PACTA versus PCAF

PACTA versus PCAF

A carbon footprint approach involves estimating the total amount of CO2 emissions associated with a portfolio. As an output, carbon footprinting gives a single-figure indicator (CO2 emission of the portfolio) and an estimate of which sectors are carbon-intensive versus those that are not. While this approach is useful to help a bank to identify the ‘hotpots’ in the portfolio that need action first, the top-down estimates make the approach a means to arrive at an estimated measurement, not a methodology for target-setting or portfolio steering

Absolute Emissions Challenges

Limitations inherent in carbon footprint approaches for credit portfolios that concern the aggregation of absolute emissions (or volumes of emissions) at portfolio level:

• Aggregating absolute emissions across portfolios is challenging and often time incomplete
• Allocating absolute emissions to a portfolio introduces volatility, which makes it unfit for steering

See Also

• Partnership for Carbon Accounting Financials
• Paris Agreement Capital Transition Assessment