When we talk about a bank’s carbon footprint, most people picture the energy used to power its headquarters, the flights its executives take, or the paper it consumes. These operational emissions exist, yet they remain almost irrelevant next to the greenhouse gases attributable to a typical financial institution’s loans, bonds, and equity investments, known as financed emissions, which exceed its direct footprint by a factor of several hundred.
The capital a bank channels through the economy carries an invisible carbon shadow now moving toward the centre of the global climate disclosure agenda.
For African financial institutions this shift is arriving faster than most boards or risk committees realise. International standards, regional regulatory signals, and new disclosure rules are redefining climate reporting in practice. Banks that continue to view financed emissions as a future issue will encounter those requirements with limited preparation time, while those that begin now will achieve both compliance readiness and a competitive position in a continent where the need for climate-aligned capital continues to outpace available supply.
Financed emissions fall under Scope 3, Category 15 of the GHG Protocol, the globally recognised framework for corporate greenhouse gas accounting. For banks this category records the share of emissions connected to their lending and investment activities, ranging from the coal plant a loan may support to the smallholder farms reached through agricultural credit and the real estate portfolios influenced by mortgage conditions.
Unlike operational emissions, which energy audits can verify directly, financed emissions call for banks to look through their balance sheets into the activities of every funded entity.
Global studies indicate that financed emissions constitute 98 to 99 percent of a typical bank’s total carbon footprint. Reporting only Scope 1 and 2 emissions, covering office energy use and business travel, therefore accounts for less than two percent of the actual climate impact embedded in operations. Investors, regulators, and civil society, increasingly attentive to the real-world effects of capital allocation, regard this gap as unacceptable.
The Partnership for Carbon Accounting Financials (PCAF) has developed into the main framework for measuring and reporting financed emissions. Launched in the Netherlands in 2015 by 14 Dutch banks, PCAF counts more than 700 signatories worldwide that together manage over $100 trillion in assets.
Its Global GHG Accounting and Reporting Standard, in the third edition released in December 2025, sets out detailed methods for listed equity and corporate bonds, business loans, mortgages, vehicle loans, and structured finance instruments.
The framework’s data quality scoring system, ranging from one for audited primary borrower data to five for broad sectoral estimates, emphasises transparency over immediate perfection. A bank publishing a score of four with its figures conveys both its current estimate and the limitations that remain, while signalling planned improvements. This stepped approach reduces initial barriers and encourages steady progress toward higher-quality data.
Adoption across Africa stays limited yet continues to expand. Among current PCAF signatories in Africa, Standard Bank Group, FirstRand, Investec, KCB, and Nedbank maintain the most detailed disclosures. CRDB Bank, Ecobank Transnational Limited, and Access Bank have announced public commitments, while United Bank for Africa holds a seat on PCAF’s Global Core Team. Activity concentrates in Southern and West Africa, with East and Central Africa showing lower participation that corresponds to prevailing differences in disclosure readiness.
The regulatory environment around financed emissions disclosure is advancing steadily. The ISSB’s IFRS S2 Climate-related Disclosures standard finalised in June 2023 and updated in December 2025, incorporates financed emissions into formal financial reporting.
Banks must present absolute gross financed emissions broken down by industry and asset class together with the calculation methods applied. The 2025 refinements introduce targeted flexibility for cases where quantification presents genuine difficulties, while the overall movement points toward mandatory and verifiable reporting.
Eight African jurisdictions, Ghana, Kenya, Nigeria, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe, have committed to adopting IFRS S2. Tanzania mandates it for public interest entities from January 2025, Kenya targets compliance for the same group by January 2027, and Nigeria’s roadmap requires listed companies to adopt by 2028. These converging timelines make financed emissions reporting an immediate priority for institutions building systems.
Central banks are also reinforcing the momentum. The Central Bank of Kenya’s 2024 Climate Risk Disclosure Framework identifies financed emissions as a priority metric and recommends PCAF methods for calculation. Comparable guidance has come from South Africa’s Prudential Authority and from statements by Nigeria’s Central Bank Governor Olayemi Cardoso. More than 25 African central banks and supervisors now participate in the Network for Greening the Financial System (NGFS), the body coordinating climate risk integration into prudential supervision.
