Exclusive: Evenlode joins PCAF in push for harmonised emissions disclosure

The firm has changed its analysis to the value of share as a proportion of enterprise value including cash

Evenlode Investment has joined the Partnership for Carbon Accounting Financials (PCAF), committing the firm to identifying and understanding the climate change impact across its portfolios.

The PCAF is a collaboration between financial institutions worldwide to promote better measurement and disclosure of carbon emissions in the financial sector.

In November last year, the PCAF launched the Global GHG Accounting and Reporting Standard for the Financial Industry, which sets out recommendations for measuring and reporting emissions in six asset classes, aiming to help financial institutions asset climate-related financial disclosures in line with the Task Force on Climate-related Financial Disclosures, set science-based targets, report to stakeholders and inform their climate strategies and actions.

Charlie Freitag (pictured), stewardship analyst for Evenlode Investment, said: “Evenlode started measuring and disclosing financed emissions in January 2020. For the forthcoming Evenlode Portfolio Carbon Emissions report, we have aligned our methodology with the recently published PCAF Standard to ensure we measure financed emissions in the most accurate way and allow for comparison with other financial institutions.”

“The insights from this analysis help us to better target our research and engagements around climate risk, focusing on the biggest emitters and those companies that fail to report their full emissions. It also tells us where in their value chain most of their climate impact lies.”

Analysis changes

Freitag told ESG Clarity one of the main changes since aligning the firm’s methodology with the PCAF Standard has been in the attribution factor, which determines how much of a holding company’s emissions are allocated to a fund.

“For last year’s analysis, we followed the guidance set out by the TCFD, using the value of the shares held in the fund by multiplying nominal shares and share price as a proportion of market capitalisation. Following the PCAF guidance, we have changed this to the value of share as a proportion of enterprise value including cash,” she said.

“Basing the attribution of emissions on total equity and debt means other providers of capital, such as business loans, can be included in the allocation, creating a more accurate picture of who is responsible for the financed emissions and allowing for comparisons of financed emissions between asset classes. To make a comparison with our portfolio emissions last year possible, we have calculated emissions with both methodologies this year.”

As of March 2021, members of PCAF UK include Barclays, Cardano, CDC Group, Ecology Building Society, Evenlode Investment, International Business of Federated Hermes, Investec plc, Lloyds Banking Group, Nationwide Building Society, NatWest Group, PIDG – The Private Infrastructure Development Group and Virgin Money UK plc. Together, the group represents a total of over $4.9trn (£3.5trn) in financial assets through lending and investments.

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Natasha Turner

Natasha is global deputy editor at ESG Clarity, part of the Bonhill Group, and has been a financial journalist for six years. She has been shortlisted for Story of the Year and Investment Journalist of...