Facilitated Emissions

First Version
December 2023
Table of contents
Acknowledgements 3
Executive Summary 4
1. Introduction 5
2. GHG accounting in Capital Markets 12
3. GHG accounting can be used as a basis to achieve business goals 16
4. Principles and requirements of GHG accounting for facilitators 20
4.1 GHG accounting requirements derived from the GHG Protocol’s principles 21
4.2 Additional requirements for accounting and reporting emissions from
Capital Markets activities 22
5. Methodology to measure facilitated emissions 25
5.1 Scope of capital market activities and coverage of roles 26
5.2 Attribution of emissions 27
5.3 Emission scopes covered 33
6. Reporting requirements, recommendations, and metrics 39
7. Glossary 45
8. Acronyms 48
9. References 50
10. Annex 52
Annex 1: Detailed summary of data needs and equations to calculate
facilitated emissions 53
Annex 2: Table for reporting facilitated emissions 54
Annex 3: How this methodology may be used to track changes in facilitated emissions 55

2
Acknowledgements
In September 2019, the Partnership for Carbon Accounting Financials (PCAF) was launched globally
to harmonize greenhouse gas (GHG) accounting methods and to enable financial institutions to
consistently measure and disclose the GHG emissions associated with financial activities. In 2020, the
first version of The Global GHG Accounting and Reporting Standard for the Financial Industry (the
‘Financed Emissions Standard’) was launched.

As an industry-led partnership, PCAF is governed by a Board of Directors of which the 2023 members
are ABN AMRO, Amalgamated Bank, the Global Alliance for Banking on Values, Morgan Stanley, NMB
Bank, and Nordea. At the time of publishing this document, more than 431 financial institutions,
including banks, investors, asset managers, re/insurers, participated in PCAF.1

A PCAF working group was initiated in early 2021 to co-create a separate Global GHG Accounting and
Reporting Standard for facilitated emissions, particularly those associated with services provided by
financial institutions to support the issuance of capital market instruments. This Facilitated Emissions
Standard is Part B of the overall Global GHG Accounting and Reporting Standard for the Financial
Industry (the Standard).

The PCAF Secretariat facilitated the Working Group’s activities by moderating the technical
discussions, reviewing the content, and compiling and editing this document. The PCAF Secretariat is
operated by Guidehouse, a global consultancy firm specializing in energy, sustainability, risk, and
compliance for the financial industry.

The Working Group first published a discussion paper in November 2021, which looked at key design
choices in developing a methodology for the accounting of facilitated emissions associated with the
arranging of capital market issuances (when the facilitation activity should be captured; how the
responsibility should be split between the facilitators; and allocating emissions), as well as proposed
options. The Working Group gathered feedback from both the public consultation held at the end of
2021 and from additional targeted discussions the Working Group held with third-party experts.
However, there was one open question that the Working Group required specific feedback on: what
portion of the capital market issuance is the responsibility of the facilitator? In October 2022, the
Working Group published a public consultation paper to determine the percentage weighting of GHG
emissions to facilitators. Throughout the development of this Facilitated Emissions Standard, PCAF
has also engaged with stakeholders to solicit feedback and discuss PCAF methodological approaches
and considered their comments and suggestions. These points have been considered and
appropriately incorporated in this first version of The Global GHG Accounting and Reporting Standard
Part B: Facilitated Emissions.

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1 The full list of PCAF participants can be found at:
https://carbonaccountingfinancials.com/financial-institutions-takingaction#overview-of-institutions

3
Executive Summary
The Partnership for Carbon Accounting Financials (PCAF) is an industry-led initiative that helps
financial institutions assess and disclose their indirect greenhouse gas (GHG) emissions related to
their financial activities (Scope 3 emissions classified as category 15). GHG accounting refers to the
processes required to consistently measure and report the amount of GHGs generated, avoided, or
removed by an entity, allowing it to track and report these emissions over time. It enables financial
institutions to disclose these emissions at a fixed point in time and in line with financial accounting
periods.

Until now, there has not been a globally accepted standard for measuring and reporting emissions
associated with capital market activities. This new Standard constitutes PCAF (2023) The Global
GHG Accounting and Reporting Standard Part B: Facilitated Emissions for the Financial Industry. As
such, these Standards supplement the requirements of the GHG Protocol 'Corporate Value Chain
(Scope 3) Accounting and Reporting Standard'.

This document is the first version of the Facilitated Emissions Standard. It provides detailed
methodological guidance for the measurement and disclosure of GHG emissions associated with
capital market transactions. It is anticipated that the Facilitated Emissions Standard will be reviewed
again once the revised GHG Protocol Corporate Standards have been published. This will allow
experiences of implementing the Standard and expected updates to the GHG Protocol Corporate
Standards to be incorporated.

The Facilitated Emissions Standard provides detailed guidance to calculate the facilitated emissions
resulting from capital market activities. By following the methodologies, financial institutions can
measure GHG emissions for each segment and produce disclosures that are consistent, comparable,
reliable, and clear.

Limited data is often the main challenge in calculating facilitated emissions; however, data limitations
should not deter financial institutions from starting their GHG accounting journeys. The Facilitated
Emissions Standard provides guidance on data quality scoring per segment, facilitating data
transparency and encouraging improvements to data quality in the medium and long term.

This Facilitated Emissions Standard also provides recommendations and requirements for reporting.
Any requirements not fulfilled must be accompanied by an explanation.

This Facilitated Emissions Standard equips the financial industry with standardized, robust methods
to measure and disclose facilitated emissions.

4
1. Introduction

5
PCAF’s Standard enables the financial industry to measure and report emissions associated with
financial activities. GHG accounting provides the starting point to assess and disclose climate-related
risks, set science-based targets, and inform climate strategies and actions that direct capital in
support of the alignment of financial flows with the Paris Agreement’s goals. Although PCAF’s
Standard for Financed Emissions accounting (Part A) continues to grow to cover additional asset
classes and the Insurance-Associated Emissions Standard (Part C) continues to be used more
frequently, there has been increasing global interest for additional GHG accounting guidance. More
precisely, a specific interest to cover those activities that may be classified as facilitated emissions,
such as capital market activities.

Within the financial sector, Capital Markets (where companies and governments raise debt and
equity) play a crucial role in fueling economic activity and providing needed funding. In 2022 alone,
global long-term bond issuance was $22.5 trillion and global equity issuance was $0.4 trillion, meaning
that total capital market issuance was $22.9 trillion.2 This first version of the Facilitated Emissions
Standard (Part B) now covers the emissions associated with primary capital market issuance activities
(see chapter 5). It is expected that this Facilitated Emissions Standard will be expanded with
additional financial sector activities and products that are associated with facilitating emissions in the
coming years.

THE IMPORTANCE OF CAPITAL MARKETS

Capital Markets sit at the nexus of financial flows that must increasingly be directed towards more
sustainable practices if we are to avoid the worst effects of climate change. Furthermore, a capital
market issuances that occurs in a particular year will impact the climate for many subsequent years.
Actors within these markets have an opportunity to help those financial flows move into activities that
minimize climate impact. These actors include the following:
• Those who raise funding in Capital Markets (the issuers), such as governments and private
sector companies.
• The investors in Capital Market instruments who are the providers of this funding.
• Those who facilitate and enable these complex multi-party transactions, i.e., facilitators.

For two of these three actors, there are already GHG accounting methodologies in place. For issuers,
the GHG Protocol Corporate Accounting and Reporting Standard can be applied (also applicable for
non-corporate organizations). For investors, Part A of the PCAF Global GHG Accounting and
Reporting Standard for the Financial Industry3 has been available since November 2020. However, no
harmonized accounting standard is yet in place for actors facilitating capital market transactions.

WHO ARE FACILITATORS AND WHAT IS THEIR ROLE

Facilitators are mostly large international banks that conduct substantial capital market facilitation
activities including advising issuers on structure, pricing, and process; preparing materials for, and
engaging with, investors; and arranging and guiding clients on roadshows. These facilitation services
are critical to the functioning of Capital Markets. Through this facilitation role, banks are in a unique
position to help their clients meet the growing sustainability demands and climate considerations of
investors. To help limit climate change and achieve net-zero emission targets by 2050, Capital
Markets need to redistribute a large amount of capital to green and sustainable companies that follow
GHG emissions protocols with net-zero targets with projects, products, and services to support

______
2 Securities Industry and Financial Markets Association, Capital Markets Fact Book, 2023
3 PCAF (2022). The Global GHG Accounting and Reporting Standard Part A: Financed Emissions. Second Edition

6
decarbonization on the real economy. Financial institutions can take up several roles as facilitators.
These roles vary by product and market, and are summarized as follows:4
• Lead Bookrunner: This includes both active and passive bookrunners. Lead bookrunners
typically lead on the largest percentage of a deal’s economics. Active bookrunners are
responsible for most deal support (i.e., investor book, allocations, roadshow) and they are
compensated with the highest fees. Passive bookrunners do not have access to the investor
order book.
• Co-Manager/Lead Manager: These institutions are invited into a deal by the active
bookrunners but the activities they undertake are less significant. Economics for lead/co-
managers are typically smaller in relationship to the bookrunners. Given their passive role, co-
managers are not captured in the Standard.

WHICH FACILITATING ACTIVITIES ARE COVERED

This Facilitated Emissions Standard is based on the facilitation activity of the bookrunners and
managers in a capital market issuance. Although these financial institutions do not provide the capital
directly, they play a key role in an issuer’s capacity to expand or transition. Crucially, this activity can
include a material part of business activities. Therefore, the influence of financial institutions on
Capital Markets and the associated financial flows can be substantial. If Capital Markets are to
channel more financing into climate-friendly projects and businesses, all actors in these markets need
to be as transparent as possible to the market and wider stakeholders about their role and the impact
of these activities on climate change.

This Facilitated Emissions Standard includes the primary issuance of capital market instruments and
loan syndication. Loan syndication involves a group of lenders that fund portions of a loan for a single
borrower. A primary issuance includes new securities to provide debt-based or equity-based
financing. For the purposes of this Facilitated Emissions Standard, primary issuances are those
issuances where a financial institution may propose a beginning price range for a given security and
oversee its sale to investors on a best-efforts basis. This Facilitated Emissions Standard only covers
the portion of primary issuances that are sold to investors. In the case of an under-subscribed
issuance, any unsold securities are not accounted for within the scope of this Facilitated Emissions
Standard. The scope of this Facilitated Emissions Standard includes:

• Facilitated issuance of new:

- Public debt: all types of bonds issued for general purposes (including sustainability-
linked bonds, corporate bonds, and corporate medium-term notes5)
- Public equity: common stock (IPOs and follow-on issuances) and preferred shares
• Facilitated equity investments in private companies (including private placements)
• Facilitated debt investments in private companies (including private credit)
• Syndicated loans6

Sovereign bonds,7 securitized products (including asset-backed securities), covered bonds, derivative
financial products (e.g., futures, options, swaps) and advisory services such as mergers and
acquisitions (M&A) are not covered by the scope of this Facilitated Emissions Standard.
______
4 Capital Market Instruments Proposed Methodology for Facilitated Emissions 2022
5 Medium-term notes are excluded when issued by government agencies.
6 A syndicated loan transaction is defined as a loan made available by two or more providers under a common loan agreement
and ranking credit is assigned upon signature of the loan documentation. If these fundamental tests cannot be applied, it will
not be considered for inclusion.
7 US agency, non-US agency, supranational and subnational bonds are excluded as well.

7
The same holds for green bonds since no PCAF method exists yet to calculate the emissions
associated with green bonds and other known use of proceeds bonds. PCAF has prioritized the
development of a method covering green bonds moving forward.

THE PURPOSE OF REPORTING FACILITATED EMISSIONS OF PRIMARY CAPITAL

MARKET ISSUANCE
As the intermediary between organizations seeking debt or equity capital and investors looking for
more investment opportunities, financial institutions need to develop a mechanism to provide
transparency about the GHG emissions associated with capital distributed via capital market
activities. Several key stakeholders including the Financial Stability Board’s Task Force on Climate-
related Financial Disclosures (TCFD) and the UN-convened Net-Zero Banking Alliance (NZBA) have
asked for more transparency around capital market activities.

This proposed methodology provides a GHG accounting methodology for the facilitation of capital
market activities. This method creates a mechanism that helps provide transparency and
accountability and will enable the following:

• The ability to consistently define the quantity of GHG emissions associated with financial
institutions’ facilitation of capital market activities.
• The incentive for FIs engaged in facilitation to assess/compare the GHG emissions profile
of (potential) issuers, allowing for more informed decisions.
• More informed analysis and comparison of the financial institutions engaged in facilitation
activity by their investors and other stakeholders.