The Partnership for Carbon Accounting Financials (PCAF) standard was developed in mature markets with strong data systems, but applying it in Africa is challenging due to the dominance of SMEs, the central role of agriculture, and a large informal sector. SMEs make up over 90% of businesses and a significant share of bank lending, yet rarely have emissions or formal financial records, forcing reliance on high-uncertainty proxies (40–50%), while agriculture contributes about 35% of GDP but receives less than 5% of formal lending and lacks Africa-specific emissions factors.
In response, PCAF’s December 2025 update introduced dedicated SME and agriculture working groups, and tools like the PCAF-Joint Impact Model offer estimates based on broader developing-country data (typically at data quality score four), though closing the gap between global standards and African realities will require sustained, regionally tailored development.
NMB Bank Plc, exemplifies leading African banks advancing sustainability: recognized as Africa’s Best Bank for Sustainability 2025 by Euromoney, has issued over TZS 400 billion in sustainability bonds and aligned its 2024 reporting with IFRS, Task Force on Climate-related Financial Disclosures, Global Reporting Initiative, and Sustainability Accounting Standards Board; it has also measured financed emissions across 61% of its portfolio using Partnership for Carbon Accounting Financials and committed to net zero by 2050, though full disclosure and assurance are still pending.
The same sequence appears across much of East Africa. As Tanzania’s IFRS S2 obligations take full effect and as international capital providers place greater weight on this information, institutions will need to extend their work accordingly.
The central difficulty lies in the shortage of borrower-level emissions data, the limited suitability of existing global estimation models for African contexts, and the constraints on scaling manual processes. Artificial intelligence and banks’ own transaction records can improve materially on broad proxies, but the deeper need is not better estimates. It is accounting infrastructure that holds up under scrutiny: systems that produce consistent, auditable outputs across reporting cycles rather than figures that shift with whoever compiled the spreadsheet.
Climate fintech initiatives have begun to respond to these needs. PeerCarbon, a Nairobi-based startup founded by Raymond Maiyo and Glenn Digollo, was built precisely to serve as that infrastructure. Accredited as PCAF’s first Accredited Partner in Africa in January 2026, PeerCarbon’s Saastain platform processes transaction data to compute Scope 1, 2, and 3 emissions, automates GHG Protocol-aligned reporting, and identifies where emissions are most concentrated across a portfolio.
Unlike a reporting tool layered on top of existing processes, Saastain functions as the institutional backbone that banks can place directly in front of auditors and regulators.
Its second product, VeriFund, addresses a separate but related discipline, enabling banks to structure and monitor green financial products and linking SME borrowers to verified clean technologies. The separation between the two is deliberate. PCAF’s third edition standard is explicit that avoided emissions must not be reported within the same accounting layer as financed emissions, a boundary that exists precisely because collapsing the two has been one of the more reliable mechanisms for greenwashing net-zero claims in climate finance portfolios.
That PeerCarbon maintains Saastain and VeriFund as structurally distinct products reflects an architecture built around what regulators and capital providers will increasingly demand.
PCAF’s third-edition standard, IFRS S2 refinements, eight African jurisdictions’ mandatory reporting commitments, and central banks’ prudential focus establish clear trajectory. Remaining gaps centered on Africa-specific emissions factors for agriculture/informal lending, concentrated expertise, and regulatory schedules outpacing preparedness. Banks can start by mapping portfolios to PCAF asset classes, prioritizing high-materiality sectors, and engaging PCAF’s Africa team and accredited partners like PeerCarbon.
Measuring financed emissions sharpens capital allocation and credibility for international climate finance. The measurement conversation has started. Which institutions lead?
“For most financial institutions, financed emissions represent the overwhelming majority of their climate footprint, yet the systems used to measure them are often still spreadsheets or one-off consulting exercises. What the sector increasingly needs is durable disclosure infrastructure that allows banks to calculate, govern and disclose financed emissions consistently across reporting cycles, particularly in emerging markets where borrower-level data is often incomplete.” ~ Raymond Maiyo, PeerCarbon Co-founder and CEO
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