Union Bank of India Joins PCAF to Strengthen Climate Risk Management

Union Bank of India has taken a significant step towards enhancing its climate risk management practices by becoming a signatory to the Partnership for Carbon Accounting Financials (PCAF). This move aligns with the increasing global focus on climate change and the recent guidelines issued by the Reserve Bank of India (RBI) on climate risk disclosures.

PCAF is a global initiative that aims to develop a standardized framework for financial institutions to assess and disclose the greenhouse gas emissions associated with their lending and investment activities. By joining PCAF, Union Bank demonstrates its commitment to measuring and managing its financed emissions, a critical component of effective climate risk management for banks.

Financed emissions, often referred to as Scope 3 emissions, represent the indirect emissions that result from a bank’s lending and investment activities. These emissions can be substantial and pose significant risks to a bank’s portfolio in the face of climate change and evolving regulations. The RBI’s recent draft guidelines on climate-related financial risks have emphasised the importance of tracking financed emissions for Indian banks.  

The RBI’s guidelines mandate regulated entities to disclose information on four key areas: governance, strategy, risk management, and metrics and targets. This shift towards more stringent climate risk reporting underscores the growing urgency for Indian banks to address climate change-related risks and take proactive measures to mitigate their impact.

By joining PCAF, the Union Bank of India is positioned to play a leading role in the development of a standardised approach to carbon accounting in the financial sector. This initiative not only strengthens the bank’s climate risk management capabilities but also contributes to a more sustainable and resilient financial system.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.