• The updated PCAF Standard adds new methodologies covering use-of-proceeds structures, securitisations, structured products, sub-sovereign debt, treaty reinsurance and project insurance.
• More than 100 experts from institutions across all regions contributed to the development process through PCAF’s industry-led working groups.
• The expansion equips banks, insurers and asset owners with clearer mechanisms to quantify financed and insurance-associated emissions, their “exposure to associated risks,” and forward-looking climate impacts.

The Partnership for Carbon Accounting Financials (PCAF) has released a sweeping update to the Global Greenhouse Gas Accounting and Reporting Standard for the Financial Industry, widening the scope of assets that banks, asset managers and insurers can measure across their financed and insurance-linked emissions. The move reflects rising pressure on financial institutions to provide more complete, decision-useful disclosures as global regulators advance climate-risk frameworks.

The latest package includes an update to the Financed Emissions Standard (Part A), new methods for Insurance-Associated Emissions (Part C), and a supplemental guidance document covering financed avoided emissions and forward-looking metrics. Together, these frameworks reshape how institutions assess the emissions they finance today and the climate consequences embedded in future balance sheets.

Expanding Coverage Across Complex Portfolios

PCAF said the revisions respond to the reality that modern portfolios rarely fit neatly into a single asset class and often combine loans, investments, insurance exposures and structured financial products. Standardising how to quantify emissions across this breadth has long been a challenge for climate-risk teams.

“Calculating GHG emissions of these portfolios is complex,” the organisation said. The new methods “close gaps, enabling institutions to account for emissions across relevant exposures” without altering the existing methodologies that many institutions have already embedded in reporting systems.

The update introduces four new financed-emissions methodologies that extend coverage to use-of-proceeds structures, securitisations and structured products, sub-sovereign debt, and optional reporting of undrawn loan commitments under IFRS S1 and S2. The changes also incorporate recommendations stemming from industry feedback on PCAF’s 2024 Inventory Fluctuation discussion paper.

On the insurance side, two new approaches for treaty reinsurance and project insurance bring a significant group of previously unaccounted-for exposures into scope.

A separate guidance document sets out guardrails for reporting financed avoided emissions and forward-looking emission metrics. These additions are designed to give financial institutions tools to assess future climate impact, not only historical emissions.

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A Sector-Driven Governance Process

The updates emerged from PCAF’s working groups, which bring together more than 100 experts across regions and asset classes. The process was governed by the PCAF Core Team, made up of representatives from signatory institutions.

“This update reflects the collective expertise and commitment by our global community of signatories,” said Hetal Patel, Head of Sustainable Investment Research at Phoenix Group and Chair of the PCAF Core Team. “By enhancing the Standard with new methods and guidance, we’re helping financial institutions create a more comprehensive and complete view of the emissions impact of their activities and exposure to associated risks.”

The organisation emphasised that transparent, consistent accounting remains the backbone of credible climate disclosures. “Complete, transparent, and consistent accounting methods are the foundation of credible financial GHG emission disclosures,” said Caspar Noach, PCAF’s Technical Director. “This update to the Standard reflects our commitment to helping financial institutions and their stakeholders improve transparency and make better-informed decisions.”

Implementation Timelines and Governance Implications

PCAF acknowledged that institutions will need time to integrate the expanded methodologies. Firms may adopt a phased approach, provided they clearly disclose which parts of their portfolios are covered or excluded and explain the rationale for any omissions. This flexibility mirrors expectations emerging in global regulatory frameworks, from Europe’s sustainability reporting requirements to jurisdiction-level climate-risk rules.

For C-suite leaders, the broader coverage strengthens the connection between financed emissions, capital-allocation decisions and long-term risk. It also raises the bar on comparability at a moment when investors, supervisors and civil-society groups increasingly scrutinise Scope 3 Category 15 emissions.

Global Stakes for Climate-Aligned Finance

PCAF’s expansion arrives as financial institutions race to understand the transition and physical-risk exposure embedded in their balance sheets. By adding methods for instruments that have historically fallen outside standardised climate reporting, the framework moves the sector closer to a unified global baseline.

The organisation said its ongoing methodological development is aimed at meeting industry demand for harmonised tools. As the recognised global standard-setter for financed Scope 3 emissions, PCAF positions its updates as part of a broader effort to build a collaborative community focused on shared learning and collective climate action.

For global financial leaders, the expanded Standard offers a clearer lens on where emissions sit—and how future investment decisions shape climate impact across the real economy.

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