Box 1-1. Sustainable finance reporting and PCAF

Many financial institutions have commitments to raise financing for sustainable and climate-
related activities. These commitments have been made to demonstrate the role financial
institutions can play in scaling climate solutions. Sustainable finance reporting is a separate and
distinct concept where financial institutions are simply reporting the actual amount of financing
that is either directly lent to, invested in, or arranged for the purpose of sustainable activity – it
does not involve the attribution of emissions or avoided emissions to that financing as would be
the case for calculating financed and facilitated emissions.

PCAF does not offer guidance on reporting requirements for sustainable or any type of financing
where there is no attribution of emissions involved. However, financial institutions may consider,
as appropriate, how to best align the methodologies for how they account for these activities
relative to facilitated and financed emissions so that they can communicate in a consistent
manner what their contribution is to any loan or transaction.

HOW FACILITATED EMISSIONS ARE DIFFERENT FROM FINANCED EMISSIONS

Facilitated emissions differ from financed emissions in two respects: they are rarely held on a financial
institution’s balance sheet (representing services rather than financing); and a financial institution’s
association with the transaction is temporary. PCAF views facilitation as a separate but important
metric, which exerts a material impact on the direction of capital towards economic activities that will
enable the transition to net-zero by 2050.

8
The Financed Emissions Standard (Part A) is based upon on-balance sheet exposure (i.e., financed
emissions), which allows financial institutions to account for their share of a corporate client’s
emissions based on the client’s enterprise value (or equivalent in the case of non-corporate actors).
On-balance sheet exposure (e.g., loans and investments) are usually held for relatively long time
periods (typically years) on a financial institution’s balance sheet and exposes the financial
institutions to credit risk. By contrast, capital market transactions are rarely held on a financial
institution’s balance sheet. They are facilitated, using various services the facilitating institution
provides, rather than financed, because the institution is not providing financing directly to the issuer.
This leads to a temporary association with transactions (usually days or weeks) and where usually no
financial (credit) risk taken by the financial institution. As a result, there is a distinction in the concept
of emissions ownership.

Although facilitation and lending/investing are commercial activities, which will earn revenue, they are
fundamentally different in nature and the financial institution’s role differs in these activities.

This proposed methodology does not cover how targets should be set for facilitated emissions. We
expect this work to be covered by other bodies concerned with target setting – PCAF is focused
exclusively on GHG accounting and disclosure.

STANDARDIZING GHG ACCOUNTING IN CAPITAL MARKETS

This document is the first version of the ‘Global GHG Accounting and Reporting Standard for
Facilitated Emissions’. Throughout this document, it will be referred to as the Facilitated Emissions
Standard. This Facilitated Emissions Standard constitutes Part B of the ‘Global GHG Accounting and
Reporting Standard for the Financial Industry’. The purpose of this Facilitated Emissions Standard is
to provide financial institutions with transparent, standardized, and robust methodologies to measure
and report facilitated emissions, as a supplement to the requirements of the GHG Protocol "Corporate
Value Chain (Scope 3) Accounting and Reporting Standard".

PCAF first published a discussion paper in November 2021, which looked at key design choices in
developing a methodology for the accounting of facilitated emissions associated with the arranging of
capital market issuances (when the facilitation activity should be captured; how the responsibility
should be split between the facilitators; and allocating emissions), as well as proposed options. Then,
in October 2022, PCAF published a public consultation paper to determine the percentage weighting
of GHG emissions to facilitators. Throughout the development of this Facilitated Emissions Standard,
PCAF has engaged with stakeholders to solicit feedback and discuss PCAF methodological
approaches and considered their comments and suggestions.

BUILT ON THE GHG PROTOCOL

This Facilitated Emissions Standard is based on the GHG Protocol standards for corporate reporting,
such as the 'GHG Protocol Corporate Accounting and Reporting Standard'8, the 'Corporate Value
Chain (Scope 3) Accounting and Reporting Standard'9, and the supplemental 'Technical Guidance for
Calculating Scope 3 Emissions'10. More specifically, this Facilitated Emissions Standard will
supplement the GHG Protocol 'Corporate Value Chain (Scope 3) Accounting and Reporting Standard'

______
8 https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf
9 https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf
10 https://ghgprotocol.org/sites/default/files/standards/Scope3_Calculation_Guidance_0.pdf

9
by providing additional detailed guidance as to how financial institutions can report on facilitated
emissions under Scope 3 category 15.

Capital Market activities are part of “Managed Investments and Client Services” as listed in Table 1.1
below. The accounting guidance provided by the GHG Protocol on these types on investments is very
limited. The protocol only states that “Companies may account for emissions from managed
investments and client services in scope 3 category 15 (investments)”. In absence of additional
guidance, PCAF has taken the 5 core principles of the GHG Protocol and the derived PCAF
requirements (see chapter 4) as starting point for the developing this Facilitated Emissions Standard
(see chapter 4).

Table 1-1. Overview of GHG Protocols’ optional categories

for accounting for emissions from investments

Financial investment/service Description GHG accounting approach

(optional)
Debt investments General corporate purposes debt Companies may account for scope 1
(without known use of proceeds) holdings (such as bonds or loans) and scope 2 emissions of the investee
held in the reporting company’s that occur in the reporting year in
portfolio where the use of proceeds scope 3, category 15 (Investments)
is not specified
Managed investments Investments managed by the reporting Companies may account for emissions
and client services company on behalf of clients (using from managed investments and client
clients’ capital) or services provided by services in scope 3, category 15
the reporting company to clients, (Investments)
including:
• Investment and asset
management (equity or fixed
income funds managed on behalf
of clients, using clients’ capital
• Corporate underwriting and
issuance for clients seeking
equity or debt capital
• Financial advisory services for
clients seeking assistance with
mergers and acquisitions or
requesting other advisory
services

Other investments or financial Other investments, financial contracts, Companies may account for emissions
services or financial services not included above from other managed investments in
(e.g., pension funds, retirement scope 3, category 15 (Investments)
accounts, securitized products,
insurance contracts, credit guarantees,
financial guarantees, export credit
insurance, credit default swaps, etc.)

Source: (WRI and WBCSD, 2011), adapted by PCAF, 2023

Beyond reporting the scope 3 category 15 emissions covered by this Facilitated Emissions Standard,
financial institutions shall also measure and report their scope 1 and 2 emissions as well as any other
relevant categories of scope 3 emissions in line with the GHG Protocol’s standards.

10
ABOUT PCAF
The Partnership for Carbon Accounting Financials (PCAF) is an industry-led initiative which was
created in 2015 by 14 Dutch financial institutions. In 2018 PCAF expanded into North America and
went global in September 2019. PCAF aims to standardize the way financial institutions measure and
report financed emissions, insurance-associated emissions, and facilitated emissions. In addition, it
aims to increase the number of financial institutions that commit to measuring and disclosing these
scope 3 emissions in line with the methods it develops.

In 2020, the first edition of the "Global GHG Accounting and Reporting Standard for the Financial
Industry" covering financed emissions (“Financed Emissions Standard”) was published. Since then,
financial institutions have asked to expand the standard with more methods, also covering other
activities of the financial industry. From 2021 onwards, PCAF started the work on three parts under
the umbrella of the Global GHG Accounting and Reporting Standard for the Financial Industry:

• Part A: update of the first version standard on measuring and reporting financed
emissions ("Financed Emissions Standard - second version")
• Part B: development of a standard for measuring and reporting the GHG emissions
associated to the capital market facilitation activities ("Facilitated Emissions Standard")
• Part C: development of a standard for measuring and reporting the GHG emissions
associated to re/insurance underwriting portfolios ("Insurance-Associated Emissions
Standard")

HOW TO READ THIS FACILITATED EMISSIONS STANDARD

This Facilitated Emissions Standard uses the following language to indicate which provisions are
requirements, which are recommendations, and which are allowable options that financial institutions
may choose to follow. The following terms are used throughout this Facilitated Emissions Standard:

• "Shall" or "required": indicates what is required for a GHG inventory to conform with this
Facilitated Emissions Standard.
• "Should": indicates a recommendation but not a requirement.
• "May": indicates an allowed option.
• "Needs", "can", and "cannot": provide guidance on implementing a requirement or to
indicate when an action is or is not possible.

Figure 1-1. Overview of the Standard and steps for disclosing facilitated emissions

11
2. GHG accounting
in Capital Markets

12
WHAT IS GHG ACCOUNTING
GHG emissions accounting ("GHG accounting") refers to the processes required to consistently
measure the amount of GHGs generated, avoided, or removed by an entity, allowing it to track and
report these emissions over time. The emissions measured are the seven gases mandated under the
Kyoto Protocol and needed to be included in national inventories under the United Nations
Framework Convention on Climate Change (UNFCCC)—carbon dioxide (CO2), methane (CH4), nitrous
oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6) and
nitrogen trifluoride (NF3). For ease of accounting, these gases are usually converted to and expressed
as carbon dioxide equivalents (CO2e).

GHG accounting is commonly used by governments, corporations, and other entities to measure the
direct and indirect emissions that occur throughout their value chains as a result of organizational
and business activities. According to the GHG Protocol Corporate Accounting and Reporting
Standard,11 direct emissions are emissions from sources owned or controlled by the reporting
company. Indirect emissions are emissions that are a consequence of the operations of the reporting
company, but that occur at sources owned or controlled by another company.

Direct and indirect emissions are further categorized by scope and distinguished according to the
source of the emissions and where in an organization’s value chain the emissions occur. The three
scopes defined by the GHG Protocol—scope 1, scope 2 and scope 3—are briefly described below and
are illustrated in Figure 2-1.
• Scope 1: Direct GHG emissions that occur from sources owned or controlled by the reporting
company—i.e., emissions from combustion in owned or controlled boilers, furnaces, vehicles,
etc.
• Scope 2: Indirect GHG emissions from the generation of purchased or acquired electricity,
steam, heating, or cooling consumed by the reporting company. Scope 2 emissions physically
occur at the facility where the electricity, steam, heating, or cooling is generated.
• Scope 3: All other indirect GHG emissions (not included in scope 2) that occur in the value
chain of the reporting company. Scope 3 can be broken down into upstream emissions that
occur in the supply chain (for example, from production or extraction of purchased materials)
and downstream emissions that occur as a consequence of using the organization’s products
or services.

The GHG Protocol 'Corporate Value Chain (Scope 3) Accounting and Reporting Standard'12
categorizes scope 3 emissions into 15 categories, as shown in Figure 2-1. According to the GHG
Protocol, accounting and reporting on emissions associated with a reporting company’s capital
market related activities are optional under scope 3 category 15 (Investments, other investments, or
financial services). This Facilitated Emissions Standard now clarifies and requires that capital market
facilitated emissions are to be reported as a separate and supplementary accounting note within
scope 3 category 15 (Investments). Please see Chapter 6 for more details on reporting
recommendations.

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11 WRI and WBCSD, 2004
12 WRI and WBCSD, 20011

13
 Figure 2-1. Overview of GHG Protocol scopes and emissions across the value chain

Source: (WRI and WBCSD, 2011) adapted by PCAF, 2023

GHG ACCOUNTING HELPS MEASURE THREE TYPES OF CLIMATE IMPACT:

GENERATED EMISSIONS, EMISSION REMOVALS, AND AVOIDED EMISSIONS
Facilitated emissions can be measured as the amount of GHGs generated, avoided, or removed by a
financial institution in the reporting year. The total volume of GHG emissions emitted and facilitated
by a financial institution is commonly referred to as its generated (absolute) emissions. The core
focus of this Facilitated Emissions Standard is the aggregated GHG emissions emitted and facilitated
over the reporting year by the financial institution itself or its facilitated parties.

However, not all capital market activities are associated with generated facilitated emissions.
Facilitation can also contribute to the deployment of emission removal solutions that absorb CO2e
from the atmosphere and store it in durable materials, terrestrial carbon sinks, or in geological
reservoirs deep underground. For instance, issuing green bonds for sustainable forestry projects is
likely to increase the forest carbon stock through diversification of tree species, more underbrush, and
healthier forest soils. Other examples are Direct Air Capture technologies that can capture CO2
directly from the atmosphere and durably store it, for instance into carbonate minerals locked inside
concrete blocks. The volume of CO2e absorbed and durably stored is considered an emission
removal that can also be quantified and reported.

