Overnight, the three big banks’ decision makes PCAF, founded in 2015 by the Netherlands consultancy Guidehouse, a focal point in the struggle over how to address climate change.
Three major US banks—Morgan Stanley, Citi and Bank of America—have joined the Partnership for Carbon Accounting Financials (PCAF), a coalition to measure the carbon impact of financial institutions’ lending and investments. Initially, US institutions weren’t inclined to become more transparent about their dealings with the fossil-fuel industry, but the Covid-19 pandemic changed that.
Overnight, the three big banks’ decision makes PCAF, founded in 2015 by the Netherlands consultancy Guidehouse, a focal point in the struggle over how to address climate change. Their aim is to align their business models with the Paris accord on climate change and to be able to quantify their progress toward that goal.
“If there is a lesson to be learned from the Covid-19 pandemic, it is that our economy, physical health and resilience, our environment and our social stability are inextricably linked,” said Citi CEO Michael Corbat in a statement in August.
The growing PCAF coalition now claims 70 members, accounting for more than $9 trillion in assets. The Dutch institutions ABN Amro, ASN Bank and Triodos were the first to sign on, followed by the UK’s National Westminster, Denmark’s Danske Bank and investment management giant BlackRock. Together, they are developing accounting standards to better assess the carbon impact of their customers’ electric generation, oil and gas production and carbon footprint, in the case of residential buildings. The standards are available for public consultation until September 30; the final version is expected to be published in November.
Environmental NGOs note that banks have been, until now, big supporters of the energy industry. According to the Rainforest Action Network, Citi lent $187.7 billion to fossil-fuel companies between 2016 and 2019, and BofA $156.9 billion.
Nevertheless, attitudes have changed. Policymakers and investors are pressuring financial institutions to take action, and NGOs are already talking about changing priorities. As the Sierra Club preaches the phase-out of funding for polluting fossil-fuel projects, PCAF’s growth underscores that European, US and even Chinese banks are paying attention.