Partnership for Carbon Accounting Financials (PCAF)’s Post

The Science-Based Target Initiative (SBTi) has released an update for the financial sector. Effective November 30, this update requires institutions to deliver on short-term emissions reductions goals within 5-10 years, phase out most coal-related projects by 2030, and publicly declare when they will stop financing projects that do not align with the Paris Agreement. Financial institutions should begin prioritizing accurate emissions tracking and strategic alignment between financial and sustainability goals to accomodate these updates. If your organization is looking for a partner to help manage your ESG data, visit www.greenimpacttech.com to learn how we make ESG easy. https://lnkd.in/en2mDh8D

ESG ratings - a new potential conflict between US and Europe ? Last August S&P global ratings dropped ESG indicators from its credit rating. In the US there are more and more voices claiming the "end of ESG"... In Europe however the acronym is kick and alive as demonstrated by the negotiating mandate just approved by the EU Council for a Regulation on ESG rating...mind that we are talking of a Regulation and not a Directive. A Regulation is self executing and immediately applicable in all the EU countries. So what this Regulation will be about ? This is how it is presented by the EU: "The new rules aim to strengthen the reliability and comparability of ESG ratings by improving the transparency and integrity of the operations of ESG ratings providers, making ratings more comparable and preventing potential conflicts of interests. Under the proposed rules, ESG rating providers will need to be authorised and supervised by the European Securities and Markets Authority (ESMA) and comply with transparency requirements, in particular with regard to their methodology and sources of information. Providers will be subject to specific measures to prevent and manage conflicts of interests." It is expected that the discussions will start in earnest early next year under Belgian presidency. With the US elections looming, multinational companies will need to address various (possibly conflicting ) legislative initiatives ...being a CEO will increasingly look like being a captain navigating in arctic waters ! https://lnkd.in/em9exDFF

The CSSF‘s supervisory priorities in the area of sustainable finance for investment funds draw upon the European legislative and regulatory framework including the ESMA Supervisory Briefing on sustainability risks and disclosures in the area of investment management. Because supervisory convergence and only a collective and coordinated response can be effective in tackling the global challenge of climate change. Key takeaways of the updated ESG priorities for investment funds include the publication of the CSSF Thematic Review on the implementation of sustainability-related provisions in the investment fund industry, the ESMA CSA on sustainability risks and disclosures, ESG data-driven supervision, continued guidance and clarifications to the industry as the need may be and the upcoming ESMA Guidelines on funds’ names using ESG or sustainability-related terms. #sustainabilty #ESG #investmentfunds #ESMA #CSSF

Think your small and/or private organization doesn't have to worry about #Scope3 reporting? Think again. Natalie Runyon at Thomson Reuters predicts how Scope 3 will have an impact in 2024: "Regardless of public disclosure, private firms of all sizes that supply to major public or private corporations will probably need to initiate or improve their greenhouse gas accounting methods." 🌏 Get in touch to learn how Avarni can automate your Scope 3 reporting. 💡 Read Natalie's ESG predictions: https://lnkd.in/gsPQzCua

Just a short notice upfront: if even the EU Platform on #SustainableFinance, who has publishes a Compendium of Market Practices on 29th of January is confused about too many acronyms (CSSSD instead of CSDDD)t’s obviously a complex matter ;-). The report focuses on how the EU Taxonomy and the overall sustainable finance framework are helping financial and non-financial actors transition to net-zero; and also provides key recommendations and priorities for the Platform’s future work. The market practices presented are based on the contributions of seven stakeholder groups, including large corporates, credit institutions, investors, insurers, public institutions, auditors and consultants, and SMEs. Overall, the report finds that the usability of the EU Taxonomy and wider framework needs to be further improved to fully support financial and non-financial actors in transitioning their business models to align with the EU’s sustainability objectives.  So true… #EUTaxonomy #Greendeal #ESRS #sustainableinvestment #SFDR #Taxonomy #CSDDD #CSRD