Carbon removal activities will become important to achieve global net-zero, namely, to neutralize
(balance) residual emissions. Currently, though, there are no final international rules for carbon
removals accounting. Final guidance by the GHG Protocol on emissions removals is expected to be

14
published late 2023.13 While PCAF acknowledges that emissions removals are integral to combatting
climate change,14 this Facilitated Emissions Standard does not provide specific guidance on how to
measure and report facilitated emissions removals. For the time being, PCAF refers to the forthcoming
guidance from the GHG Protocol. Future versions of this Facilitated Emissions Standard may
potentially include more specific guidance on emissions removals.

Lastly, emissions accounting in the real economy sometimes compares actual emissions of a zero- or
low-emission project (project emissions) to the hypothetical emissions of high-emission alternatives
(baseline emissions). The difference between the two is referred to as avoided emissions. This
Facilitated Emissions Standard does not cover methods to quantify avoided emissions, in absence of
credible and widely accepted standards for corporate and financed emissions.

When a financial institution chooses to report on emission removals or avoided emissions they shall
always do so separately from the financial institution’s scope 1, 2, and 3 GHG inventories, shall apply
the same accounting principles (including attribution and weighting) as for its generated facilitated
emissions, and shall report their methodological formula for calculating these types of emissions (i.e.,
emission removals and avoided emissions) in accordance with the guidance contained in Chapter 6.

______
13 The GHG Protocol's 'Land Sector and Removals Guidance' is currently being developed through a multi-stakeholder development
process. The draft guidance is published for both pilot testing and review in June 2022. Final publication is expected in 2023.
https://ghgprotocol.org/land-sector-and-removals-guidance
14 IPCC WGIII 6th Assessment Report, 2022.

15
3. GHG accounting
can be used as a
basis to achieve
business goals

16
MEASUREMENT OF FACILITATED EMISSIONS FROM PRIMARY ISSUANCE OF
CAPITAL MARKET INSTRUMENTS SERVES FOUR BUSINESS GOALS
Understanding the climate impact of financial activities makes good business sense for financial
institutions. GHG accounting of capital market instruments can help financial institutions achieve
multiple objectives, such as creating transparency for stakeholders, managing financial risks
associated with climate policies and regulations, creating new financial instruments to further the
transition to net-zero, and aligning financial flows with the goals of the Paris Agreement (Figure 3-1).
Financial institutions cite these business goals as the key reasons for assessing emissions associated
with their financial activities, but this list is by no means exhaustive. This chapter will elaborate on
these goals in greater detail.

Figure 3-1. GHG accounting can help financial institutions meet multiple business goals

The level of detail captured in the assessment of facilitated emissions could dictate how well the
inventory can meet the business goals of the financial institution. For example, if a financial institution
uses the inventory to manage risk, it may consider measuring and recording sector-level emissions to
identify emission-intensive industry activities in its portfolios. Other financial institutions may want to
structure their inventory in a way that helps them track their facilitated emissions reduction goals
year-over-year. In the end, what is captured in the GHG inventory should serve the business goals of
the financial institution.

BUSINESS GOAL 1: CREATE TRANSPARENCY FOR STAKEHOLDERS

Financial institutions motivated to be more transparent about their climate impact can use GHG
accounting to measure and report the facilitated emissions. Transparency, especially around
readiness for the low-carbon transition and risk of stranded assets, can help companies and financial
institutions identify how capital expenditure may be re-allocated to provide risk-adjusted returns as
decarbonization occurs. In response to demand and the consensus that climate change poses a
considerable threat to the global economy, the Financial Stability Board (FSB) launched the industry-
led Task Force on Climate-related Financial Disclosures (TCFD) in 2015. The TCFD framework15 has
expanded since the first recommendations were launched in 2017 to be the global guidance on how
companies should disclose their climate-related risks and opportunities. At the time of the publication
of this edition of the Facilitated Emissions Standard, TCFD-recommended disclosures are mostly
voluntary.16 However, with strong backing from central banks, the Supervisors Network for Greening
the Financial System (NGFS), and the industry itself, companies will likely face new regulatory
requirements in this related to the emissions associated with financial activities in the future.

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15 TCFD, 2017
16 Except in New Zealand, where the government introduced mandatory TCFD disclosures in September 2020: https://bit.ly/2TWUxwm.
The UK also hopes to enshrine mandatory climate disclosures in line with TCFD recommendations in a new law which would take effect
as soon as April 2022, subject to Parliamentary approval. https://bit.ly/35B0rwF

17
Creating transparency for internal stakeholders can also be a business goal for financial institutions.
Assessing facilitated emissions allows the board members and senior management of financial
institutions to get a better picture of their organization’s impact on the climate and how to facilitate
activities toward the goals of the Paris Agreement. By measuring and disclosing facilitated emissions,
and thereby creating opportunities for climate disclosure, financial institutions can internally align on
their role, as well as the financial sector’s responsibility, in the transition to a net-zero economy.

BUSINESS GOAL 2: MANAGE CLIMATE-RELATED TRANSITION RISKS

Financial institutions are increasingly comprehending the exposure of their activities to risks posed by
climate-related policies and regulations. GHG accounting helps these institutions screen and identify
areas of their financial activities that fall under emission-intensive assets. Such financial activities
could suffer setbacks resulting from the introduction of carbon prices, policies and regulations that
are aimed at reducing emissions in carbon-intensive sectors.

In addition, financial institutions that do not disclose their climate-related risks could face reputational
risk, especially if peers are increasingly doing so. Measuring and disclosing facilitated emissions
according to the Facilitated Emissions Standard is a way for financial institutions to manage their
climate-related reputational risk. By applying the GHG accounting methods in this Facilitated
Emissions Standard, financial institutions can identify areas of significant exposure to emission-
intensive assets across their financial activities and use this information as the basis to assess climate
risk scenarios. By disclosing in line with the requirements and recommendations in Chapter 6 of this
Facilitated Emissions Standard, financial institutions can show that they are serious about climate
action.

BUSINESS GOAL 3: DEVELOP CLIMATE-FRIENDLY FINANCIAL PRODUCTS

For financial institutions, significant opportunities exist in the development of financial instruments
that aid in achieving their own and their clients’ climate ambitions.

Figure 3-2. Evolution of green products in the bond market

With the transition to a low-carbon economy, financial institutions can develop innovative products
and services that enable their clients to decarbonize their business activities. By measuring facilitated
emissions, financial institutions can see which sectors and businesses require the most help in their
decarbonization efforts, and how best to support them in their transition to a net-zero future.

18
BUSINESS GOAL 4: ALIGN FINANCIAL FLOWS WITH THE PARIS AGREEMENT
Financial institutions that want to align their financial activities with the goals of the Paris Agreement
implement portfolio GHG accounting to understand the absolute emissions they facilitate in the real
economy. These institutions use this information as the basis for analyzing decarbonization scenarios
and setting emission-based targets at the asset class or sector level. While other climate initiatives
focus on scenario analysis and target setting, PCAF has been established to focus solely on the GHG
accounting of financial activities. Undertaking GHG accounting equips financial institutions with a
metric that can help track absolute emissions year over year and compare it with their facilitated
emissions goals.

Financial institutions’ commitments to set science-based targets,17 transition their activities to net-
zero GHG emissions by 2050 (e.g., Net-Zero Asset Owner Alliance18), and align their financial activities
with the objectives of the Paris Agreement (e.g., Net-Zero Banking Alliance19) are examples of this
business goal.

______
17 Information about SBTs for financial institutions can be found at: https://sciencebasedtargets.org/financial-institutions/
18 Information about the Net-Zero Asset Owner Alliance can be found at: https://www.unepfi.org/net-zero-alliance/
19 Information about the Net-Zero Banking Alliance can be found at https://www.unepfi.org/net-zero-banking/

19
4. Principles and
requirements of
GHG accounting
for facilitators

20
4.1 GHG accounting requirements derived from the GHG protocol’s principles
Like financial accounting and reporting, GHG accounting and reporting follow generally accepted
principles to ensure that an organization’s disclosure represents an accurate, verifiable, and fair
account of its GHG emissions. The core principles of GHG accounting are set out in the 'GHG
Protocol Corporate Accounting and Reporting Standard'20 and the GHG Protocol 'Corporate Value
Chain (Scope 3) Accounting and Reporting Standard'.21

Table 4-1. Additional PCAF requirements of GHG accounting and reporting

are derived from the GHG Protocol's five principles

GHG Protocol principles for scope 3 inventories22 Additional PCAF requirements for facilitated emissions of
Capital Markets
Completeness Recognition
Account for and report on all GHG emission sources and Financial institutions shall account for all facilitated
activities within the inventory boundary. Disclose and emissions from the primary issuance of capital market
justify any specific exclusions. instruments23 under scope 3 category 15,24, 25 as defined by
the GHG Protocol 'Corporate Value Chain (Scope 3)
Accounting and Reporting Standard'. Any limitations or
restrictions shall be disclosed.
Consistency Measurement
Use consistent methodologies to allow for meaningful Financial institutions shall measure and report their absolute
performance tracking of emissions over time. facilitated emissions from capital market issuance by
Transparently document any changes to the data, “following the money” and using the PCAF methodologies
inventory boundary, methods, or any other relevant factors and guidance provided in the Facilitated Emissions Standard.
in the time series. If data availability and methodologies allow, avoided, and
removed emissions may also be measured and reported.
Relevance Attribution
Ensure the GHG inventory appropriately reflects the GHG The financial institution’s share of facilitated emissions shall
emissions of the company and serves the decision-making be proportional to the share of its exposure to the total value
needs of users — both internal and external to the of the issuance, per the methodology outlined in chapter 5.
company. An important aspect of relevance is the
selection of an appropriate inventory boundary that
reflects the substance and economic reality of the
company’s business relationships.
Accuracy Data quality
Ensure that the quantification of GHG emissions is Financial institutions shall use the highest data quality
systematically neither over nor under actual emissions, as available for capital market issuance and the underlying
far as can be judged, and that uncertainties are reduced as assets/companies and improve the quality of the data over
far as practicable. Achieve sufficient accuracy to enable time.
users to make decisions with reasonable confidence as to
the integrity of the reported information.
Transparency Disclosure
Address all relevant issues in a factual and coherent Public disclosure of the results of the PCAF assessment is
manner, based on a clear audit trail. Disclose any relevant crucial for external stakeholders, and financial institutions
assumptions and make appropriate references to the using the methodology, to have a clear, comparable view on
accounting and calculation methodologies and data how capital market activities of financial institutions
sources used. contribute to the Paris Agreement's climate goals.

______
20 WRI and WBCSD, 2004
21 WRI and WBCSD, 2011
22 https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf, p.7
23 Capital market instruments are financial assets that are sold by companies or governments who seek capital.
24 Category 15 of the 'Technical Guidance for Calculating Scope 3 Emissions' does not explicitly refer to capital markets. It solely focuses
on "investments" and providing such "financial services" and "client services". I.e., the reporting of any kind of capital market facilitated
emissions is considered to be a voluntary broadening of the interpretation of the Technical Guidance due to the facilitator’s own
ambitions and goals.
25 As described, the reported figures in the context of capital market facilitated emissions might, however, not be at all comparable with
emissions being reported for the facilitator’s own or financed emissions. Any voluntary reporting might depend on the further specifics
to be defined.

21
The GHG Protocol’s five core principles are completeness, consistency, relevance, accuracy, and
transparency. This Facilitated Emissions Standard follows these five core principles and provides five
additional requirements for the application of these principles that are directly relevant for facilitators
wishing to assess their capital market facilitated emissions (Table 4-1).

4.2 Additional requirements for accounting and reporting emissions from

capital market activities
This section describes the additional requirements for GHG accounting for Capital Markets and its
facilitators and how these requirements guide accounting for and reporting of facilitated emissions.

RECOGNITION
Financial institutions shall account for all emissions that are associated with capital markets
instrument and justify any exclusions. They shall be reported separately under scope 3 Category 15
26,27
as defined by the 'GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting
Standard'. They shall be measured and reported as a supplementary accounting note and shall not
be aggregated with financed emissions. Any limitations or restrictions shall be explained and
disclosed.

MEASUREMENT
“Follow the money” is a key tenet for GHG accounting, meaning that the money should be followed as
far as possible to understand and account for the climate impact in the real economy, i.e., emissions
caused by the financial institution’s financial activities.

Financial institutions shall measure and report their facilitated emissions using the methodologies set
out in this Facilitated Emissions Standard and covering the seven GHGs required under the Kyoto
Protocol. As a minimum, financial institutions shall measure the absolute GHG emissions resulting
from facilitating activities (scope 3 category 15 emissions) in the reporting year. When relevant,
emission removals should be measured and reported separately. Avoided emissions may also be
measured and reported separately. However, in absence of credible accounting guidance, financial
Institutions shall disclose the methodology and formulas adopted in calculating such emissions.

