Union Bank of India has become the first major Indian bank to sign the Partnership for Carbon Accounting Financials (PCAF). The bank announced this decision marking a milestone in aligning with global efforts to assess and disclose greenhouse gas emissions associated with loans and investments.
The move coincides with the Reserve Bank of India’s (RBI) recent draft guidelines on climate risk disclosures, underscoring the growing importance of transparency in climate-related financial risks.
PCAF is a global initiative that aims to develop a standardized approach for financial institutions to measure and manage their financed emissions, also known as Scope 3 emissions. These indirect emissions from a bank’s lending and investment activities can significantly exceed its operational emissions.
“By joining PCAF, Union Bank of India is taking a crucial step in measuring and managing its financed emissions, which is vital for mitigating climate risks and adhering to evolving regulatory requirements,” the bank said.
The RBI’s draft guidelines, issued on February 28, 2024, emphasize the need for regulated entities to disclose climate-related information in four key areas: governance, strategy, risk management, and metrics and targets. This initiative signals a shift towards more rigorous climate risk reporting for Indian banks, further highlighting the importance of tracking financed emissions.
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Union Bank of India’s commitment to PCAF represents a proactive approach to sustainable finance, positioning it as a leader in the industry’s response to climate change.
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