Financed emissions (PCAF method)
Formula
Financed emissions (PCAF method)
Financed Emissions = Sum over all borrowers of (Attribution factor × Borrower's emissions), where Attribution factor = Amount outstanding ÷ EVIC (listed companies) or Amount outstanding ÷ (Total equity + Total debt) (unlisted companies)
Variables
| Amount outstanding | The lender's or investor's outstanding loan, bond or equity holding in the company at year end, in ₹ crore |
| EVIC | Enterprise value including cash for a listed company: the market value of its ordinary and preferred shares plus the book value of its total debt and minority interests, with no deduction for cash, in ₹ crore |
| Total equity + Total debt | Book value of equity plus debt for an unlisted company, in ₹ crore |
| Borrower's emissions | The company's Scope 1 and Scope 2 emissions in tCO2e (and Scope 3 for sectors where PCAF requires it) |
Finding the inputs
Amounts outstanding come from the lender's own loan and investment records, so outside analysts usually see only the bank's published totals. Borrowers' Scope 1 and 2 emissions are in their BRSRs (Principle 6, a BRSR Core indicator). Market capitalisation comes from stock exchange data and debt from the borrower's balance sheet. Where reported emissions are missing, PCAF's emission factor database gives sector estimates, with a lower data quality score.
Reading the number
The result is the part of the borrowers' emissions that is linked to the lender's money. Total financed emissions grow when lending grows, so also look at intensity: financed emissions per ₹ crore lent. Check how much of the loan book is covered and the weighted average data quality score (1 is best, 5 is weakest). For listed borrowers, a rise in share prices raises EVIC and lowers attributed emissions even if real emissions do not change.
Illustrative example
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