As a basis for reporting emissions, financial institutions shall choose a fixed point in time to determine
their financial data needed to calculate an attribution factor, such as the last day of its fiscal year (e.g.,
June 30 or December 31). The GHG accounting period shall align with the financial accounting
period.

ATTRIBUTION
The financial institution’s share of facilitated emissions shall be proportional to the share of its
exposure relative to the total value of the intended borrower or investee. The Standard applies the
same attribution principles for all parts. It is crucial for financial institutions to consider equity and
debt equally important in calculations and avoid double counting.

______
26 Category 15 of the 'Technical Guidance for Calculating Scope 3 Emissions' does not explicitly refer to capital markets. It solely focuses
on "investments" and providing such "financial services" and "client services". I.e., the reporting of any kind of capital market facilitated
emissions is considered to be a voluntary broadening of the interpretation of the Technical Guidance due to the facilitator’s own
ambitions and goals.
27 As described, the reported figures in the context of facilitated emissions for capital markets might, however, not be at all comparable
with emissions being reported for the facilitator’s own or financed emissions. Any voluntary reporting might depend on the further
specifics to be defined.

22
 Box 4-1. Facilitated emissions and double counting
Double counting, which occurs when GHG emissions are counted more than once in the
facilitated emissions calculation of one or more institutions, or across different parts of the
Standard, should be minimized as much as possible. This can be done by splitting-out emissions
reporting by the different emission scopes and financial activities that inherently have the
potential for overlapping emissions. Beyond the double counting of facilitated emissions itself,
there will also be double counting between financed (Part A), facilitated (Part B) and insurance
associated (Part C) emissions. However, given the very different nature of these activities and
different ways to influence decision making, this is not considered an issue when emissions are
clearly reported separately.

Even though double counting is a frequent and inherent aspect of GHG accounting it does not
need to be as seen as problematic, if:
• double counting does not interfere with stated decarbonization goals and;
• methodologies and limitations are stated transparently as part of the disclosure.

One of PCAF’s goals is to develop harmonized and transparent methodologies to measure and
report emissions associated with loans, investments, provision of insurance, and other financial
products and services. Methodologies are developed with attention to help minimize double
counting. All financial institutions using the methodologies in this Facilitated Emissions Standard
will be subject to the same exposure to double counting and with none being more significantly
affected than others.

DATA QUALITY
Financial institutions shall ensure that their GHG accounting appropriately reflects the GHG
emissions associated with their facilitation activities. To safeguard these outcomes, financial
institutions shall use the highest-quality data that is reasonably available for each facilitated
emissions calculation, and, where relevant, improve the quality of the data over time. PCAF recognizes
that high-quality data can be difficult to obtain when calculating facilitated emissions, particularly for
sectors with less data availability. However, data limitations should not deter financial institutions
from taking the first steps toward preparing their inventories. Even estimated or proxy data can help
them identify GHG-intensive hotspots, which in turn can help to determine their climate strategies.
Where data quality is low, financial institutions can design approaches to improve it over time.

For measuring facilitated emissions for each facilitation activity, various data inputs are needed to
calculate the financial institutions attribution factor and the client’s total emissions. The data needed
to calculate an attribution factor can typically come from the financial institution and its clients,
although the data required to calculate the client's emissions might not be readily available and must
be sought out by the financial institution. The quality of this data can vary depending on assumptions
relating to its assuredness, specificity, and other variables.

PCAF recognizes that there is often a lag between financial reporting and required data becoming
available, such as emissions data for a client. In these instances, financial institutions should use the
most recent data available, even if it represents different years. For example, it would be expected and
appropriate that financial institutions reporting in 2023 for its 2022 financial year would use 2022

23
financial data alongside 2021 emissions data. More information on considerations related to data
quality and how to employ the hierarchy for each line of business can be found in Chapter 5.

DISCLOSURE
The public disclosure of aggregated absolute facilitated emissions is important for external
stakeholders to have an analogous view of the climate impact of financial institutions. To this end,
financial institutions that intend to conform to the Facilitated Emissions Standard shall report
absolute facilitated emissions. To support their disclosures, financial institutions shall follow the
requirements and recommendations listed in Chapter 6 on how to report information relating to
methodology, calculations, time frames, and data quality (as scored using the hierarchies provided in
Chapter 5).

24
5. Methodology
to measure
facilitated
emissions

25
This chapter describes the methodology used to account for the GHG emissions related to capital
market activities. Financial institutions, in their role as facilitators, play a critical role in the issuance of
capital market instruments. The GHG emissions associated with capital market issuances are known
as “facilitated emissions”. This methodology aims to balance the fair attribution of emissions to the
facilitator with due consideration given to practical implementation.

This chapter includes guidance on the following elements as a part of the method to measure capital
market instruments:
• Attribution of emissions
• Emission scopes covered
• Formulas to calculate facilitated emissions
• Data required
• Limitations

5.1 Scope of capital market activities and coverage of roles

This Facilitated Emissions Standard includes the primary issuance of capital market instruments and
loan syndication. Loan syndication involves a group of lenders that fund portions of a loan for a single
borrower. A primary issuance includes new securities to provide debt-based or equity-based
financing. For the purposes of this Facilitated Emissions Standard, primary issuances are those
issuances where a financial institution may propose a beginning price range for a given security and
oversee its sale to investors on a best-efforts basis. This Facilitated Emissions Standard only covers
the portion of primary issuances that are sold to investors. In the case of an under-subscribed
issuance, any unsold securities are not accounted for within the scope of this Facilitated Emissions
Standard. The scope of this Facilitated Emissions Standard includes:

• Facilitated issuance of new:

- Public debt: all types of bonds issued for general purposes (including sustainability-linked
bonds, corporate bonds, and corporate medium-term notes28)
- Public equity: common stock (IPOs and follow-on issuances) and preferred shares
• Facilitated equity investments in private companies (including private placements)
• Facilitated debt investments in private companies (including private credit)
• Syndicated loans29

Sovereign bonds30 , securitized products (including asset-backed securities), covered bonds,

derivative financial products (e.g., futures, options, swaps) and advisory services such as mergers and
acquisitions (M&A) are not covered by the scope of this Facilitated Emissions Standard.
The same holds for green bonds since no PCAF method exists yet to calculate the emissions
associated with green bonds and other known use of proceeds bonds. PCAF has prioritized the
development of a method covering green bonds moving forward.

______
28 Medium-term notes are excluded when issued by government agencies.
29 A syndicated loan transaction is defined as a loan made available by two or more providers under a common loan
agreement and ranking credit is assigned upon signature of the loan documentation. If these fundamental tests cannot be
applied, it will not be considered for inclusion.
30 US agency, non-US agency, supranational and subnational bonds are excluded as well.

26
 Additionally, this method currently is aimed at the roles of lead bookrunners only. The roles of co-
managers/lead managers are less significant, and the economics are typically smaller in relationship
to the lead bookrunners. Given their more passive role, co-managers are currently not captured in this
Facilitated Emissions Standard. More information on the classification of the different roles can be
found in Chapter 1.

5.2 Attribution of emissions

To quantify and attribute the facilitated emissions from primary issuance of capital market
instruments three key elements need to be considered.

i Annual emissions: What is the time period over which the facilitation activity is captured?

ii Attribution factor (facilitated amount/company value): How are emissions allocated between the different facilitators of an issuance?

iii Weighting factor: How is the responsibility of a facilitator for the issuer's emissions valued?

An accounting method should therefore carefully consider and define these three elements. The
section below explains how this Facilitated Emissions Standard defines these elements of the
methodology.

Formula for calculating facilitated emissions

Facilitated emissions from primary issuances of capital market instruments are calculated using the
formula below:

ii iii i
!"#$%$&"&'( "*,0-&!
!"#$%$&"&'( '*$++$,-+ = / × 6'$7ℎ&$-7 9"#&,: × ;--0"% '*$++$,-+!
1,*2"-3 4"%0'
!

("#$%&%#'() #+,-.' = 0,'#& 1#%2() #+,-.' × 4(#5-( '#6&( $1()%')

c = The issuing company

1. Facilitated amount:
Defined as the product of the total amount raised and volume attributed to the financial
institution (or league table credit, see Box 5.1.).
2. Company value:
For all listed companies this is the company enterprise value including cash (EVIC) of the
respective client. Only for private companies EVIC should be replaced by the sum of the total
company equity31 and debt32 when no market value for equity is available.33

______
31 In cases where the total company equity value according to the client’s balance sheet is negative, the financial institution shall set total
equity to 0; this means that all emissions are attributed to debt only, while no emissions are attributed to equity investments. Such
cases can happen when the retained earnings are negative while at the same time being higher than the other equity components on
the balance sheet of the client—e.g., this often holds for startups that have high negative profits during their first years of operation. By
this approach, for those companies that are doing well (i.e., they have high retained earnings), financial institutions attribute more
emissions to equity providers; for those companies doing poorly (i.e., they have high retained losses), financial institutions attribute
more emissions to debt providers. This is in line with the attribution factor rationale for listed companies, where the equity part of EVIC
(i.e., market capitalization) also implicitly reflects retained earnings and losses (e.g., if retained earnings increase, the share price and
market capitalization also increase).
32 Total debt includes both current and long-term debt on the balance sheet.
33 If total debt or total equity cannot be obtained from a client’s balance sheet for whatever reason, financial institutions are allowed to fall
back to the total balance sheet value (i.e., the sum of total equity and liabilities, which is equal to the client’s total assets) with the
intention of improving this data quality in the future.

27
 The values for EVIC, or total equity and debt, collected by the financial institution for its annual
facilitated emissions reporting should be based on the most recent available results reported
by the client at the financial institution's annual emission reporting date (regardless of timing
of all individual issuances in the reporting year).

For listed companies:

!"#$%&"&'( "*,0-&!
;&&:$<0&$,- 9"#&,:! =
=-&':2:$+' >"%0' ?-#%0($-7 1"+ℎ (=>?1)!

For unlisted companies:

!"#$%&"&'( "*,0-&!
;&&:$<0&$,- 9"#&,:! =
B,&"% 'C0$&3 + ('<&!

Box 5-1. How EVIC is defined

EVIC is defined as the sum of the market capitalization of ordinary shares at fiscal year-end, the
market capitalization of preferred shares at fiscal year-end, and the book values of total debt34
and minorities’ interests. No deductions of cash or cash equivalents are made to avoid the
possibility of negative enterprise values35.

PCAF chose to align the definition of EVIC with the common definition provided by both the:
1. EU TEG in its Handbook of Climate Transition Benchmarks, Paris-Aligned Benchmark
and Benchmarks’ ESG Disclosure36; and
2. Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020 Supplementing
Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards
minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned
Benchmarks, which says EVIC should be used to determine the GHG intensities for the
benchmarks.

Box 5 in the Financed Emissions Standard further clarifies the rationale for using EVIC in the
attribution factor.

______
34 In its EVIC definition, the EU TEG refers to “the book values of total debt,” including all debt as listed on the company balance sheet.
This is different from some accounting definitions of book value of debt, which exclude some elements like non-interest-bearing debt
(also see next footnote on precautionary principle).
35 This is the standard definition of EVIC as provided by the EU TEG. For consistency reasons, PCAF decided to align with this definition
to ensure maximum alignment on metrics in the market, which also enables data providers to collect data in a consistent way. Specific
elements of EVIC might not be readily available because data providers are still working on aligning their data with this definition. For
cases where data is missing, the EU TEG (pg. 16 in its handbook of climate-related benchmarks) recommends conducting corporate
GHG data estimations based on the UN’s (1992) Precautionary principle: “If in doubt, err on the side of the planet not the side of the
company.” Following this precautionary approach for EVIC calculations, financial institutions can decide to exclude elements of the
EVIC (e.g., minority interests or certain elements of the book value of debt) as this would lead to a slightly lower EVIC and higher
attribution of financed emissions to their own outstanding amount. These slight deviations from the standard EVIC definition are
allowed as long as: (1) they are in line with this precautionary principle, and (2) the basis of the EVIC definition still includes the market
value of equity (market capitalization) plus the total book value of debt of any given company.
36 EU Technical Expert Group on Sustainable Finance, 2019

28
i WHAT IS THE PERIOD OVER WHICH THE FACILITATION IS CAPTURED?
Context
Unlike the role financial institutions undertake with lending and investing activities, capital market
facilitation involves arranging transactions and does not usually involve capital exposure for the
financial institution. This arranging activity leads to what is classified as facilitated emissions.

