Facilitated emissions are greenhouse gas emissions associated with financial institutions' capital market activities. Unlike financed emissions (which arise from on-balance-sheet lending and investment), facilitated emissions arise when a financial institution helps companies or governments raise capital in the primary markets by acting as an underwriter, bookrunner, or arranger. The financial institution does not provide the capital itself; it facilitates access to capital markets on behalf of the issuer.
How Facilitated Emissions Differ from Financed Emissions
Facilitated emissions differ from financed emissions in two fundamental ways:
- Off-balance-sheet: Capital market transactions are not held on the financial institution's balance sheet. The institution earns a fee from the facilitation service, but the capital flows from investors to the issuer, never sitting on the bank's own books.
- Temporary association: The facilitation role lasts days or weeks (the deal period). Once the transaction closes, the financial institution's direct association with the instrument ends. By contrast, a loan remains on the bank's balance sheet for years.
| Characteristic | Financed Emissions (Part A) | Facilitated Emissions (Part B) |
|---|---|---|
| Balance sheet treatment | On-balance-sheet | Off-balance-sheet (fee income) |
| Duration of association | Months to years | Days to weeks (deal period) |
| Financial risk | Credit risk (loan default, equity loss) | Typically no financial risk to the institution |
| Accounting principle | "Follow the money" | "Follow the facilitation role" |
| Attribution factor | Outstanding amount / company value | League table credit × weighting factor |
Which Activities Are Covered
The Facilitated Emissions Standard (Part B, First Version, December 2023) covers primary capital market issuances:
- Public debt: All types of bonds issued for general purposes (including sustainability-linked bonds, corporate bonds, and medium-term notes)
- Public equity: Common stock (IPOs and follow-on issuances) and preferred shares
- Facilitated equity investments in private companies (private placements)
- Facilitated debt investments in private companies (private credit)
- Syndicated loans: Loans made available by two or more lenders under a common agreement
Not covered: Sovereign bonds, securitized products (ABS, MBS), covered bonds, derivative instruments, mergers and acquisitions advisory, and green bonds with known use of proceeds (under development by PCAF).
The Attribution Framework
The attribution formula for facilitated emissions has two key components:
Facilitated Emissions - Core Formula
Facilitated Emissions
GHG emissions attributed to the FI's capital market facilitation role, in tCO₂e
Attribution Factor
The FI's league table credit share of the deal
Weighting Factor
Fixed at 33%, reflecting the temporary and off-balance-sheet nature of facilitation
Annual Emissions of Issuer
Total annual GHG emissions of the issuing company, in tCO₂e
Attribution Factor: League Table Credit
The attribution factor is based on league table credit, the standard industry convention for assigning economic credit among banks participating in a deal. PCAF uses this because it reflects the actual role and economic contribution of each financial institution.
- Active bookrunner: Receives 100% credit (lead institution responsible for most deal execution)
- Passive bookrunner: Receives 50% credit (part of the bookrunner group but with less active responsibility)
- Co-manager / lead manager: Not captured under Part B (their role is too passive)
Where multiple institutions share bookrunner roles, the credit is divided equally among them.
League table credit in a bond deal
A corporation issues a $1 billion bond. The deal has three bookrunners: Bank A is the active bookrunner (receives 100% credit), and Banks B and C are passive bookrunners (each receives 50% credit). Total credits = 100 + 50 + 50 = 200.
Bank A's league table share = 100 / 200 = 50% Bank B's league table share = 50 / 200 = 25% Bank C's league table share = 50 / 200 = 25%
Bank A's facilitated volume = 50% × $1 billion = $500 million Bank B and C: $250 million each
Weighting Factor: The 33% Rule
Because the financial institution's association with facilitated transactions is temporary and off-balance-sheet, PCAF applies a weighting factor of 33% to facilitated emissions. This factor reflects that the facilitation role is meaningfully less impactful than the ongoing capital relationship represented by on-balance-sheet lending.
The 33% weighting factor was determined through PCAF's public consultation process (October 2022). It reflects the view that facilitators who arrange capital market deals have one-third of the "emissions responsibility" compared to investors who hold those instruments on their balance sheets long-term. While debated, it provides a standardised, comparable basis for reporting.
The full facilitated emissions formula is:
Facilitated Emissions - Full Formula with League Table Credit
Facilitated Emissions
Emissions attributed to financial institution i from the facilitation, in tCO₂e
League Table Share
Institution i's credit (100% for active, 50% for passive bookrunner) divided by total credits across all bookrunners
Weighting Factor
Fixed weighting reflecting the indirect, temporary facilitation role
Annual Emissions of Issuer
Total annual GHG emissions of the issuing company, in tCO₂e
Where i = the financial institution's position in the deal.
Emission Scopes Covered
Facilitated emissions cover the same GHG gases as financed emissions (all seven Kyoto Protocol gases expressed as CO2e). The scopes included mirror those reported under Part A for the equivalent issuer profile: Scope 1 and Scope 2 are required; Scope 3 should be included where available.
Reporting and Data Quality
Facilitated emissions data quality scoring follows the same Option 1 to 3 hierarchy as Part A. The emissions of the issuer are obtained either from company reports, data providers (for listed issuers), or estimated using sector-level proxies (for unlisted issuers).
Financial institutions report facilitated emissions as a separate, supplementary accounting note within Scope 3 Category 15. They must not be combined with financed emissions or used to offset them.
Business Goal Alignment
PCAF Part B identifies four business goals served by measuring facilitated emissions, which mirror the goals from Part A:
- Create transparency for internal and external stakeholders
- Manage climate-related transition risks in capital market activities
- Develop climate-friendly financial products (sustainable finance advisory, green underwriting)
- Align financial flows with the Paris Agreement's goals
As banks face regulatory and market pressure to understand their full climate impact, facilitated emissions close an important accountability gap that financed emissions alone cannot address.
If financed emissions are like owning shares in a company's operations, facilitated emissions are like being the real estate agent who helped someone buy a house. You did not buy the house yourself, you did not live in it, and your association ended when the sale closed. But you played a key role in making that transaction happen. PCAF's 33% weighting acknowledges this role as real but proportionately less impactful than ownership.
Key Takeaways
- 1Facilitated emissions arise from off-balance-sheet capital market activities (underwriting, syndication) where the bank enables rather than provides capital
- 2Attribution uses league table credit: active bookrunners receive 100% credit, passive bookrunners receive 50%, divided equally among co-bookrunners
- 3A 33% weighting factor is applied to all facilitated emissions, reflecting the temporary and indirect nature of the facilitation role
- 4Facilitated emissions must be reported as a separate supplementary note within Scope 3 Category 15 - never combined with or used to offset financed emissions
- 5Covered activities include public debt and equity issuances, private placements, and syndicated loans - sovereign bonds, ABS/MBS, and derivatives are excluded