A Guide to PCAF Compliance and Portfolio Emissions Management

Financial institutions reporting financed emissions often reach a ceiling on the private and SME tail of a portfolio: no disclosed data, and a modelled figure with no way to explain it to an auditor. Automated platforms are changing what that estimated tail can look like.

Automated PCAF alignment and reporting

PCAF's hierarchy ranks financed emissions data quality from a company's own verified figures down to sector averages. DitchCarbon provides verified emissions data for over 2 million organisations, built on primary emissions data wherever it exists, mapped to that hierarchy before a portfolio review begins. Each record carries its source document and the assurance level that document itself states (reasonable, limited, unspecified or none), so a reporting team can see exactly what an auditor would be sampling. The underlying calculator is verified to ISO 14064-3, limited assurance, by UL Solutions, renewed annually, and every figure carries its source and change history. This does not replace a bank's own model or factor set; it sits inside it, moving the DQ5 and DQ4 tail up the hierarchy without requiring a rebaseline.

The hybrid calculation behind those figures ranks methods top down: a published product carbon footprint first, then activity or service level data a company has disclosed, then that company's own reported inventory applied to spend, and a sector average last, used only where nothing above it exists. A holding's own reported inventory applied to spend counts as primary data under the GHG Protocol, not a sector average, which is the distinction that moves a figure up the PCAF hierarchy without any extra work from the institution or the counterparty.

Tracking and managing portfolio emissions

A team of 15 analysts maintains the underlying dataset, and entity resolution against DUNS, LEI and ISIN identifiers keeps counterparty records matched to the right legal entity as portfolios change. Coverage gaps are shown rather than hidden, so a reporting team can see which holdings still rest on a generic factor and which have moved to a disclosed or modelled figure specific to that counterparty. DitchCarbon data has been used in customer emissions reports subsequently assured by ten different third-party providers, including Big Four firms, evidence a reporting team can point their own auditor to when a new data source enters the model.

Common questions on PCAF compliance and financed emissions software

Is DitchCarbon PCAF compliant?

DitchCarbon maps financed emissions data to the PCAF data quality hierarchy and shows a company specific figure for the private and SME tail of a portfolio before a request is sent. The underlying calculator is verified to ISO 14064-3, limited assurance, by UL Solutions, renewed annually. That is the claim: mapped to PCAF's hierarchy with an independently verified methodology behind it, not a certification of compliance with the PCAF standard itself, which is a determination for the institution and its own auditor.

How does automated financed emissions software reduce the estimated tail of a portfolio?

By running the hybrid calculation on every holding: a published product carbon footprint or activity data first, then the counterparty's own reported inventory applied to spend, and a sector average only where none of that exists. Coverage gaps are shown rather than hidden, so a reporting team can see exactly how much of a book still rests on a generic factor.

What evidence can a financial institution show its own auditor for financed emissions data?

Every figure carries its source document and the assurance level that document itself states, reasonable, limited, unspecified or none. The calculator itself is verified to ISO 14064-3 by UL Solutions, and DitchCarbon data has already appeared in customer reports assured by ten different third-party providers, including Big Four firms.

Can financed emissions software work alongside a bank's existing model?

Yes. The approach is additive: it moves the DQ5 and DQ4 tail of a portfolio up the hierarchy inside a bank's existing model and factor set, rather than requiring a new baseline or a change in reported targets.