Lending, investing, and financed emissions: Where a financial institution lends funds, it puts at risk
its own capital and this exposure remains on its balance sheet for the life of the loan, leading to
financed emissions over that period.

Capital market activities and facilitated emissions: Where a financial institution facilitates a capital
market issuance, the financial institution generally does not put any of its own capital at risk and so
there is no transaction recorded on the financial institutions’ balance sheet. The exception is if the
facilitator of a capital market instrument has underwritten any part of the issuance – where a financial
institution provides an underwriting facility that puts the institution’s capital at risk, this should be
treated separately from the role they provide in arranging and facilitating an issuance. Underwriting
facilities are not covered by the scope of this Facilitated Emissions Standard. Note: these underwriting
activities are not the same as the underwriting by the re/insurance sector. For more details on these
activities, we refer to the PCAF Standard Part C: Insurance-Associated Emissions.37

Methodology
As facilitators of capital market instruments, financial institutions are only involved when the
transaction is being arranged and launched, they will take no (or limited) capital risk. Given the
temporary association with transactions, capital market facilitations are treated differently than
lending and investing.

Using this approach, the association with the capital market transaction shall be accounted for in the
year the facilitation occurs, using the reported or estimated annual emissions of the issuer in that
year. All the transactions during the year are then aggregated over that one year to calculate the total
facilitated emissions. This annual period is selected to be in line with other parts of the PCAF
Standard. PCAF acknowledges that there may be a time lag in data availability given that emissions
data will typically be available 12-15 months after the calendar year-end. Please see the limitations
section of this chapter.

The assumption is that — in line with Part A of the PCAF Standard — buyers of the facilitated
instruments (both equity and debt) will report their financed emissions separately and for each year
that they are invested in the instrument (i.e., assuming there will always be an investor or lender
reporting the emissions associated with the issuance until its maturity). In contrast, the facilitator will
only report its association with the instrument in the year that the instrument is issued, and the
facilitation takes place.

When reporting facilitated emissions next to financed emissions, facilitators shall use the same
reporting period. In practice, this means that the facilitator reports the attributed share of the annual
emissions of all companies it facilitated for in the same reporting year up until prior to the same fixed
point in time chosen to disclose financed emissions.

______
37 See also PCAF Standard Part C: Insurance-Associated Emissions https://carbonaccountingfinancials.com/files/downloads/pcaf-
standard-part-c-insurance-associated-emissions-nov-2022.pdf

29
ii
HOW ARE EMISSIONS ALLOCATED BETWEEN THE DIFFERENT FACILITATORS OF AN
ISSUANCE (ATTRIBUTION)?
Context
Given that there is typically more than one facilitator in a transaction, it is important to split the
responsibilities between the facilitators (e.g., lead/active/passive bookrunners and lead/co-managers),
in a consistent manner.

Methodology
The facilitators’ responsibility shall be split based on the proportion of the issuance that is allotted to
each facilitator for each transaction. As a first preference and if the data is readily available, the
specific volume facilitated by the individual financial institution shall be used to determine what
proportion of the ‘facilitated’ part of the transaction each facilitator takes responsibility for. If this data
is not readily available, league table credit shall be used.

League tables rank financial institutions based on their total capital market activities, by summing up
the credit allotted to each facilitator based on their role in an individual transaction. The facilitated
amount can be calculated by multiplying the proportion of the issuance assigned to the facilitator by
the amount of debt or equity raised. League tables used to track the issuance of capital market
issuances generally fall in to one of two categories – league tables based on fees or league tables
based on the value of the volume. This Facilitated Emissions Standard allows the use of either league
tables based on fees or the value of the volume, but financial institutions shall be transparent about
which method they are using in their public reports. As mentioned, economics for co-managers are
typically smaller in relationship to the bookrunners, and co-managers are also not accounted for
consistently in all league tables – co-managers will therefore currently not be captured in this
Facilitated Emissions Standard. Data can be obtained from third-party providers, such as Bloomberg
or Dealogic, and financial institutions shall disclose the data source used. Please see an example of
applying the league table credit in box 5-2.

Box 5-2. Recommended approach for calculating facilitated emissions when using league
table credit
Three facilitators – two lead bookrunners and one co-manager – support a listed Company X
with raising capital in the debt market in August 2022. In total, $200 million was raised. Company
X reported emissions of 1,000 kt CO2e over the past year. The Enterprise Value Including Cash
(EVIC) of Company X on 31st December 2022 is reported as $2 billion.

The total facilitated emissions for each facilitator is as follows – showing the option for both fee-
based and volume-based league tables:

30
 Financial Institution Lead Bookrunner 1 Lead Bookrunner 2 Co-manager

i 1. Annual emissions of company 1,000 kt CO2e

1. Based on 50% 45% 5%
2. League fees
table credit 2. Based on
volume 50% 50% 0%

1. Based on $200m x 50% = $100m $200m x 45% = $90m N/A

3. Facilitated fees
amount 2. Based on
volume $200m x 50% = $100m $200m x 50% = $100m N/A

1. Based on $100m/$2bn = 0.05 $90m/$2bn = 0.045 N/A

4. Attribution factor fees
ii (facilitated amount/
Company value) 2. Based on $100m/$2bn = 0.05 $100m/$2bn = 0.05 N/A
volume

iii 5. Weighting factor 33% 33% N/A

1. Based on 1,000 kt CO2e x 0.045 x 0.33 = 14.85
6. Facilitated fees 1,000 kt CO2e x 0.05 x 0.33 = 16.5 N/A
emissions
(kt CO2e) 2. Based on 1,000 kt CO2e x 0.05 x 0.33 = 16.5 1,000 kt CO2e x 0.05 x 0.33 = 16.5 N/A
volume

iii
HOW IS THE RESPONSIBILITY OF A FACILITATOR FOR THE ISSUER'S EMISSIONS
VALUED (WEIGHTING)?
Context
A financial institution’s role in arranging capital market activities is distinct from its role as a provider
of capital to a company.

Although it is important to capture the emissions associated with capital market activities,
adjustments should be made to help communicate to stakeholders the different roles in lending or
investing versus facilitation. As described in Chapter 1, the role that a facilitator plays in helping a
company to issue capital market instruments to investors (i.e., facilitated transactions) is not directly
equivalent with the provision of capital by a financial institution when it uses its balance sheet to
extend loans and equity (i.e., financed emissions). Using the “follow the money” principle upon which
prior PCAF methodologies are built, facilitated emissions are therefore clearly distinct from financed
emissions.

Because of the distinct role facilitators play, PCAF includes a “weighting” factor to the facilitated
emissions calculation to help distinguish between the two types of emissions – facilitated emissions
and financed emissions – acknowledging that a unit of facilitated emissions is not equal to a unit of
financed emissions (or insurance-associated emissions) given that no direct funding is provided by
the financial institution to the company producing emissions in the real economy; combined with the
very short-term role facilitators have in their roles as arrangers.

Several dynamics were considered when determining the appropriate weighting to be used. One such
consideration was the fact that the portion of financing that comes from lending versus the portion of
financing that comes from capital market activities varies widely across jurisdictions – capital market
issuance can represent anywhere between 20% to 80% of total financing (loans and capital markets).

31
 Figure 5-1. Illustration of volume of capital markets vs. lending activity across regions 38

100%
80%
60%
40%
20%
0%
US UK Euro Area Japan China
Capital Markets Loans Other

A further consideration is that, when comparing fees that arrangers earn to the coupon received by
investors, typically fees earned by arrangers represent approximately 10% to 15% of the combined fee
and coupon total for the full first year. This is true when looking across markets.

The Basel Committee on Banking Supervision’s Basel Framework from 2021 includes a description of
the Committee’s indicator-based measurement approach for assessing the systemic importance of
global systemically important banks (G-SIB).39 In this approach, the Committee has assigned
percentage weightings for the relative importance of certain key activities that banks undertake.
These activities include underwritten transactions in debt and equity markets (which includes
arranging debt and equity capital market instruments) and total exposures (which includes loans).
The relative weighting of these two activities implies the Basel approach weights balance sheet
exposures as six times more consequential than underwriting activity – put another other way
underwriting (leading to facilitated emissions) is only ~17% as impactful as balance sheet exposures
(leading to financed emissions). However, this methodology has been developed to establish which
banks are of consequence to global systemic risk and does not consider the broader roles that banks
may play in the issuance of a capital market instrument – including acting as a broker between the
user and the investors, which is a challenging role to replicate and quantify. Further, these percentage
weightings assigned by the Basel Committee are subject to regular review and change. Earlier in 2018,
the Basel approach weighted balance sheet exposures as only three times more consequential than
underwriting, specifically ~33% as impactful as balance sheet exposures.

Methodology
To ensure consistency in facilitated emissions reporting and reflect the fact that a financial
institution’s role in facilitating capital market activities is different from its role as a lender, PCAF
decided a 33% weighting for all capital market issuances in scope for this Facilitated Emissions
Standard to appropriately distinguish between the relative importance of a financing activity versus a
facilitation activity. It is also a conservative option as it equals the highest weighted relative
importance of underwriting activities versus balance sheet exposure according to the Basel
Committee on Banking Supervision’s Basel Framework in the 11 years since the G-SIB assessment
reports began in 2012.40 This weighting also considers all factors and viewpoints explained in Capital
Market Instruments Proposed Methodology for Facilitated Emissions 2022. 41 Therefore, financial
institutions shall report their facilitated emissions using a 33% weighting factor and disclose the
______
38 Source: OECD, Federal Reserve, ECB, Bank of Japan, National Bureau of Statistics of China, SIFMA estimates
39 Basel Framework SCO40: https://www.bis.org/basel_framework/chapter/SCO/40.htm
40 The past annual G-SIB assessment reports archive: https://www.bis.org/bcbs/gsib/reporting_instructions.htm
41 https://carbonaccountingfinancials.com/files/downloads/pcaf-capital-market-instruments-proposed-methodology-2022.pdf

32
applied weighting factor clearly in their public reports. Financial institutions may additionally report
their facilitated emissions without weighting42 as long as this is reported separately, and the rationale
is clearly disclosed – this would be in addition to reporting the 33% weighting, not instead of.

The weighting factor should be applied consistently across transactions, regardless of the use of
proceeds. This weighting would apply to the facilitation of a bond where use of proceeds is for a
carbon-intensive issuer or activity, as well as to a bond where use of proceeds is for a low-carbon or
renewable issuer or activity – financial institutions would be expected to apply the same treatment to
facilitation when calculating facilitated emissions to any type of activity.

In terms of disclosure, this Facilitated Emissions Standard is transparent about the percentage
weighting used for capital market activities (33%) and financial institutions are required to report
facilitated emissions separately from financed emissions (see next chapter on Reporting for more
details). As such, if required by any user of the information, different percentage weightings can be
derived from this methodology by simple extrapolation from the numbers disclosed.

Box 5-3. How this methodology related to setting facilitated emissions targets
PCAF’s remit as an organization is to develop carbon accounting rules for scope 3, category 15
for financial institutions reporting in line with the GHG Protocol. GHG accounting and emissions
inventories can act as a baseline from which financial institutions can develop targets to help
manage their emissions. However, target setting methodologies are a distinct topic, and not the
remit of PCAF. Please see annex 3.

Differences between equity and debt Capital Markets

This Facilitated Emissions Standard applies the same calculation and approach for debt and equity
Capital Markets. This offers the benefit of methodological simplicity across the most common
facilitated emissions transactions. It is noted, however, that equal treatment of both equity and debt
capital market activities means that the permanence of equity versus the recycling of debt is not
accounted for. More research is required to assess whether grouping these two distinct capital
market products is an accurate representation of emissions attribution and may need to be revisited
in future iterations of this Facilitated Emissions Standard.

5.3 Emission scopes covered

Financial institutions shall report their attribution of absolute scope 1 and scope 2 emissions of
issuers they raise capital for across all sectors. This Facilitated Emissions Standard relates to primary
markets (new issuances) and does not cover the secondary markets and the trading of existing
capital market instruments.

For reporting the scope 3 emissions of capital markets issuers, PCAF follows a phase-in approach
which requires scope 3 reporting for lending to and making investments in companies depending on
the sector in which they are active, i.e., where they earn revenues. For sectors where scope 3
emissions reporting is required, the financial institutions shall separately disclose these absolute
scope 3 emissions, including the specific sectors covered. Separate reporting allows for full

______
42 Applying no weighting is equal to applying a weighting of 100%.

33
transparency while acknowledging potential double counting issues when adding these to the scope 1
and 2 emissions of issuers.

PCAF acknowledges that, to date, the comparability, coverage, transparency, and reliability of scope 3
data still varies greatly per sector and data source. By requiring scope 3 reporting for selected sectors
over time, PCAF seeks to make scope 3 emissions reporting more common by improving data
availability and quality over time.