💡 SBTi Solution 3/3 : Pooled Impact Finance to Scale Scope 3 Solutions As companies grapple with the need to decarbonise complex value chains, a real debate has been introduced as to the appropriateness of market-mechanisms and broadly the use of Environmental Attribute Certificates (EACs). I’ve been posting about a different type of credit or certificate each day this week and today I’m wading into a relatively new type (for me) though not new, I think, to the book and claim community! The explosive SBTi board statement in April references the potential use of ‘EACs’ for abatement of Scope 3 emissions. A follow up op-ed by an SBTi board member referenced a type of EACs used to scale in-value chain decarbonisation (e.g. green freight). This is not your typical VCM credit: In cases where emissions in value chains are difficult to trace or influence, it seems sensible to create an option for companies to collectively finance solutions, perhaps in or near their supply shed, if not their own emissions. If close enough by sector/geography could these be claimed as reductions? Both the GHGP & the SBTi have called for perspectives on new market-based approaches for scope 3. Some respondents have argued these have a key role to play in helping scale advanced *commitment* to green products. Others worry these might deter supply chain engagement or other solutions like developing alternative products that rely on less carbon. Developing new ways to pool financing for hard-to-reach emissions may be critical for driving the sectoral breakthroughs we need. However, in designing these mechanisms we must learn from and avoid challenges we’ve already seen with VCM credits and RECs. Some issues to avoid & possible solutions: 1. Credits often use hard to verify counterfactuals: What if scope 3 certificates were forward looking instruments using attributional accounting? 2. Credits often fail to scale with no connection to capital markets: What if scope 3 certificates were used to demonstrate demand & de-risk investment, public & private? 3. Certificates have additionality issues especially when markets mature: What if scope 3 certificates were only allowed for emerging markets and relied on performance milestones? These are new ideas. I was hesitant about this post because more research is needed to consider the appropriate use of scope 3 certificates & develop governance, guardrails & conditions under which these might be effective. That's going to require a lot of capacity across specific sectors - could that lead to industry dominance of standards? What do you think? A careful final solution: Gather more evidence to design governance and guardrails for scope 3 market mechanisms to scale climate solutions. How could a value chain transition finance market work? Should certificates (not) be trade-able? As this is my final post, I'll leave a table here on the types of certificates I've covered this week & different uses.

Navigating the carbon markets requires more than just environmental commitment—it demands rigorous accounting and reporting. From bespoke revenue sharing mechanisms to the challenges of 'book and claim' systems, understanding these complexities can position your company for success. Explore the intricate world of carbon market accounting with us. #Accounting #CarbonCredits #EnvironmentalReporting

🌿🌟 Exciting Read Alert! Learn all about Sustainable Finance Disclosure Regulation (SFDR) in this comprehensive blog post! 📊💡 Discover how SFDR works, why it's important, and practical solutions to implement it effectively. Whether you're a finance professional or an environmentally-conscious individual, this post is a must-read! 🌍💰 Check it out here: "SFDR Explained and Solutions: A Deep Dive into Sustainable Finance Regulatory Landscape" 👉🔗 [Sustainable Finance Disclosure Regulation (SFDR) Explained and Solutions](https://lnkd.in/dCeDhAxx) 📚✨ #Sustainability #Finance #SFDR #Regulations #GreenInvesting 🌱💸

🆕 The Partnership for Carbon Accounting Financials (PCAF) recently announced its proposed developments for 2024! 📰On the blog, EcoAct analyst Ben Wrighton, outlines what's coming next in PCAF and why the financial industry-led initiative has emerged as the gold standard for measuring and reporting on #financedemisisons. 🔗👉Read now: https://hubs.li/Q02hQXcF0 #PCAF

The Latest in ESG and Stewardship Regulation – August 2024 Wondering about the latest regulatory developments related to ESG and stewardship worldwide? Read our latest ESG Financial Regulation Bulletin, authored by Noam Cherki, Hugo Gallagher, and Karina Karakulova, at: https://lnkd.in/erEq7BRp #ESG #Regulation #Regulatory