Earlier this month, Morgan Stanley announced that it had achieved a first among U.S. investment banking firms by joining the global steering committee of the Partnership for Carbon Accounting Financials (PCAF). In that role, the firm will lend its support in developing a methodology that will help global banks track and measure their climate change risks.
PCAF officially launched this past September and its stated, first goal is the joint, global development of a “Global Carbon Accounting Standard for the financial industry to measure and disclose the greenhouse emissions of their loans and investments.” Basically, lines will be drawn to show “the complex challenge of measuring financed emissions.”
PCAF participants, who are setting targets that are in line with the Paris Climate Agreement, include “asset owners, asset managers and banks to support a broad range of climate initiatives.”
The steering committee, which will monitor the progress of PCAF’s initiatives, includes ABN AMRO, Amalgamated Bank, ASN Bank, Global Alliance for Banking on Values (GABV) and Triodos Bank. PCAF’s 66 formal members from across the planet represent more than $5.3 Trillion in assets, officials say.
Beyond the steering committee, Morgan Stanley has committed to “measuring and disclosing [its own] lending portfolio greenhouse gas emissions,” according to bank officials.
In taking this leadership role, Morgan Stanley “will lend insights and expertise to help PCAF develop the global accounting standard that can be used by all financial institutions to measure and reduce their climate impact,” according to bank officials.
“We are excited to join PCAF and to support the important work they are leading to build a methodology for global banks’ efforts to track and measure climate change risks,” says Audrey Choi, Morgan Stanley’s chief sustainability officer and CEO of the Morgan Stanley Institute for Sustainable Investing, in a prepared statement.
“The measurement of financed emissions, defined by the Greenhouse Gas Protocol as Scope 3 — category 15 emissions, provides important data that financial institutions can use to assess risk, manage impact, meet the disclosure expectations of important stakeholders, and assess progress and pathways to global climate goals,” according to Morgan Stanley. “PCAF‘s methodology is currently being used in several markets for measuring financed emission in the financial sector and will soon be published as a global methodology which has been the work of a core team of financial institutions, including Morgan Stanley.”
“As we work toward COP26, and a critical year ahead in aligning the finance sector with the goals of the Paris Climate Agreement, we believe that PCAF and member financial institutions will play an important leadership role in that work,” says Giel Linthorst, executive director of the PCAF secretariat, in a prepared statement.