Financial institutions shall explain if they are not able to report the required scope 3 emissions
because of data availability or uncertainty. For all sectors where PCAF does not yet require scope 3
emissions reporting, financial institutions should follow the GHG Protocol Corporate Value Chain
(Scope 3) Accounting and Reporting Standard and only account for scope 3 emissions where
relevant.

PCAF provides a sector list detailing where scope 3 emissions of issuers are required to be reported
(see Table 5-1). The sector list of PCAF aligns with the scope 3 phase-in approach as defined by the
EU TEG, which was included in Article 5 of the Commission Delegated Regulation (EU) 2020/1818 of
17 July 2020, Supplements the Regulation (EU) 2016/1011 of the European Parliament and of the
Council as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned
Benchmarks. The year indication in Table 5-1 refers to the reporting year, meaning that the phased-in
measurement shall start over the year prior.

The above requirement for all FIs to start reporting on the scope 3 emissions of issuer companies in
the referenced sectors is a PCAF requirement.

Table 5-1. List of sectors with required scope 3 emissions inclusion

Phase-in period NACE Level 2 (L2) sectors considered

For reports published At least energy (oil & gas) and mining (i.e., NACE L2: 05-09, 19, 20)
in 2021 onwards

For reports published A least transportation, construction, buildings, materials, and industrial
in 2023 onwards activities (i.e., NACE L2: 10-18, 21-33, 41-43, 49-53, 81)

For reports published Every sector

in 2025 onwards

The facilitated emissions from primary issuance of capital market instrument instruments can be
calculated in different ways depending on the availability of financial and emissions data specific to
the issuer company. Overall, PCAF distinguishes three different options to calculate the facilitated
emissions from listed equity and corporate bonds depending on the emissions data used:
• Option 1: reported emissions, where verified or unverified emissions are collected from the
issuer company directly (e.g., company sustainability report) or indirectly via verified third-
party data providers (e.g., CDP) and then allocated to the reporting financial institutions
using the attribution factor.

34
 • Option 2: physical activity-based emissions, where emissions are estimated by the reporting
financial institution based on primary physical activity data collected from the issuer
company (e.g., megawatt-hours of natural gas consumed, or tons of steel produced) and then
allocated to the reporting financial institution using the attribution factor. The emissions data
should be estimated using an appropriate calculation methodology or tool with verified
emission factors expressed per physical activity (e.g., tCO2e/MWh or tCO2e/t of steel) issued
or approved by a credible independent body.
• Option 3: economic activity-based emissions, where emissions are estimated by the reporting
financial institution based on economic activity data collected from the issuer company (e.g.,
euro/dollar of revenue or euro/dollar of sectoral assets) and then allocated to the reporting
financial institution using the attribution factor. The emissions data should be estimated
using official statistical data or acknowledged environmentally extended input-output (EEIO)
tables providing region- or sector-specific average emission factors expressed per economic
activity (e.g., tCO2e/€ or $ of revenue or tCO2e/€ or $ of sectoral assets).

DATA REQUIRED
PCAF distinguishes three options to calculate the facilitated emissions from capital market
transactions depending on the emissions data used:
• Option 1: reported emissions
• Option 2: physical activity-based emissions
• Option 3: economic activity-based emissions

While Options 1 and 2 are based on company-specific reported emissions or primary physical activity
data provided by the issuer or third-party data providers, Option 3 is based on region- or sector-
specific average emissions or financial data obtained from public data sources such as statistics or
data from other third-party providers.43

Options 1 and 2 are preferred over Option 3 from a data quality perspective because they provide
more accurate emissions results to a financial institution. Due to data limitations, financial institutions
might use Options 1 or 2 for certain companies and Option 3 for others. The data quality mix shall be
reflected in the average data quality score, as Chapter 6 illustrates.

Table 5-2 provides data quality scores for each of the described options and sub-options (if
applicable) that can be used to calculate facilitated emissions.

______
43 Option 1 and Option 2 were called “Approach 1: company specific approach” and Option 3 was called “Approach 2: Sector/region
average approximation” in the report produced by the PCAF Dutch team: (PCAF, 2019).

35
 Table 5-2. General description of the data quality score table
(score 1 = highest data quality; score 5 = lowest data quality)

Data Options to estimate the When to use each option

quality facilitated emissions

Facilitated amount and EVIC or total equity plus debt

Score 1 1a are known. Verified emissions of the company are
Option 1: available.
reported
emissions Facilitated amount and EVIC or total equity plus debt
1b are known. Unverified emissions calculated by the
company are available.

Facilitated amount and EVIC or total equity plus debt

Score 2 are known. Reported company emissions are not
known. Emissions are calculated using primary physical
2a44
activity data of the company’s energy consumption
Option 2: and emission factors45 specific to that primary data.
physical Relevant process emissions are added.
activity-based
emissions Facilitated amount and EVIC or total equity plus debt
are known. Reported company emissions are not
Score 3 2b known. Emissions are calculated using primary physical
activity data of the company’s production and
emission factors specific to that primary data.
Facilitated amount, EVIC or total equity plus debt, and
the company’s revenue46 are known. Emission factors
Score 4 3a
for the sector per unit of revenue are known (e.g., tCO2e
per euro or dollar of revenue earned in a sector).
Option 3:
Facilitated amount is known. Emission factors for the
economic 3b sector per unit of asset (e.g., tCO2e per euro or dollar of
activity-based asset in a sector) are known.
emissions
Score 5 Facilitated amount is known. Emission factors for the
sector per unit of revenue (e.g., tCO2e per euro or dollar
3c
of revenue earned in a sector) and asset turnover
ratios for the sector are known.

A detailed summary of the data quality score table, including data needs and equations to calculate
facilitated emissions, is provided in Chapter 10 (Annex). Data for all three options in Table 5-2 can be
derived from different data sources.

Data providers (Option 1)

For Option 1 (reported emissions), PCAF recommends either collecting emissions from the issuer
company directly (e.g., company sustainability report) or third-party data providers, such as CDP,
Bloomberg, MSCI, Sustainalytics, S&P/Trucost, and ISS ESG.

______
44 The quality scoring for the Option 2a is only possible for/applicable to scope 1 and scope 2 emissions as scope 3 emissions cannot be
estimated by this option. Other options can be used to estimate the scope 3 emissions, however.
45 Supplier-specific emission factors (e.g., from electricity provider) for the respective primary activity data are always preferred over non-
supplier-specific emission factors.
46 If revenue is not deemed a suitable financial indicator for estimating the emissions of a company in a certain sector, one can apply other
suitable financial indicators as a proxy. If an alternative indicator is used, the reasoning for the selection of this alternative indicator
should be made transparent. The data quality score will not be affected.

36
Data providers typically make scope 1 and 2 emissions data available. PCAF encourages using the
most recent available data and to mention the data source, reporting period, or date of publication.
Data providers collect emissions data as reported by the companies themselves, either through a
standardized framework such as CDP or through a company’s own disclosures in official filings and
environmental reports. They often have their own methodologies to estimate calculate companies’
emissions, especially if emissions are not reported. In this case, the calculation would be in line with
Options 2 or 3, assuming the methodology used is in line with the GHG Protocol. Data providers
should transparently disclose the calculation method they use conform the GHG Protocol and
financial institutions should ask their data providers to provide this. This will enable financial
institutions to apply the proper score to the data. PCAF also encourages data providers to apply the
PCAF scoring method to their own data, which would allow them to share the data quality scores
directly with their clients.

PCAF does not recommend a preferred data vendor. PCAF recommends using data providers that
use the standardized CDP framework and suggests data providers disclose the data quality score
according to the scoring hierarchy in Table 5-2. 47 When using data providers, PCAF recommends
using the same provider due to variability of scope 1 and 2 emissions observed between providers.

Estimation models (Option 2 and 3)

Not all companies disclose their emissions data in official filings or through data providers. Reporting
in emerging markets often lags that of developed markets. To maximize the coverage of emissions
data, the remaining gaps are often filled with estimates.

For Option 2 (physical activity-based emissions), PCAF recommends using actual energy
consumption (e.g., megawatt-hours of natural gas consumed) or production (e.g., tons of steel
produced) data reported by companies, given the data fully covers the company’s emissions
generating activities. The emission factors expressed per physical activity used should be based on
appropriate and verified calculation methodologies or tools issued or approved by a credible
independent institution. Example data sources for retrieving emission factors are ecoinvent48, Defra49,
IPCC50, GEMIS51, and FAO52. The most recent available data should be used, including a mention of
the data source, reporting period, or publication date.

For Option 3 (economic activity-based emissions), PCAF recommends using official statistical data or
acknowledged EEIO tables providing region- or sector-specific average emission factors expressed
per economic activity (e.g., tCO2e/€ or $ of revenue or tCO2e/€ or $ of sectoral assets). Financial
institutions should use emission factors that are as consistent as possible with the primary business
activity facilitated. For example, for a business loan to a paddy rice farmer, the financial institution
should seek to find and use a sector-specific average emission factor for the paddy rice sector and
not an emission factor for the agricultural sector in general. Example EEIO databases that can be used
to obtain such emission factors are EXIOBASE53, GTAP54, and WIOD55.

______
47 More information about CDP can be found at: https://www.cdp.net/en
48 More information can be found at: https://www.ecoinvent.org/
49 More information can be found at: https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversionfactors-2021
50 More information can be found at: https://www.ipcc-nggip.iges.or.jp/EFDB/find_ef.php
51 More information can be found at: http://iinas.org/gemis-download.html
52 More information can be found at: http://www.fao.org/partnerships/leap/database/ghg-crops/en
53 More information can be found at: https://www.exiobase.eu
54 More information can be found at: https://www.gtap.agecon.purdue.edu
55 More information can be found at: http://www.wiod.org

37
PCAF’s web-based emission factor database provides a large set of emission factors for Option 2 and
Option 3 above. The database, which is only available to PCAF signatories, can help financial
institutions get started with estimating the facilitated emissions of their loans and/or investments.

PCAF expects that the facilitated emissions for most capital market transactions can be derived
through either reported emissions (Option 1), physical activity data (Option 2), or economic activity
data (Option 3). However, PCAF allows the use of alternative options to calculate emissions if none of
the specified options can be used or in the case that new options are developed. The reporting
financial institution shall always explain the reasons for using an alternative option if it deviates from
the three options defined above.

LIMITATIONS
Generalized nature of Option 3
One limitation of Option 3, economic activity data, is the generalized nature and necessary
assumptions made in applying region- or sector-specific average values (both for emissions and
financial data). This makes calculations less robust and more uncertain than those based on data
specific to the issuer, as the data for this option largely depends on assumptions and approximations
derived from region and sector averages. In addition, statistical data or acknowledged EEIO tables for
a given region need to be critically mapped to the sector classification used by the reporting financial
institution. As the sectors may not map one-to-one, this may cause facilitated emissions to be over- or
understated.

Market value fluctuations

When using EVIC as the denominator, calculated facilitated emissions may change as a result of
fluctuating market prices throughout the reporting year. Given that EVIC will be reported as of year-
end, there may be changes in the EVIC of a company from the date of transaction close to the
reporting year-end date. Market price fluctuations may cause discrepancies in the annual facilitated
emissions figures, however using fiscal year-end EVIC is the most consistent approach as it aligns
with the year-end reporting for financed emissions.

Time lag in data availability

Another limitation of the described options stems from the fact that emissions data is typically
available months after the calendar year-end. Given that the issuance is reported in the calendar year
of occurrence, the facilitator could have to revert to emissions data from previous years in order to
perform the GHG accounting calculations.

38
6. Reporting
requirements,
recommendations,
and metrics

39
INTRODUCTION
A global, standardized methodology to measure and disclose the GHG emissions associated with
capital market transactions (as part of Scope 3 category 15) is intended to create consistency and
comparability in reporting.

PCAF has developed these reporting requirements and recommendations to complement existing
frameworks such as 'GHG Protocol Corporate Accounting and Reporting Standard’, the 'Corporate
Value Chain (Scope 3) Accounting and Reporting Standard', and the supplemental 'Technical
Guidance for Calculating Scope 3 Emissions' as indicated in Chapter 1.

Reporting facilitated emissions associated with Capital Market Instruments is “optional” according to
the GHG Protocol Scope 3 Standard at the time of the release of this first version of the Facilitated
Emissions Standard, hence all financial institutions that decide to adopt and use the Facilitated
Emissions Standard shall follow the requirements therein when publicly disclosing their facilitated
emissions.

