Review of 70 disclosures highlights lack of compliance with PCAF standard

Key Findings


PCAF should evolves its rules such that "PCAF signatories" are obliged to comply with the PCAF standard as part of a robust compliance process.


PCAF signatories should comply with the PCAF standard and set coherent and robust rebaselining policies that ensure a clear differentation between virtual vs. real emissions reductions.


PCAF signatories should more fully adopt and integrate data frameworks that allow for the improvement of data quality and focus disclosures and engagement on these areas, notably building on alternative datasets.


The PCAF standard should clarify the disclosure requirements around sectoral splits and make the related recommendation mandatory.


PCAF – in collaboration with third party experts – should develop standards around the requirements for rebaselining. We would recommend a rebaselining policy that fully accounts for changes to portfolio composition, consistent with current best practice.


Financial supervisors should review the potential compliance of disclosures claiming to report in line with PCAF and create enforcement mechanisms to ensure transparent and accurate disclosures.

Today, the 1in1000 programme of 2° Investing Initiative Germany (2DII), is releasing a new research report analysing the disclosures of 70 PCAF signatories. The review focused on compliance with three components of the reporting requirements, as well as the overall data quality underpinning the disclosures. The report finds that not a single PCAF signatory currently fully complies with the PCAF standard on financed emissions across all disclosure requirements.

Specifically, no PCAF signatory currently complies with the requirement to disclose the rebaselining policy of their disclosures, an original requirement of GHG Protocol, and necessary to distinguish ‘virtual’ vs. ‘real’ emissions reductions. Over 20% of reviewed signatories do not provide transparency on the coverage of their disclosure. Finally, almost half of PCAF disclosures do not provide sectoral granularity.

The report also reviewed the data quality of disclosures and found that – of those disclosures sufficiently transparent on data quality – more than 70% primarily rely on sector-regional emissions factors, the second worst PCAF data quality level. This implies that less than 30% of disclosures satisfy a data quality necessary to meaningfully assess the emissions performance of the financial institution and their lending and investing decisions.

In the context of growing regulatory awareness of greenwashing, the report suggests that financial institutions face significant risks in marketing compliance with a standard that they currently do not fulfil and advertising transparency that does not meet minimum data quality standards.

To avoid naming and shaming, no individual financial institutions are mentioned in this report. We recognize that certain assessments may be subjective, and we commit to sharing the assessment with any interested financial institution and publicly disclosing any errors or omissions should this review process identify any.