Financed emissions
Financed emissions are greenhouse gas emissions attributed to a financial institution because it provides loans or investments to emitting activities. They are generally reported within Scope 3 emissions, category 15, using an attribution method that assigns part of a borrower’s or investee’s emissions to the institution according to the relevant financial activity and asset class.
In simple terms
The Partnership for Carbon Accounting Financials provides methods for measuring emissions associated with financial activities. A calculation identifies the relevant outstanding finance, selects the asset-class method, determines the borrower’s or investee’s emissions, and applies the prescribed attribution factor. Results depend on portfolio coverage, boundaries, data quality, and estimation choices. Financed emissions belong in a financial institution’s Greenhouse gas inventory as indirect emissions; they are not the institution’s own operational emissions. They also differ from avoided, facilitated, and insurance-associated emissions, which have separate purposes and methods.
Why it matters
Loans and investments can connect a financial institution to emissions far larger than those from its offices, including exposure to Methane-intensive activities. A consistent inventory helps institutions understand portfolio exposure, set targets, compare changes, and support climate disclosures such as IFRS S2. The number does not by itself measure climate impact or prove that financing caused an investee’s emissions. Users need the asset-class boundary, attribution method, coverage, data-quality information, and current PCAF edition.
Example
For example, a fictional bank measures emissions associated with its business-loan portfolio. For each covered borrower, it applies the current PCAF asset-class method and attributes a share of reported or estimated emissions. It discloses portfolio coverage and data-quality scores rather than presenting the total as directly measured emissions from the bank’s operations.
References
Current status
- As of
- Issuer
- Partnership for Carbon Accounting Financials
- Instrument or version
- Global GHG Accounting and Reporting Standard for the Financial Industry, Part A — Financed Emissions, third edition (2025)
- Status
- Current published financed-emissions methodology is Part A, third edition, released in 2025.
Applicability: Methods and attribution rules vary by financial activity and asset class; the current PCAF Standard controls PCAF-aligned measurement and disclosure.