Triodos Bank supports the sustainable and inclusive transition of our economies and society in line with the Paris Agreement target of limiting the temperature increase to – at most –1.5 degrees Celsius above pre-industrial levels. At the COP26 in November 2021, we disclosed our transition plan targeting net zero as early as possible and by 2035 at the latest.
Our ambition is to significantly reduce the greenhouse gas emissions of all Triodos Bank's loans and funds’ investments, using a science-based targets approach, while also considering, for instance, biodiversity and social inclusion. Any remaining emissions will be balanced or ‘inset’ by investing considerably in nature projects that remove greenhouse gases from the air. Triodos Bank’s As One to Zero target aligns its portfolio of loans and funds’ investments with a maximum global temperature rise of 1.5 degrees Celsius.
In this context, in 2015, at the landmark Paris Climate Conference, Triodos Bank co-signed the Dutch Carbon Pledge to measure and disclose its greenhouse gas, or carbon emissions, and to ensure these emissions remained in line with the ambitions of the Paris Agreement. The initiative launched the Partnership for Carbon Accounting Financials (PCAF), a collaboration between Dutch financial institutions which has evolved into the Global GHG Accounting and Reporting Standard for the Financial Industry. Widespread adoption of the global PCAF standard will allow stakeholders to compare the GHG emissions of banks and other financial institutions. Triodos Bank played a catalytic role in these developments and is still actively taking part in the development and advocacy of the methodology. As one of the first banks to report in this way, we actively collaborate with our partners to encourage others to do the same.
CO2 emissions avoided as a result of sustainable energy projects financed by Triodos Bank
The PCAF Standard in practice
As our main impact in the economy and society stems from our loans and investments, PCAF's harmonised approach focuses on measuring the carbon footprint of these asset classes. Triodos Bank implemented and reported on the PCAF methodology for the first time in 2018 and has disclosed the carbon accounting of 100% of our loans and funds’ investments since 2019.
By mapping emissions per asset class, we can identify current hotspots within our portfolio. This provided useful guidance when setting the science-based targets following the Science Based Targets initiative (SBTi) and helps us navigate a long-term strategy that is in line with the Paris Agreement.
Guided by PCAF's Global GHG Accounting and Reporting Standard for the Financial Industry and in collaboration with the PCAF consulting team from Guidehouse, we defined our reporting and measurement principles as follows:
While GHG emissions include other gases besides just carbon, we use the latter as shorthand for GHG emissions in our reporting.
GHG emissions are measured in tonnes CO2 equivalent (CO2e) and categorised as three main types:
Generated emissions: GHG emissions arising from various economic activities. This refers to carbon that is emitted into the atmosphere.
Sequestered, or absorbed, emissions: GHG emissions stored in carbon sinks, such as trees, plants and soil etc. This refers to the actual removal of carbon from the atmosphere.
Avoided emissions: GHG emissions that are avoided from fossil-fuel power generation due to renewable energy. While avoided emissions play a very positive role, they do not remove existing carbon from the atmosphere. That is why we present these avoided emissions in our graphs and tables, beneath actual emissions. And it is important to note that our avoided emissions figures will, eventually, start to decline, even as the amount of energy generated by the renewable energy projects we finance increases. This is because the wider energy system is in the process of becoming less carbon-intensive overall. Energy from fossil-fuel sources will continue to decline while energy from renewable sources is increasing, creating a more sustainable energy system.
In the calculation of our financed emissions we have applied the attribution approach. This means that we calculate the emissions as they relate to the proportion of our finance in a project or on a customer's balance sheet. For example, if we are responsible for half of a project’s finance, we report half of the emissions generated or avoided by that project. This attribution approach is a more accurate reflection of Triodos Bank’s responsibility for the GHG emissions it finances and is consistent with the PCAF methodology.
We aim to improve the overall data quality level of our carbon footprint measurements each year to improve our insights and better steer on targets. The data quality levels are defined in the ‘data quality’ table below.
This year, overall data quality dropped from 3.1 to 3.5 on a five-point scale, with 1 being considered the highest score. The main cause of the lower data quality score is the data used to calculate the carbon emissions of the Dutch mortgage portfolio. In previous years, we used real energy consumption data from our portfolio (provided in 2019 by the Dutch Central Bureau of Statistics), which is a better ranked data source. For this year, however, it is considered to be outdated. Instead, for 2021 we have applied the energy label method, which has a lower data quality score. We aim to improve this score in the coming year by also using m2 data.
For 2021 reporting we changed the building-related emission factors based on CBS and ECN data to the new PCAF 'Laudes' database. On 14 Februari 2022 PCAF launched the European building emission factor database (funded by the Laudes Foundation). This publicly available database will enable the financial industry to measure and track the financed emissions of their European building portfolios towards net-zero. Triodos Bank is one of the first to actually use this database, and in doing so has been involved in the validation process.
For readers with a more detailed interest, a separate GHG accounting methodology report on how the PCAF standard was applied to our portfolio is available on our website.