For a bank, an insurer or an asset manager, most of the carbon footprint sits in the companies and projects it finances, not in its branches. The GHG Protocol files these emissions under Scope 3 category 15, and the PCAF standard (Partnership for Carbon Accounting Financials) provides the calculation method: financed emissions.

This article covers Part A of that standard: asset classes, the attribution factor (including EVIC), the 1 to 5 data quality scale, a fictitious worked example and disclosure. It also serves companies that receive a questionnaire from their bank or investor: their data feeds this calculation.

Formulas and requirements read in the third edition of Part A (December 2025), consulted on 5 October 2026.

Table of contents

  • What is the PCAF standard?
  • What does the GHG Protocol say about category 15?
  • What are the ten asset classes of Part A?
  • How is the attribution factor calculated?
  • Which data quality score, from 1 to 5?
  • Worked example: three loans, one total
  • What must be disclosed?
  • PCAF, CSRD and SBTi: what is the link?
  • Financed company: what to give your lender
  • Common mistakes
  • How Kabaun supports financed emissions
  • FAQ
  • Conclusion

What is the PCAF standard?

PCAF is an industry-led initiative, created in 2015 by Dutch financial institutions. Its Global GHG Accounting and Reporting Standard has three parts:

  • Part A, financed emissions: loans and investments. Third edition in December 2025; first edition in November 2020.
  • Part B, facilitated emissions: capital market transactions. First version in December 2023, with a 33% weighting of the issuer's emissions.
  • Part C, insurance-associated emissions: second edition of December 2025, covering four segments (commercial lines, project insurance, personal motor, treaty reinsurance).

The PCAF website shows more than 780 signatories on 5 October 2026. The standard supplements the GHG Protocol Scope 3 Standard. The first edition was reviewed by the GHG Protocol for six asset classes (the "Built on GHG Protocol" mark); that review service is now closed, so later additions have not been reviewed.

What does the GHG Protocol say about category 15?

Category 15 (investments) covers the Scope 3 emissions of the year's investments, outside Scope 1 and 2. The GHG Protocol distinguishes four types: equity investments, debt investments, project finance, and managed investments and client services. Emissions are allocated according to the share invested.

PCAF requires the operational or financial control approach: unless the institution controls the investee, all financed emissions go to category 15. The institution also reports its own Scope 1 and 2. For the other categories, see the Scope 3 reference guide; for the basics, Scopes 1, 2 and 3.

What are the ten asset classes of Part A?

The third edition covers ten asset classes:

  • listed equity and corporate bonds;
  • business loans and unlisted equity;
  • project finance;
  • commercial real estate;
  • mortgages;
  • motor vehicle loans;
  • use of proceeds structures;
  • securitization and structured products;
  • sovereign debt;
  • sub-sovereign debt.

Use of proceeds structures, securitization and sub-sovereign debt are new in 2025.

How is the attribution factor calculated?

The asset classes described below follow the same logic:

  • Financed emissions = sum, for each borrower or investee, of (attribution factor × that entity's emissions).
  • Attribution factor = the institution's outstanding amount / the value of the financed entity.

Only the denominator changes:

  • listed equity and bonds of listed companies: EVIC (enterprise value including cash);
  • bonds of private companies, loans to private companies, unlisted equity: total equity plus debt of the company;
  • loans to listed companies: EVIC;
  • project finance: total equity plus debt of the project;
  • commercial real estate and mortgages: property value at origination;
  • motor vehicle loans: vehicle value at origination;
  • sovereign debt: purchasing power parity (PPP) adjusted GDP.

EVIC adds the market capitalization of ordinary and preferred shares at fiscal year-end, the book value of total debt and minority interests. No cash is deducted, to avoid negative enterprise values.

A loan's outstanding amount is the disbursed debt minus repayments: attribution falls to zero at maturity. The seven Kyoto Protocol gases are covered, in tCO2e (tonnes of CO2 equivalent). For reports published from 2025, the Scope 3 of financed companies is required in all sectors.

Which data quality score, from 1 to 5?

