PCAF Methodology

Definition

PCAF Methodology denotes any of the Partnership for Carbon Accounting Financials proposed methodologies for attributing GHG Emissions to diverse financial contracts. The essence of the methodology is a linear attribution of emissions using measures that capture on the one hand (numerator) a measure of the monetary value of the financial contract and on the other hand (denominator) a measure of the total value of the project, company or asset that is being financed.

Formula

The stylized formula that results from the application of the methodology defines the Portfolio Carbon Footprint and is given by

$\mbox{PCA} = \sum_i A_i E_i$

where the index i runs over the components of the portfolio (clients, contracts, etc), A is the attribution factor and E are emissions in suitable units (e.g. CO2 equivalent). The precise definition of A and E depends on

• the specific financial asset class which determines the type of contactual relations and available financial data
• the specific emissions and emissions measurement technologies which determine the available data

Specific Asset Class Methodologies

• Listed equity and corporate bonds
• Business loans and unlisted equity
• Project Finance
• Commercial real estate
• Mortages
• Motor vehicle loans