to move to data that the company calculates and discloses itself.