At the end of December, LHV Pank joined the Partnership for Carbon Accounting Financials (PCAF) in order to identify the climate impacts of its loans and investments. Participation in the financial partnership will also enable LHV to contribute to the management of the environmental impacts of the bank’s clients.
What is PCAF and why are we joining it?
PCAF is a global partnership of financial institutions that work together to develop and implement a harmonized approach to assess and disclose the greenhouse gas (GHG) emissions associated with their loans and investments. Financial institutions that have joined the partnership will consider the climate impact of their lending and investment portfolios and will aim to comply with the Paris Agreement.
LHV has been calculating the carbon footprint of its office operations for a couple of years now, and as the next step, we are moving towards measuring and disclosing the bank’s financed emissions. The methodology developed by the PCAF helps to achieve this.
“Since 2019, we have been mapping the footprint of LHV’s office operations, we do this annually and we are gradually expanding the scope of the emissions calculation. Clearly, emissions from office and staff activities pale next to the carbon footprint of a financial company’s business operations, and the bank’s biggest environmental impact comes from its lending and investment activities. PCAF will help us move closer to quantifying the carbon footprint of the business by asset class,” said Ragne Maasel, Head of ESG at LHV.
Estonia has set itself the goal of achieving a climate-neutral economy by 2050, and the green transition of businesses will play a key role in carrying this out. Banks, in turn, are expected to lead these changes.
What are the benefits for LHV and our clients?
LHV’s goal is to help our clients reduce their climate impact, and we can do this more effectively if we have consistent and comparable data. From another perspective, there is growing pressure on banks to start measuring and disclosing the GHG emissions and the proportion of green assets associated with their portfolio, and to manage environmental and climate risks. We have established our goals and pledged to follow the principles of responsible banking, but we also need well-applicable practices to make them a reality.
“In order to better manage your impacts, you need to measure them accurately. Indeed, PCAF allows us to measure and disclose financed emissions in a way that is easy to compare with other banks. We have already started collecting additional information on the greenhouse gas emissions of the clients of our loan products and investment projects. We can make the calculation of impacts clearer and more transparent, and in the future, we will also be able to help our clients in this regard,” said Ragne Maasel.
LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group’s key subsidiaries are LHV Pank, LHV Varahaldus, and LHV Kindlustus. LHV employs over 650 people. As at the end of November, LHV’s banking services are being used by 316,000 clients, the pension funds managed by LHV have 138,000 active clients, and LHV Kindlustus protects a total of 142,000 clients. LHV’s UK branch offers banking infrastructure to 180 international financial services companies, via which LHV’s payment services reach clients around the world.
The Partnership for Carbon Accounting Financials (PCAF) was launched globally in September 2019. Currently, more than 190 banks and investors have joined the PCAF initiative. PCAF participants are working together to jointly develop the Global GHG Accounting and Reporting Standard for the Financial Industry, to measure and disclose the greenhouse gas emissions of their loans and investments. By doing so, PCAF participants are taking an important step towards assessing climate-related risks, setting targets in line with the Paris Climate Agreement, and developing effective strategies to decarbonize our society. For more information see https://www.carbonaccountingfinancials.com/.All news