Two initiatives seek to standardise approaches to carbon accounting and provide a blueprint for investors to help achieve net zero global emissions by 2050.
By Paul A. Davies and Michael D. Green
On 3 August 2020, the Partnership for Carbon Accounting Financials (PCAF), a global collaboration of 70 financial institutions with total financial assets of more than US$10 trillion, released its proposed Global Carbon Accounting Standard (GCAS), aiming to provide financial institutions with a common set of robust carbon accounting methods. The proposed standard will help institutions assess and track the greenhouse gas (GHG) emissions financed by their loans and investments.
Environmental, social, and governance (ESG) issues are playing an increasing role in the global leveraged finance market. As a result, borrowers who wish to access this market should consider paying closer attention to their ESG performance. The European Leveraged Finance Association (ELFA) has called for a coordinated approach to ESG disclosure among companies that wish to access leveraged loans, with the aim to help potential investors analyse ESG issues in a more consistent and uniform manner.