For listed equity, bonds and business loans, PCAF distinguishes three options, scored from 1 (best quality) to 5 (lowest):

  • Option 1, reported emissions: verified by a third party (1a, score 1) or unverified (1b, score 2).
  • Option 2, physical activity: energy consumption (2a, score 2, Scope 1 and 2 only) or production (2b, score 3), with specific emission factors.
  • Option 3, economic activity: sector factor per euro of revenue (3a, score 4) or per euro of assets (3b, score 5), or revenue with sector asset turnover ratios (3c, score 5).

Each class has its own grid (mortgages: score 1 for metered consumption, score 5 for an estimate based on the number of buildings).

PCAF recommends publishing an average weighted by outstanding amount: the sum of (outstanding amount × score) divided by the sum of outstanding amounts. The Scope 3 score is reported separately from that of Scope 1 and 2. PCAF recommends that data be verified, over time, to at least limited assurance. On the neighboring notion of uncertainty, see carbon footprint uncertainty.

Worked example: three loans, one total

Fictitious data, loans to private companies:

  • Loan A: outstanding 10 M€, equity plus debt 50 M€, reported and verified emissions 20,000 tCO2e (score 1). Factor: 10 / 50 = 0.20. Financed emissions: 4,000 tCO2e.
  • Loan B: outstanding 4 M€, equity plus debt 80 M€, emissions calculated from production 60,000 tCO2e (score 3). Factor: 0.05. Financed emissions: 3,000 tCO2e.
  • Loan C: outstanding 6 M€, equity plus debt 40 M€, revenue 25 M€, fictitious sector factor of 200 tCO2e per M€ of revenue, i.e. 5,000 tCO2e (score 4). Factor: 0.15. Financed emissions: 750 tCO2e.

Total: 7,750 tCO2e for 20 M€ outstanding, or 387.5 tCO2e per M€ lent. Weighted score: (10 × 1 + 4 × 3 + 6 × 4) / 20 = 2.3. Loan C, scored 4, rests on a sector average: it is the first line to improve.

What must be disclosed?

The disclosure baseline:

  • absolute financed emissions, at least annually, at a fixed date, by asset class or sector;
  • the percentage of outstanding amounts covered, with justification of any exclusion (data unavailable, negligible amount, no methodology);
  • the Scope 3 of financed entities, separate from their Scope 1 and 2;
  • a base year recalculation policy, with a significance threshold;
  • as a recommendation, economic intensities (tCO2e per M€), because absolute emissions are a poor basis for comparing institutions of different sizes.

Any requirement not met must be explained.

The simplified ESRS have been adopted: Commission Delegated Regulation (EU) 2026/1563 of 3 July 2026, published in the Official Journal of the EU on 21 September 2026, which replaces Annex I of Delegated Regulation 2023/2772. It enters into force on 10 November 2026 and applies to financial years beginning on or after 1 January 2027 (for financial years beginning in 2026, undertakings already subject to the ESRS may apply either version). In the revised ESRS E1, a financial institution must consider PCAF Part A for its Scope 3. The text cites the second edition of Part A, not the third edition detailed here. Financial institutions are also exempted from disclosing absolute values for their category 15 intensity targets, provided they use physical or financial denominators, disclose absolute financed emissions consistent with those targets and provide contextual information. See the ESRS E1 standard and the CSRD guide after the Omnibus.

The SBTi offers financial institutions two frameworks: the Net-Zero Standard (launched July 2025) and the Near-Term Criteria, both available until at least the end of July 2027. The latter set targets on operational and financed emissions. See SBTi: definition and application.

Financed company: what to give your lender

If you are the borrower, your emissions are the multiplier in the calculation. What improves your position:

  • A complete GHG Protocol inventory: Scope 1, 2 and 3. Institutions must report the Scope 3 of their borrowers in all sectors, or explain why they cannot.
  • Third-party verification: verified emissions, score 1; unverified, score 2.
  • Documented sources: otherwise the lender falls back on sector averages, scored 4 or 5.
  • The right entity level: if the institution finances a subsidiary and has its balance sheet, attribution is made at that level.

PCAF accepts a vintage gap between financial and emissions data: provide the most recent figures and state the period.

