Preparing for Impact: Accurate Emissions Calculations and Reporting for Financial Institutions

In today's rapidly evolving financial landscape, the importance of sustainability and accurate emissions reporting has never been more critical. Financial institutions, including banks, asset managers, and investment firms, increasingly recognize their role in driving environmental change. The need to calculate and report on emissions has become a fundamental aspect of their operations. At Schneider Electric Sustainability Business, we are excited to announce our official accreditation with the Partnership for Carbon Accounting Financials (PCAF) as their first accredited global consultant. This milestone not only highlights our commitment to sustainability but also positions us uniquely to help businesses navigate their sustainability journey, particularly with Scope 3 (financed emissions) data calculations.

Emissions Reporting: A Growing Priority for Financial Institutions

Financial institutions manage vast portfolios that span various industries and geographies. As investors, they have a significant influence on the companies they invest in, making them pivotal players in the global effort to reduce greenhouse gas (GHG) emissions. Accurate emissions reporting is essential for several reasons:

• Regulatory Compliance: Regulators globally are tightening emissions disclosure requirements. In Europe, regulations like the Corporate Sustainability Reporting Directive (CSRD) and the Sustainable Finance Disclosure Regulation (SFDR) require financial institutions to report on the climate impact of their financing activities—including financed emissions. In the U.S., California’s Climate Corporate Data Accountability Act mandates large companies to disclose full-scope GHG emissions. Financial institutions must ensure they have reliable emissions data from their portfolio companies to meet these requirements, avoid regulatory penalties, and prevent reputational damage.

• Investor Demand: As capital increasingly shifts toward sustainable assets, investors are demanding clear, credible ESG data to guide their decisions. Transparent emissions reporting isn't just about compliance—it's a competitive advantage that attracts capital, enhances investor confidence, and positions financial institutions to capture growing inflows into climate-conscious funds.

• Risk Management: Measuring financed emissions gives financial institutions a clearer view of the climate risk embedded in their portfolios. This data-driven approach helps identify high-emission exposures, assess transition and regulatory risks, and inform capital allocation decisions—ultimately safeguarding assets and supporting long-term value creation.

The Role of PCAF in Standardizing Emissions Reporting

The Partnership for Carbon Accounting Financials (or PCAF) is an industry-led partnership to facilitate transparency and accountability of the financial industry. PCAF achieves this through the development and implementation of a harmonized approach to assess and disclose greenhouse gas emissions associated with loans and investments. 

PCAF focuses on capacity building and developing technical guidance to support the financial sector in accurately measuring and disclosing emissions. This partnership is crucial as it provides a robust framework for emissions calculations, ensuring consistency and comparability across the industry. PCAF has developed GHG accounting methodologies that apply to any financial institution, with three distinct Standards that cover a variety of asset classes and activities.

Schneider Electric’s Collaboration with PCAF

Schneider Electric’s collaboration with PCAF underscores our commitment to advancing sustainability practices and providing our clients with solutions that address environmental challenges. As the first accredited global consultant, we are uniquely positioned to drive progress in GHG emissions measurement and support our clients in achieving their sustainability goals.

Our accreditation with PCAF brings several key benefits to the emissions calculations work:

• Enhanced Accuracy: PCAF’s standardized methodologies ensure that emissions calculations are accurate and reliable. This precision is vital for financial institutions as they report on the environmental impact of their investments.

• Consistency: By adhering to PCAF’s guidelines, financial institutions can ensure consistency in emissions reporting across their portfolios. This uniformity facilitates better comparison and benchmarking, enabling firms to track progress and identify areas for improvement.

• Credibility: PCAF accreditation enhances the credibility of emissions reports. Investors and stakeholders can trust that the data provided by financial institutions is robust and compliant with industry standards.

ClimFIT: A Powerful Tool for Emissions Calculations

At Schneider Electric, we work with financial clients to navigate the complexities of financed emissions and climate target setting through ClimFIT, our powerful tool that’s fully aligned with the PCAF standard. ClimFIT automates PCAF-compliant emissions calculations by integrating FactSet financial data and CDP-reported emissions, while using AI-driven estimation models for companies that don’t disclose.

With just an investment amount and ISIN or company name, ClimFIT can instantly compute financed emissions across various asset classes, including listed equity, bonds, loans, real estate, sovereign debt, and more. This automation simplifies the emissions reporting process, saving time and resources for  financial institutions with big and complicated portfolios.

Beyond financed emissions, ClimFIT provides real-time insights into portfolio transition trajectories. It tracks Science-Based Targets initiative (SBTi) and CDP-reported targets, assigns temperature ratings, and calculates portfolio coverage. These features help financial institutions align with key frameworks like SFDR, CSRD, and EU Taxonomy, ensuring comprehensive compliance.

Supporting Businesses on Their Sustainability Journey

As the pressure to decarbonize grows, financial institutions need clarity and action. With ClimFIT and our expert consultants, Schneider Electric provides a robust, transparent, and scalable solution for emissions reporting. Whether a firm is just starting its transition or refining an advanced climate strategy, our tools and expertise can guide them through the process.

Our collaboration with PCAF and the tools we employ uniquely position us to help businesses along their sustainability journey. Specifically, we focus on Scope 3 (financed emissions) data calculations, which are often the most challenging to measure and report. By leveraging our accredited experts and advanced tools, financial institutions can confidently disclose their financed emissions and demonstrate their commitment to sustainability.

Catch the Announcement

Missed our live accreditation announcement? No worries! You can still watch the recorded video on LinkedIn Socialive. Discover how Schneider Electric is pioneering emissions reporting and sustainability.

Conclusion

The need for accurate emissions calculations and reporting in private equity is undeniable. As regulatory requirements tighten and investor demand for transparency grows, financial institutions must prioritize sustainability in their operations. Schneider Electric’s accreditation with PCAF and our powerful ClimFIT tool provide the necessary support for firms to navigate this complex landscape.

By partnering with us, financial institutions can ensure their emissions reporting is accurate, consistent, and credible. Together, we can drive progress in GHG emissions measurement and support the financial sector in achieving its sustainability goals. Join us on this journey towards a more sustainable future.

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