Triodos Bank supports the sustainable and inclusive transition of our economies and society in line with the Paris Climate Agreement target of limiting a temperature increase from pre-industrial levels to 1.5 degrees Celsius. We believe this transition is a shared responsibility of governments, business, finance, NGOs and citizens.
In this context, in 2015, at the landmark Paris Climate Conference, Triodos Bank co-signed a Dutch Carbon Pledge to measure and disclose its greenhouse gas (GHG), or carbon emissions and to ensure these emissions are in line with the ambitions of the Paris Agreement. While GHG emissions include more than just carbon, we use the latter as shorthand for GHG emissions in this chapter. The initiative launched the Dutch Partnership for Carbon Accounting Financials (PCAF), a collaboration between Dutch financial institutions which has produced, we believe, the only carbon accounting methodology developed by financial institutions, for financial institutions, in the world. The methodology was first launched in November 2017. Triodos Bank implemented the PCAF methodology for the first time in 2018. This year we have extended the scope of our carbon accounting to 100% of our loans and funds’ investments and improved the data quality in some sectors. We will also build on this work in 2020, as Co-Chair of PCAF in The Netherlands.
We will continue to collaborate with the PCAF partners, as well as others specialising in this developing field, in future years in order to refine the models used. Importantly, during 2019, PCAF developed into a global, funded programme, which aims to substantially increase the number of financial institutions using the methodology. The initiative, which was launched during Climate Week in New York, was renamed the Partnership for Carbon Accounting Financials. Triodos Bank played a catalytic role in these developments by working with our colleagues in the Global Alliance for Banking on Values, to ensure that 28 of them committed to start assessing their carbon emissions within three years. By the year end 57 institutions had agreed to start using the PCAF approach and the number is growing.
As our main impact in the economy and society stems from our loans and investments, this harmonised approach on carbon accounting focuses on measuring the climate impact or carbon footprint of loans and investments. By accounting for the carbon emissions, institutions can be transparent about the climate impact of their loans and investments and use this information, ultimately, to set climate targets and steer investments towards a low-carbon economy. To date no methodology exists for the financial industry to set science-based targets. But that will change in 2020, and we expect to set targets for key sectors with the benefit of this methodology. In this way banks and the sector more broadly can monitor their carbon emissions, create opportunities for comparison between institutions and deliver more accountability and transparency for stakeholders.
Avoided emissions in kilotonnes of CO2