IndusInd Bank has joined the Partnership for Carbon Accounting Financials (PCAF), a global collaboration of financial institutions focused on developing and implementing a harmonised approach to measuring and disclosing greenhouse gas (GHG) emissions linked to financial activities.
The move marks a step forward in the bank’s sustainability strategy as it seeks to strengthen climate-related disclosures and build a more robust framework for measuring the carbon footprint associated with its lending and investment portfolio.
PCAF enables financial institutions to assess and disclose emissions associated with their financial activities, helping them identify climate-related risks and opportunities and support the transition towards a lower-carbon economy.
With more than 750 financial institutions participating globally, PCAF has emerged as a leading framework for accounting for Scope 3 Category 15 emissions, which covers emissions associated with investments and financial activities.
Building a financed-emissions baseline
For IndusInd Bank, joining PCAF is expected to help establish a credible baseline for emissions associated with its financial activities.
The methodology will enable the bank to better understand the carbon intensity of its lending and investment exposures, identify sectors with greater decarbonisation potential and integrate climate considerations more systematically into its business and risk-management processes.
The move also aligns with the bank’s broader commitment to integrating environmental, social and governance (ESG) considerations into its business strategy.
Focus on sustainable finance
IndusInd Bank has been expanding its sustainable finance agenda, with financing directed towards renewable energy, energy efficiency, sustainable infrastructure and other climate-positive sectors.
The adoption of the PCAF methodology could provide a more structured basis for assessing the climate impact of these financial activities while helping the bank identify opportunities to increase financing for transition-oriented businesses.
The framework is also expected to support the bank in engaging with customers on their decarbonisation journeys and encouraging the adoption of lower-carbon business models.
From disclosure to climate-risk management
The PCAF membership comes as financial institutions globally face growing pressure to improve the transparency of climate-related risks embedded in their portfolios.
For banks, measuring financed emissions is particularly important because a significant part of their indirect climate impact is linked to the companies and projects they finance rather than their own operational footprint.
By adopting a common methodology, IndusInd Bank can improve the comparability and credibility of its emissions disclosures while developing a clearer view of the climate risks and opportunities across its portfolio.
The initiative therefore moves the bank’s sustainability agenda beyond operational emissions towards measuring, managing and potentially reducing the emissions associated with its core financial activities.