Common mistakes

  • Mixing up denominators: EVIC for a listed company, equity plus debt for an unlisted one; and deducting cash from EVIC.
  • Revaluing the property every year for a mortgage: the denominator stays the value at origination; if unavailable, the latest known value is fixed.
  • Hiding coverage and exclusions: the share of outstanding amounts not calculated must be visible, and the Scope 3 of financed entities is reported separately.

How Kabaun supports financed emissions

Kabaun natively supports the PCAF framework (financed emissions), with automatic adaptation of factors and templates to the selected framework (CBC-007). Around it:

  • CSV and Excel import with a column-mapping assistant (GDD-001);
  • multi-entity management, with consolidation at group level (GDD-004);
  • traceable sources and supporting documents for each data point (GDD-003, CERT-004);
  • a timestamped audit trail, useful to a verifier (CERT-003);
  • PDF and Excel reports (RV-002) and regulatory monitoring that follows PCAF (REG-001).

The asset classes and formulas handled by the platform should be confirmed with the Kabaun team.

FAQ

What are financed emissions?
They are the emissions of the companies, projects and assets an institution finances through its loans and investments, attributed to that institution in proportion to its financing. They fall under Scope 3 category 15.

How is the PCAF attribution factor calculated?
Divide the outstanding amount by the value of the financed entity: EVIC for a listed company, equity plus debt for an unlisted company or a project, value at origination for a property or vehicle, PPP-adjusted GDP for a country. Then multiply by the entity's emissions.

What is EVIC?
EVIC (enterprise value including cash) adds the market capitalization of ordinary and preferred shares at year-end, the book value of total debt and minority interests, with no cash deduction.

How does the PCAF data quality score work?
Each data point is scored from 1 (reported and verified emissions) to 5 (sector averages based on financial amounts). PCAF recommends publishing an average weighted by outstanding amount, by asset class or sector, with Scope 3 reported separately.

What is the difference between Parts A, B and C?
Part A covers loans and investments (financed emissions), Part B capital market transactions (facilitated emissions, weighted at 33%), Part C insurance (emissions associated with underwriting).

Is PCAF mandatory?
PCAF is an industry standard that institutions commit to. The revised ESRS (Delegated Regulation 2026/1563) ask financial institutions subject to the CSRD to consider Part A for their Scope 3, from financial years beginning in 2027. Other national or sector requirements may apply: have your situation confirmed by a lawyer.

Conclusion

Financed emissions are calculated by multiplying, for each position, an attribution factor (outstanding amount divided by the value of the financed entity) by that entity's emissions, then scoring each data point from 1 to 5. The result is published with its coverage, exclusions and weighted score.

To do now: sort your portfolio into the ten asset classes, record the outstanding amount and denominator of each line, then identify your five largest borrowers whose emissions are not verified.

Kabaun supports financial institutions on their financed emissions → www.kabaun.com/en/contact

Sources

  • PCAF, The Global GHG Accounting and Reporting Standard Part A: Financed Emissions, third edition, December 2025 (chapters 4 to 6, tables 5.1-2, 5.2-1 and 5.5-1). Consulted 2026-10-05. carbonaccountingfinancials.com
  • PCAF, "The Standard" page (Parts A, B, C, number of signatories). Consulted 2026-10-05. carbonaccountingfinancials.com
  • PCAF, Part B Facilitated Emissions, executive summary, December 2023. carbonaccountingfinancials.com
  • PCAF, Part C Insurance-Associated Emissions, second edition, December 2025. carbonaccountingfinancials.com
  • GHG Protocol, Technical Guidance for Calculating Scope 3 Emissions, category 15 "Investments". Consulted 2026-10-05. ghgprotocol.org
  • Commission Delegated Regulation (EU) 2026/1563 of 3 July 2026 amending Delegated Regulation (EU) 2023/2772 (simplified ESRS), OJ L of 21.9.2026, Article 3 and ESRS E1. Consulted 2026-10-05. publications.europa.eu
  • European Commission, Implementing and delegated acts, CSRD (act of 3 July 2026). Consulted 2026-10-05. finance.ec.europa.eu
  • EFRAG, Draft Simplified ESRS (3 December 2025), for background. Consulted 2026-10-05. efrag.org
  • SBTi, Financial Institutions. Consulted 2026-10-05. sciencebasedtargets.org