Climate change threatens every aspect of our society, including the financial sector. That is why financial institutions need to devote more attention to understanding not only the impact of climate change but also the role they play in either accelerating or mitigating it.
However, these institutions lack a global standard for measuring the emissions that their loans and investments finance. This is a barrier to managing the climate impact of lending and investment activities.
The Partnership for Carbon Accounting Financials provides financial institutions with a robust and transparent approach to measure the emissions they finance. By understanding their financed emissions, financial institutions can make better decisions to reduce the climate impact associated with their loans and investments, as well as to manage climate related transition risks and identify business opportunities that can support the alignment of financial flows with the goals of the Paris Climate Agreement.
The IKEA Foundation is partnering with the Partnership for Carbon Accounting Financials because we believe that enabling financial institutions to measure their financed emissions will lead them to discuss carbon reduction with the companies they invest in and the clients they lend to, reducing the climate impact of their portfolios. This partnership will lead to the increase of the number of banks and investors that use it to over 100 institutions.