Slightly more than half of the 50 financial institutions in the Netherlands that signed the country’s 2019 Climate Commitment promising to align themselves with the goals of the Paris Agreement have formulated a CO2 reduction plan.

The plans are, however, hard to compare as they are often partly based on estimates. The signatories, which include 13 pension funds, also use different methods to measure carbon emissions.

Almost all signatories now measure the carbon footprint of their own investments and loans, according to a progress report by KPMG but only about half have a concrete plan on how to reduce emissions.

By next year, the remaining 49% will need to publish reductions plans of their own too, according to the 2019 Climate Commitment.

Measuring carbon emissions is not a straightforward exercise, KPMG pointed out. This is because emissions data for government bonds, smaller companies and non-listed assets are often not available or outdated.

“This makes it difficult to get comparable outcomes suitable for decision-making and governance purposes,” according to the accountancy firm.

Another complication is that financial institutions disagree on the best method to measure carbon emissions. Some prefer measuring carbon intensity based on total production, while others report CO2 emissions as a percentage of revenues or money invested.


Most financial institutions measure their carbon footprint using the so-called PCAF method (Partnership for Carbon Accounting Financials).

This method, originally developed by Dutch banks back in 2015, has become a global standard used by nine out of 10 signatories to the Dutch Climate Commitment. However, using the same method does not guarantee comparable outcomes since the PCAF guidelines are not very strict.

The PCAF links CO2 emissions to assets under management: as a result, increases in asset prices lead to a lower CO2-intensity, even if absolute levels of carbon emissions have not come down.

The alternative PACT (Paris Agreement Capital Transition Assessment) is linked to the Paris agreement. It looks at carbon emissions per unit of product, with special attention for seven carbon-intensive sectors such as fossil fules, steel and the cement industry.


Because not all companies provide the necessary data, providers that gather emissions data – such as Sustainalytics and MSCI – often need to use complementary metrics such as sector averages.

This makes it hard to determine whether companies actually make progress in reducing their emissions. Investors that aim to reduce actual emissions in their portfolios also face the problem of outdated data: available CO2-data are on average two years old.

The results of measures to reduce emissions therefore tend to only become visible with a delay.

For the original article, go to Pensioen Pro.