The requirements for disclosure of facilitated emissions describe a minimum disclosure level with
room for financial institutions to report beyond this level. Any requirements not fulfilled must be
accompanied by an explanation. Minimum reporting requirements are described in this chapter using
the word "shall". Where certain aspects of reporting are not required but encouraged as best practice,
the word "should" is used. An allowed optional recommendation is indicated using the word "may".

REPORTING FACILITATED EMISSIONS VS FINANCED EMISSIONS

Facilitated emissions shall be reported separately from financed emissions reporting.56 PCAF explains
the differences and similarities between financed emissions and facilitated emissions in Chapter 1. For
the avoidance of doubt, facilitated emissions and financed emissions are not, and are not intended to
be, directly comparable. Thus, facilitated emissions and financed emissions shall not be aggregated,
but must be reported separately under the GHG Protocol scope 3 category 15 (Investments).

OVERALL REPORTING REQUIREMENTS AND RECOMMENDATIONS

• Principles: GHG accounting and reporting from financial institutions shall be based on the
following principles: relevance, completeness, consistency, transparency, and accuracy.
• Purpose: A financial institution’s reporting should align with its specific business goals; for
instance, for identifying and assessing climate-related transition risks and opportunities.
• Frequency: Financial institutions shall disclose at least annually and at a fixed point in time in
line with the financial accounting cycle. Financial institutions shall ensure that the chosen
point in time provides a representative view on the emissions for that reporting year and shall
transparently disclose if results are affected by a significant threshold57 close to (before/after)
the reporting date.
• Recalculation and significance threshold: Financial institutions shall, in line with the 'GHG
Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard' requirement
(page 10458), establish a baseline recalculation policy. This is to define under which
circumstances recalculating (base year) facilitated emissions is necessary to ensure the
consistency, comparability, and relevance of the reported GHG emissions data over time. As
______
56 In line with the requirements set forth in: The Global GHG Accounting and Reporting Standard Part A: Financed Emissions. Second
Edition.
57 Definition according to the GHG Protocol: "A significance threshold is a qualitative and/or quantitative criterion used to define any
significant change to the data, inventory boundaries, methods, or any other relevant factors."
58 (WRI and WBCSD, 2011)

40
 part of the base year emissions recalculation policy, financial institutions shall establish and
disclose the significance threshold59 that triggers base year emissions recalculations.
• Form of reporting: Financial institutions shall disclose in publicly available reports such as
(semi) annual reports, website articles or other publicly available sources as deemed
appropriate by the financial institution. Table 10.2 (in Annex) provides an example template
for how financial institutions can disclose their facilitated emissions.
• Past performance: Where appropriate and relevant for their business goals, financial
institutions should disclose their facilitated emissions for multiple comparable time periods
(e.g., years).

COVERAGE
• Financial institutions shall disclose all absolute facilitated emissions for all primary issuance of
capital market instruments during the reporting year, in line with the scope defined in Chapter
5, and shall justify any exclusions and be transparent about their resulting coverage in the
case of exclusions. Potential justification criteria for exclusion could include, by way of
example:
- Data availability: required data is not available to the financial institutions.
- Size: the activities are insignificant to the institution’s total anticipated facilitated emissions.

GASES AND UNITS

• Financial institutions shall account for the seven gases under the Kyoto Protocol that are also
mandated under the UNFCCC to be included in national inventories if they are emitted in the
value chain. These are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),
hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen
trifluoride (NF3). Biogenic CO2 emissions that occur in the value chain shall not be included in
the scopes but shall be included and separately reported in the public report.
• These seven gases shall be converted to carbon dioxide equivalents (CO2e) using the 100-
year time horizon global warming potentials published by the IPCC; either the AR5 values
published by the GHG Protocol60 or the IPCC’s most recently published assessment report.61
• Financial institutions shall express their facilitated emissions in metric tons of carbon dioxide
equivalents (tCO2e) or another appropriate metric conversion—e.g., kilotons (ktCO2e),
megatons (MtCO2e). When emissions from a specific GHG (e.g., methane emissions) are
material and relevant, financial institutions should consider a separate disclosure of these
emissions.
• Financial institutions shall separately account for, and report, facilitated biogenic and non-
biogenic CO2 emissions, and facilitated biogenic and non-biogenic CO2 removals (if
applicable).

ABSOLUTE EMISSIONS
• Institutions shall disclose the absolute emissions (scope 1 and 2 combined) of their financial
activities. If it serves the business goals of the financial institutions, absolute scope 1 and
scope 2 emissions should be reported separately from each other.

______
59 Definition according to the GHG Protocol: "A significance threshold is a qualitative and/or quantitative criterion used to define any
significant change to the data, inventory boundaries, methods, or any other relevant factors."
60 (GHG Protocol, 2014)
61 The IPCC reports can be found at: https://www.ipcc.ch/.

41
 • Beyond the reporting of scope 3 category 15 emissions covered by this Facilitated Emissions
Standard, financial institutions shall also measure and report their scope 1 and 2 emissions
and any other relevant scope 3 emissions categories in line with the GHG Protocol Corporate
Value Chain (Scope 3) Accounting and Reporting Standard.
• Where required, financial institutions shall separately disclose the absolute scope 3 emissions
of their financial activities. Financial institutions shall explain if they are not able to provide
any required scope 3 information because of data availability or uncertainty.
• Financial institutions should disaggregate and disclose absolute emissions data at the sector
level, particularly for the most emission-intensive sectors (e.g., energy, power, cement, steel,
automotive).
• Absolute emissions shall be reported without taking into account carbon credits retired by
clients to offset these emissions. Carbon credits retired by clients may be reported, and if so,
shall be reported separately.

AVOIDED EMISSIONS AND EMISSION REMOVALS

• In addition to absolute generated emissions, financial institutions
- May report emission removals where relevant to their facilitation activities when
accounting for in line with the most recent GHG Protocol guidance.
- May report avoided emissions. However, in absence of credible accounting guidance it
shall disclose the methodology and formulas adopted in calculating such emissions. The
methodology adopted, and any accompanying narrative, should reflect the principles of
relevance, completeness, consistency, transparency, and accuracy.62
• If financial institutions choose to account for and disclose facilitated emission removals or
avoided emissions, they:
- shall apply the same accounting principles (including attribution and weighting) as for its
generated facilitated emissions.
- shall disclose absolute emission removals or avoided emissions separately from the
financial institution’s scope 1, scope 2, and scope 3 inventories.
• Avoided emissions and emission removals shall be reported without considering carbon
credits generated for these same emissions. Carbon credits generated by clients should be
reported, and if so, shall be reported separately.

EMISSION INTENSITY
• Financial institutions may report economic emission intensities if these values are relevant to
their business goals.
• If reported economic emission intensities shall be expressed on a portfolio level in metric tons
of carbon dioxide equivalents per million euro or dollar facilitated: tCO2e/€M or tCO2e/$M
• When relevant to their business goals, financial institutions should consider reporting physical
emission intensities per sector using sector specifics.

DATA AND DATA QUALITY

• Financial institutions shall use the most recent or otherwise appropriate data reasonably
available to them. PCAF recognizes there is often a lag between financial reporting and
required emissions data, such as emission factors or emissions data from clients. In these
instances, it is acceptable that the data represents different years.

______
62 PCAF will be considering to uptake newly developed methodologies on avoided emissions in the future.

42
• Financial institutions should provide a description of the types and sources of data, including
activity data, assumptions, emissions factors, and all relevant publication dates, used to
calculate emissions. The descriptions should be written to create transparency.
• Financial institutions should publish a weighted data quality score of the outstanding amount
or should explain why they are unable to do so. An example is provided in Box 6-1 below.
• Where financial institutions are reporting scope 3 emissions, the weighted data quality score
of these emissions shall be reported separately from that of scopes 1 and 2.
• The data hierarchy tables provided in Chapter 5 should be used as a guide for disclosing data
quality. Financial institutions should explain how data quality is assessed, acknowledging that
it will improve over time.
• Over time and where possible, data should be verified to at least a level of limited assurance.
Financial institutions should disclose whether data is verified and to what level.

43
Box 6-1. Illustrative example of calculating weighted data quality scores
It is likely that data quality will differ across lines of business, sectors, companies and emission
scopes. To disclose the best representation of data quality, the Facilitated Emissions Standard
requires that financial institutions normalize the data quality scores for each business or sector to the
facilitated amount.

The formula for calculating weighted averages for a business or sector is:

∑98:; Facilitated amount 8 × Data quality score8

=
∑98:; Facilitated amount 8
with i = borrower or investee company

An illustrative example of a financial institution’s capital market activities is provided below:

Line of Sector Company Facilitated Attributed Scope 1/2 Data quality

Business amount absolute emissions score (1 = High,
(tCO2e) 5 = Low)

IPO Oil and Gas Company A X1 Y1 Z1

IPO Power Company B X2 Y2 Z2
IPO Transport Company C X3 Y3 Z3
IPO Oil and Gas Company D X4 Y4 Z4
IPO Power Company E X5 Y5 Z5
IPO Transport Company F X6 Y6 Z6

Weighted data score for Initial Public Offerings’ Scope 1 and 2 emissions:

;(X1 × Z1) + (X2 × Z2) + (X3 × Z3) + (X4 × Z4) + (X5 × Z5) + (X6 × Z6)G
=
(X1 + X2 + X3 + X4 + X5 + X6)

Weighted data score for the Oil and Gas sector Scope 1 and 2 emissions:

(X1 × Z1) + (X4 × Z4)

=
(X1 + X4)

44
7. Glossary

45
Absolute emissions: Volume of greenhouse gas (GHG) emissions expressed in tons CO2e.

Arranger: This term refers to the facilitator roles mentioned below. This may be contrary to market
terminology but is the way we chose to describe this activity in Part B of the Standard.

Asset manager: Manages capital and invests it into financial instruments on behalf of clients. In this
role, the manager is not the owner of the assets.

Attribution factor: Share of the total annual GHG emissions from facilitated companies and activities
associated with the relative share of the capital market issuances.

Bookrunner: The primary underwriter or coordinator when a company or government issues new
equity, debt, or securities instruments. The bookrunner is also responsible for structuring the
financing, and for designing and implementing the transaction.

Capital markets: This term refers to the venues where funds are exchanged between buyers (capital
suppliers) and sellers in the form of equity securities, bonds, or other financial assets. Suppliers in
capital markets are typically banks and investors, while those who seek capital are companies and
governments.

Carbon dioxide equivalent (CO2e) emissions: The amount of CO2 that would cause the same
integrated radiative forcing (a measure for the strength of climate change drivers) over a given time
horizon as an emitted amount of another GHG or mixture of GHGs. Conversion factors vary based on
the underlying assumptions and as the science advances. As a baseline, PCAF recommends using
100-year global warming potentials without climate-carbon feedback from the most recent IPCC
Assessment report.

Co-manager/Lead manager: The secondary underwriter or coordinator when a company or

government issues new equity, debt, or securities instruments. The co-manager/lead manager plays a
more passive role in the transaction relative to a bookrunner.

Credit facility: A type of loan that borrowers can access on an ongoing basis over an extended
period.

Facilitator: An institution that directly or indirectly influences or supports another actor’s capacity to
operate/perform/own/dispose of a certain economic activity or product/good or service. The actions
that a financial institution may take to influence or support another actor, are subject to different
variants specific to each situation/transaction, including, but not limited to, business and legal
considerations.

Emission factor: The average mass of CO2 emitted by an entity in one year usually expressed in
tCO2/year.

Emission intensity: The average mass of GHG of CO2 emitted by a vehicle when it drives one unit of
measure, usually expressed in gCO2/km.

Financed emissions: Absolute emissions that financial institutions finance through their loans and
investments.

46
GHG emissions accounting: GHG emissions accounting refers to the processes required to
consistently measure the amount of GHGs generated, avoided, or removed by an entity, allowing it to
track and report these emissions over time.

Greenhouse gas (GHG) emissions: The seven gases mandated under the Kyoto Protocol and to be
included in national inventories under the United Nations Framework Convention on Climate Change
(UNFCCC)—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3). For ease of
accounting, these gases are usually converted to and expressed as carbon dioxide equivalents
(CO2e).

Investor: A private person or an institutional investor (e.g., pension fund) who invests capital into a
financial instrument. They either manage investments alone or delegate this task to an asset manager
via a mandate or by investing into an investment fund.

Issuer: The entity (in this Facilitated Emissions Standard involving only corporates) that issues a debt
or equity capital markets instrument.

Lead bookrunner: The lead underwriter or coordinator when a company or government issues new
equity, debt, or securities instruments. The bookrunner is also responsible for structuring the
financing, and for designing and implementing the transaction.

