When RBI publishes the climate-risk disclosure framework, this number is what it asks for.
Runs on your public disclosures. Nothing from you.
You are the Head of Sustainability at a bank or NBFC, working across the desk from the Chief Risk Officer. RBI signalled a climate-risk framework. You have no financed-emissions number the CRO can defend.
PCAF is the Partnership for Carbon Accounting Financials, a global standard that tells a bank how to measure the greenhouse-gas emissions attached to the loans and investments on its balance sheet. Indian scheduled commercial banks and NBFCs use PCAF Standard version 3.0 (2024) to size Scope 3 Category 15, which is financed emissions. The RBI Draft Disclosure Framework on Climate-related Financial Risks (February 2024) is what makes the number matter in India.
PCAF gives banks one accounting method per asset class: business loans, commercial real estate, mortgages, motor vehicle loans, listed equity and corporate bonds, project finance, and sovereign debt. Each class has its own attribution formula, its own data-quality score, and its own evidence chain.
The number lives on the risk side of the house, not the sustainability side. It feeds Pillar 3 disclosures, ICAAP, and the climate-risk stress tests RBI is now writing. It also feeds the Net Zero Banking Alliance sub-target, if the bank has signed on.
The output of a PCAF calculation is a tonnage of CO2e per crore of exposure, per asset class, with a data-quality score from 1 (best) to 5 (worst). The auditor asks for the calculation, the source of every number, and the reason for the data-quality score.
The RBI Draft Disclosure Framework on Climate-related Financial Risks (February 2024) proposes Pillar 3 climate disclosures for scheduled commercial banks. The framework references financed emissions directly. Banks that cannot produce a PCAF number by FY 2026-27 have a Pillar 3 gap the CRO signs.
Three failure modes we see on every PCAF scan.
A bank uses one blended factor for its entire corporate loan book. An auditor asks for the source. The bank has none. The number gets flagged.
The bank calculates borrower emissions on total borrower revenue instead of the PCAF attribution formula (debt + equity). The number reads too small. Assurance rejects.
Every asset class is scored 5 (worst), because the bank has no borrower-level data. RBI reads it as "you have no idea what you are financing".
Carbon-OS runs the seven PCAF asset-class methodologies straight, with the exact attribution formula for each. Every borrower gets scored on the PCAF data-quality ladder.
Every emission factor carries its source, its vintage, and its geography. Every borrower calculation carries the source of revenue and outstanding. Assurance never asks "where did this number come from".
The output is a Pillar 3-ready table by asset class, by sector, by geography. It plugs into ICAAP without translation. The CRO signs.
Four steps a Carbon-OS engagement runs for PCAF, in order.
Loan and investment book from the core banking system, tagged by asset class per PCAF definitions.
Every borrower matched to its revenue, its outstanding, and its physical activity data where available.
PCAF attribution formulas applied per asset class. Factors sourced from Ecoinvent, IPCC, and CEA India grid factor.
Each line gets a 1 to 5 score. Full evidence chain packaged for assurance.
Board level scope. The seven PCAF asset classes mapped to the bank chart of accounts.
Full loan book loaded. Borrower revenue and outstanding matched from CRM and CIBIL feeds.
PCAF attribution run. Emission-factor library set up with geography and vintage.
Every line scored. Data-quality gaps identified. Improvement plan drafted.
Pillar 3-ready table, board pack, and full evidence bundle handed over.
| Dimension | SBTi (financial sector) | CDP Financial Services |
|---|---|---|
| Purpose | Target-setting for a 1.5C pathway | Voluntary annual disclosure to investors |
| Scope | Emission-reduction targets, not a full number | Disclosure of climate strategy and financed emissions |
| Uses PCAF? | Yes, required for target base year | Yes, referenced as the accounting standard |
| Assurance | SBTi validation team, not an auditor | Reasonable assurance recommended, not required |
Every item on this list is what an auditor asks for on PCAF work.
Case-study copy for PCAF arrives in a follow-up pass. It will slot in here.
Not yet. It becomes the accounting reference the moment RBI publishes the final climate-risk disclosure framework. The draft from February 2024 already names PCAF-consistent methods. Banks that wait for the final rule ship late.
Business loans and unlisted equity carry the largest share of an Indian bank book. Motor vehicle loans and mortgages are next. Sovereign debt is small in most Indian bank books but still needs a calculation.
Every line gets a data-quality score from 1 to 5. The bank still reports the number. The number is flagged as low-quality. The regulator reads the score, not just the tonnes.
Yes, at data-quality score 5. That is the worst score PCAF allows. Every line at score 5 tells the regulator the bank has no borrower-level data. Score 5 is a starting point, not a destination.
No. PCAF covers Scope 3 Category 15 only, which is financed emissions. Scope 1 (owned vehicles, generators) and Scope 2 (purchased electricity for branches and data centres) stay on their own accounts.
A bank cannot invent one. Carbon-OS builds the library from Ecoinvent (physical processes), IPCC (national averages), and CEA India (grid factor). Every factor carries its source and vintage in the audit bundle.
Nine weeks on the phasing above, running as a single programme. Faster is possible if the loan book is clean at ingest, slower if the CRM has borrower fields missing.
The Draft Framework is the "why". PCAF is the "how". The bank reports climate risk under the Framework. It uses PCAF to size the financed-emissions number that sits inside that report.
The Framework does not require a target. SBTi does, for banks that opt in. The number is the prerequisite either way.
The Head of Sustainability builds the number. The Chief Risk Officer signs it. Both names appear on the disclosure. That is why the number has to be defensible line by line.