IndusInd Bank has become a signatory to the Partnership for Carbon Accounting Financials (PCAF), a global initiative that standardises how financial institutions measure and disclose greenhouse gas emissions linked to their loans, investments, and other financial activities. The move strengthens the bank's ESG commitments and aligns it with international climate reporting standards. PCAF membership requires institutions to account for Scope 3 financed emissions, the category most banks have historically avoided disclosing publicly.

PCAF is a global industry-led initiative that provides a standardised methodology for financial institutions to measure and disclose the greenhouse gas (GHG) emissions associated with their loans and investments — technically called 'financed emissions.' These fall under Scope 3, Category 15 in the GHG Protocol framework, meaning they are indirect emissions generated not by the bank itself but by the economic activities it finances.

The significance of PCAF for Indian banking lies in the regulatory direction of travel. RBI released its 'Draft Disclosure Framework on Climate-Related Financial Risks' in 2024, drawing heavily from the Task Force on Climate-related Financial Disclosures (TCFD) framework. PCAF provides the measurement backbone that makes TCFD-aligned disclosures credible — without a standardised accounting methodology, climate commitments by banks remain qualitative and unverifiable.

Financed emissions are the largest source of a financial institution's climate impact. For a bank like IndusInd, lending to carbon-intensive sectors (steel, cement, fossil fuels) creates portfolio-level climate risk. PCAF membership signals that the bank is beginning to quantify this risk, which is the first step toward managing and eventually reducing it.

PCAF is also connected to the Net-Zero Banking Alliance (NZBA) under the UN Environment Programme Finance Initiative (UNEP FI), through which member banks commit to aligning their portfolios with net-zero emissions by 2050. India's NDC targets and the Paris Agreement's 1.5°C pathway are the macro-level commitments that make financed emissions accounting relevant at the institutional level.