Scope 1 emissions: Direct GHG emissions that occur from sources owned or controlled by the
reporting company—i.e., emissions from combustion in owned or controlled boilers, furnaces, vehicles,
etc.

Scope 2 emissions: Indirect GHG emissions from the generation of purchased or acquired electricity,
steam, heating, or cooling consumed by the reporting company. Scope 2 emissions physically occur at
the facility where the electricity, steam, heating, or cooling is generated.

Scope 3 emissions: All other indirect GHG emissions (not included in scope 2) that occur in the value
chain of the reporting company. Scope 3 can be broken down into upstream emissions that occur in
the supply chain (for example, from production or extraction of purchased materials) and downstream
emissions that occur because of using the organization’s products or services.

Syndicated loan: Defined as a loan made available by two or more providers under a common loan
agreement and ranking credit is assigned upon signature of the loan documentation.

47
8. Acronyms

48
CDP Carbon Disclosure Project
CH4 Methane
CO2 Carbon dioxide
CO2e Carbon dioxide equivalent
CRE Commercial real estate
EEA European Environment Agency
EEIO Environmentally extended input-output
EU European Union
EU TEG European Commission Technical Expert Group on Sustainable Finance
EVIC Enterprise value including cash
FAO Food and Agriculture Organization of the United Nations
FSB Financial Stability Board
GAAP Generally accepted accounting principles
GEMIS Global Emissions Model for integrated Systems
GHG Greenhouse Gas
GRI Global Reporting Initiative
GTAP Global Trade Analysis Project
HFC Hydrofluorocarbon
ICCT International Council on Clean Transportation
IEA International Energy Agency
IFI Internal Financial Institution
IFRS International Financial Reporting Standards
IPCC Intergovernmental Panel on Climate Change
IPO Initial public offering
ISIC Industrial Classification of All Economic Activities
ISSB International Sustainability Standards Board
ITF OECD International Transport Forum at the Organization for
Economic Co-operation and Development
ktCO2e 1,000 metric tons of carbon dioxide equivalent
L2 Level 2 (NACE)
MtCO2e 1,000,000 metric tons of carbon dioxide equivalent
MWh Megawatt-hour
N2O Nitrous oxide
NACE Statistical Classification of Economic Activities in the European Community
NDC Nationally determined contribution
NEDC New European Driving Cycle
NF3 Nitrogen trifluoride
NGO Nongovernmental organization
PCAF Partnership for Carbon Accounting Financials
PFC Perfluorocarbon
SASB Sustainability Accounting Standards Board
SBT Science-based targets
SBTi-FI Science Based Targets initiative for Financial Institutions
SDA Sectoral Decarbonization Approach
SF6 Sulphur hexafluoride
TCFD Task Force on Climate-related Financial Disclosures
tCO2e Metric tons of carbon dioxide equivalent
UNEP FI United Nations Environment Program Finance Initiative
UNFCCC United Nations Framework Convention on Climate Change
US United States
WACI Weighted Average Carbon Intensity
WBCSD World Business Council for Sustainable Development
WIOD World Input-Output Database

49
9. References

50
• Basel Committee on Banking Supervision. (2021, November). Basel Framework: Scope and
definitions - Global systematically important banks SCO40. Retrieved from
https://www.bis.org/basel_framework/chapter/SCO/40.htm
• EU Technical Export Group on Sustainable Finance. (2019). Financing a Sustainable
European Economy: Report on Benchmarks: Handbook of Climate Transition Benchmarks,
Paris Aligned Benchmark, and Benchmarks' ESG Disclosure. Retrieved from
https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/do
cuments/192020-sustainable-finance-teg-benchmarks-handbook_en_0.pdf
• IPCC. (2022, April). Climate Change 2022 - Mitigation of Climate Change. Retrieved from
https://www.ipcc.ch/report/ar6/wg3/downloads/report/IPCC_AR6_WGIII_FullReport.pdf
• PCAF. (2019, December). Accounting for and Steering Carbon: Harmonised Approach for
the Financial Sector. Retrieved from
https://carbonaccountingfinancials.com/files/downloads/1911-pcaf-report-
nl.pdf?6253ce57ac
• PCAF. (2022, September). Capital Market Instruments Proposed Methodology for
Facilitated Emissions . Retrieved from
https://carbonaccountingfinancials.com/files/downloads/pcaf-capital-market-instruments-
proposed-methodology-2022.pdf
• PCAF. (2022, December). The Global GHG Accounting and Reporting Standard Part A:
Financed Emissions - Second Edition. Retrieved from
https://carbonaccountingfinancials.com/files/downloads/PCAF-Global-GHG-Standard.pdf
• PCAF. (2022, November). The Global GHG Accounting and Reporting Standard Part B:
Insurance-Associated Emissions. Retrieved from
https://carbonaccountingfinancials.com/files/downloads/pcaf-standard-part-c-insurance-
associated-emissions-nov-2022.pdf
• SIFMA. (2023). 2023 Capital Markets Fact Book. Retrieved from https://www.sifma.org/wp-
content/uploads/2022/07/2023-SIFMA-Capital-Markets-Factbook.pdf
• TCFD. (2017). Final Report: Recommendations of the Task Force on Climate-related
Financial Disclosures. . Retrieved from https://www.fsb-tcfd.org/publications/final-
recommendations-report/
• TCFD. (2017). Implementing the Recommendations of the Task Force on Climate-related
Financial Disclosures. Section D: Supplemental Guidance for the Financial Sector.
Retrieved from https://www.fsb-tcfd.org/wp-content/uploads/2017/12/FINAL-TCFD-
Annex-Amended-121517.pdf
• WRI and WBCSD. (2004). A Corporate Accounting and Reporting Standard - Revised
Edition. Retrieved from https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-
revised.pdf
• WRI and WBCSD. (2011). GHG Protocol, Corporate Value Chain (Scope 3) Accounting and
Reporting Standard, Supplement to the GHG Protocol Corporate Accounting and
Reporting Standard. Retrieved from Greenhouse Gas Protocol:
https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-
Reporing-Standard_041613_2.pdf

51
10. Annex

52
Annex 1: Detailed summary of data needs and
equations to calculate facilitated emissions
Table 10-1. Detailed description of the data quality score table63
Description
Option Attribution Emission factor Facilitated emissions calculation Highest
Financial data Emission data Equations to lowest
For listed companies:
"#$%&%'#'() #+,-.'!
Verified GHG emissions data ! /012!
× 4(%5ℎ'%.5 7#$',8 × 0(8%7%() $,+9#.: (+%;;%,.;!
Option from the company in ! Score
1a accordance with the GHG 1
Protocol For private companies:
"#$%&%'#'() #+,-.' !
! × 4(%5ℎ'%.5 7#$',8 × 0(8%7%() $,+9#.: (+%;;%,.;!
<,'#& (=-%': + )(?'!
!

For listed companies:

"#$%&%'#'() #+,-.'!
Unverified GHG emissions !
/012!
× 4(%5ℎ'%.5 7#$',8 × @.A(8%7%() $,+9#.: (+%;;%,.;!
Option data calculated by the ! Score
1b company in accordance with 2
the GHG Protocol For private companies:
"#$%&%'#'() #+,-.' !
! × 4(%5ℎ'%.5 7#$',8 × @.A(8%7%() $,+9#.: (+%;;%,.;!
<,'#& (=-%': + )(?'!
!

Primary
physical For listed companies:
activity data for Emission "#$%&%'#'() #+,-.'! 66
! × 4(%5ℎ'%.5 7#$',8 × /.(85: $,.;-+9'%,.! × /+%;;%,. 7#$',8
EVIC for listed the company’s factors /012!
companies and energy specific to !

total equity plus consumption that primary

Option debt for private by energy data (e.g., Score
2a64 companies source (e.g., energy 3
megawatt- source-
hours of specific
Facilitated emission For private companies:
electricity) plus factors)65 "#$%&%'#'() #+,-.'!
amount any process ! × 4(%5ℎ'%.5 7#$',8
67
× /.(85: $,.;-+9'%,.! × /+%;;%,. 7#$',8
<,'#& (=-%': + )(?'!
emissions !

Emission For listed companies:

Primary factors !
"#$%&%'#'() #+,-.'!
× 4(%5ℎ'%.5 7#$',8 × B8,)-$'%,.! × /+%;;%,. 7#$',8
physical specific to !
/012!

Option activity data for that primary

2b the company’s data (e.g.,
production emission For private companies: Score
(e.g., tonne of factor per "#$%&%'#'() #+,-.'! 3
! × 4(%5ℎ'%.5 7#$',8 × B8,)-$'%,.! × /+%;;%,. 7#$',8
rice produced) tonne of <,'#& (=-%': + )(?'!
rice) !

For listed companies:

"#$%&%'#'() #+,-.'! DED (+%;;%,.;"
! × 4(%5ℎ'%.5 7#$',8 × C(A(.-(! ×
/012! C(A(.-("
Option GHG emissions Revenue
per sector68
!
Score
3a per sector 4
Revenue of the For private companies:
"#$%&%'#'() #+,-.'! DED (+%;;%,.;"
company ! × 4(%5ℎ'%.5 7#$',8 × C(A(.-(! ×
<,'#& (=-%': + )(?'! C(A(.-("
!

Option GHG emissions Assets per For listed companies and private companies:
3b N/A per sector sector ! "#$%&%'#'() #+,-.'! × 4(%5ℎ'%.5 7#$',8 ×
DED (+%;;%,.;"
F;;(';" Score
!
5
Option Asset turnover GHG emissions Revenue
per sector
For listed companies and bonds to private companies:
GHG emissions$
3c ratio per sector per sector ! Facilitated amount # × Weighting factor × Asset turnover ratio$ ×
Revenue$
#

______
63 Where c = company and s = sector.
64 The quality scoring for Option 2a is only possible for/applicable to scope 1 and scope 2 emissions as scope 3 emissions cannot be
estimated by this option. Other options can be used to estimate the scope 3 emissions, however.
65 Supplier-specific emission factors (e.g., from an electricity provider) for the respective primary activity data are always preferred over
non-supplier-specific emission factors.
66 Where this option is used, process emissions must be added to the calculated energy consumption emissions before multiplying by the
attribution factor.
67 Where this option is used, process emissions must be added to the calculated energy consumption emissions before multiplying by the
attribution factor.
60 If revenue is not deemed a suitable financial indicator for estimating the emissions of a company in a certain sector, one can apply other
suitable financial indicators as a proxy. If an alternative indicator is used, the reasoning for the selection of this alternative indicator
should be made transparent. The data quality score will not be affected.

53
Annex 2: Table for reporting facilitated emissions
Activity Total facilitated Scope 1+ Scope Scope 3 Emission Weighted data
amount covered 2 emissions emissions intensity quality score
(x € 1,000) (tCO2e) (tCO2e) (tCO2e/€M) (High Quality = 1
Low Quality = 5)

Absolute emissions

Primary capital
market
issuances

Absolute emissions per sector (if reporting by sector)

Oil & Gas

Steel

Total

54
Annex 3: How this methodology may be used to
track changes in facilitated emissions
PCAF’s remit as an organization is to develop carbon accounting rules for scope 3, category 15 for
financial institutions reporting in line with the GHG Protocol. While tracking emission fluctuations and
target setting are distinct topics, and not the remit of PCAF as standard, as a point of context, it is
worth noting that whether a financial institution applies a 33% weighting, or any other level of
weighting to its attributed share of capital markets volumes, the rate of change in overall facilitated
emissions reported between time periods should not be impacted. This point is pertinent for target
setting and also subsequent reporting against targets. Typically, a financial institution will identify a
baseline, from which targets would be established and progress measured. If, by way of example, the
target is to reduce facilitated emissions (intensity) purely from the arranging of capital market
issuances by 50% by a target year, compared to the baseline year, then the weighting factor is
inconsequential to reaching the target. The financial institution will need to halve their facilitated
emissions (intensity) no matter what the weighting factor is. This explanation is demonstrated in
Figure 10-1.

Figure 10-1. Illustration of how different weightings show the same

decline in facilitated emissions

25
-50%
20
(kt CO2e)

15
10 -50%
5
0
33% weighting 100% weighting
Baseline year Target year

55
Website:
carbonaccountingfinancials.com
E-mail:
[email protected]

Photo credits: Pexels and:

Cameron Casey (1)
Allan So (2)
Pixabay (3+8)
Nataliya Vaitkevich (4)
Ricky Esquivel (5)
Andrew Neel (6)
lil artsy (7)
Olena Bohovyk (9)
Magda Ehlers (10)

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