Sector guide · Financial services
Financial services reporting: financed emissions, PCAF and the UK rules that actually bind
Financed emissions are the emissions of the companies and assets a bank, insurer or investor funds, and they are where a financial institution’s climate footprint mostly sits.
UK SRS S2 asks for them; PCAF is the voluntary method most institutions use to calculate them.
This guide separates what is a rule, what is a method and what is an expectation, for banks, insurers and asset managers.
The map
Rule, method or expectation: who owes what
| Firm | UK SRS | FCA ESG sourcebook | PRA | Other |
|---|---|---|---|---|
| Listed bank or building society group | Comply or explain if listed in UKLR 6, 14, 15, 16 or 22 | Anti-greenwashing rule on product claims | SS5/25 expectations | Companies Act climate disclosures if in scope |
| Listed insurer | As above; insurance-associated emissions under S2 B63–B63A | Anti-greenwashing rule; ESG 2 if a life insurer with TCFD in-scope business | SS5/25 expectations | — |
| Asset manager | Only if the manager itself is listed; funds in UKLR 11 and 12 are excluded | TCFD entity report above £5bn; data on request (ESG 2.3.5AR); SDR labels, naming and entity report | — | Anti-greenwashing rule |
| Trust-based pension scheme | Not in scope | Not in scope | — | SI 2021/839 (DWP and the Pensions Regulator) |
Three kinds of instrument are in play, and they bind differently.
Rules in the FCA Handbook bind authorised firms.
Supervisory statements from the Prudential Regulation Authority set expectations.
PCAF, the TCFD recommendations and industry alliances such as GFANZ, which describes itself as an independent, private-sector-led initiative, are voluntary methods and commitments.
Listed banks and insurers
UK SRS S2 and financed emissions, under the final FCA rules
The FCA’s final rules in PS26/19, published on 30 September 2026, require listed companies in scope to report against UK SRS on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027.
UK SRS S2 is not mandatory; a listed bank or insurer either discloses or explains what is missing, why, and the steps it plans.
Closed-ended investment funds and open-ended investment companies are excluded, because the FCA says investment vehicles are best reached through obligations on the asset manager.
Paragraph 29(a)(vi)(2) of UK SRS S2 asks for additional information about financed emissions where an entity’s activities include asset management, commercial banking or insurance.
The standard asks for the methodology used but does not name PCAF.
Paragraph B59A is a UK addition: where an entity cannot estimate financed emissions for the same period as its financial statements, it explains why and gives a plan, with a timeline, to align them.
Financed emissions are Scope 3 category 15, so the one-year Scope 3 relief for the first period reaches them.
The full S2 requirement set is on UK SRS S2 climate disclosures, and the FCA process on UK SRS and the FCA.
| Activity | UK SRS S2 paragraphs | What is disclosed |
|---|---|---|
| Asset management | B61 | Gross financed emissions by Scope 1, 2 and 3; assets under management covered; methodology |
| Commercial banking | B62–B62A | Gross financed emissions and exposure by industry and asset class; methodology |
| Insurance | B63–B63A | The equivalent for insurance and investment activities |
| All three, UK only | B59A | Where timing does not align: why, the approach used, and a plan with a timeline |
The method
PCAF: how the attribution works
The Partnership for Carbon Accounting Financials publishes a three-part standard.
Part A, financed emissions, is in its third edition of December 2025 and covers ten asset classes.
The attribution factor is the outstanding amount divided by the value of the company or asset, and financed emissions are the sum of each factor multiplied by the counterparty’s emissions.
Data quality runs from 1, the best, to 5, the worst, and PCAF says an institution should publish a score weighted by outstanding amount or explain why it cannot.
Part B, facilitated emissions from capital-markets deals, requires a 33% weighting that must be disclosed.
Part C, insurance-associated emissions, is in its second edition.
PCAF itself notes that its later additions have not been reviewed by the GHG Protocol, so conformance claims should name the edition.
The category 15 method sits within the wider Scope 3 emissions framework; the dedicated PCAF standard guide and financed emissions reporting reference on our sister site go further.
| Asset class | Attribution denominator |
|---|---|
| Listed equity, corporate bonds, loans to listed companies | Enterprise value including cash (EVIC) |
| Loans to and equity in private companies | Total equity plus debt |
| Project finance | Total equity plus debt of the project |
| Mortgages and commercial real estate | Property value at origination |
| Motor vehicle loans | Total value at origination |
| Sovereign debt | PPP-adjusted GDP |
Asset managers and asset owners
The FCA ESG sourcebook: what changed on 25 September 2026
Chapter 2 of the ESG sourcebook holds the FCA’s TCFD-aligned rules for asset managers and asset owners such as life insurers and FCA-regulated pension providers.
A firm is exempt while its TCFD in-scope business is below £5bn, calculated as a three-year rolling average, under ESG 1A.1.2R.
Above that, it publishes a TCFD entity report under ESG 2.2.1R.
On 24 September 2026 the FCA Board made FCA 2026/59, in force the next day, as recorded in Handbook Notice 144.
It replaced product-level TCFD reporting with ESG 2.3.1BR, which puts identified climate risks into retail risk-and-return communications, and ESG 2.3.5AR.
ESG 2.3.5AR requires a firm, on request, to give a client the Scope 1, 2 and 3 data it needs for its own climate disclosure obligations, once per client per product per calendar year.
The methodology behind all of this is the TCFD framework, not PCAF, which the Handbook nowhere mandates.
ESG 2.3.9R — the five product metrics, including weighted average carbon intensity — is no longer in the Handbook.
FCA 2026/59 replaced it from 25 September 2026.
The entity-level TCFD report under ESG 2.2 remains.
Sustainability Disclosure Requirements
SDR and the anti-greenwashing rule: labels, names and claims
The Sustainability Disclosure Requirements apply to fund managers and, in one rule, to every authorised firm.
Labels. ESG 4.1.1R prohibits every firm from using the four labels, then lets a qualifying manager use one from 31 July 2024 where at least 70% of the product’s gross assets are invested in line with its sustainability objective.
A label is notified to the FCA, not approved by it, and a manager must not claim otherwise.
Names and marketing. ESG 4.3.2R restricts thirteen terms, including “ESG”, “green”, “net zero” and “impact”, in retail fund names and promotions; unlabelled funds may use ten of them on conditions.
Entity report. A manager above £5bn publishes an SDR entity-level report whether or not it uses a label, under ESG 5.4.2R.
Anti-greenwashing. ESG 4.3.1R applies to all FCA-authorised firms from 31 May 2024: any reference to a product’s sustainability characteristics must be consistent with them and fair, clear and not misleading.
The FCA’s guidance, FG24/3, says the rule covers products and services; claims a firm makes about itself fall under the Principles, the Consumer Duty and consumer law.
Extending SDR to portfolio management was consulted on in 2024 and the FCA decided not to finalise it; the anti-greenwashing rule still applies to portfolio managers.
Prudential and pensions
The PRA’s expectations, and the separate pensions regime
For banks and insurers, the PRA’s climate expectations are in SS5/25, which commenced on 3 December 2025 and replaced SS3/19 in its entirety.
SS5/25 is a supervisory statement: it sets expectations for managing climate-related risk and creates no disclosure duty.
Trust-based occupational pension schemes sit under a different regime altogether: SI 2021/839, made by the DWP and enforced by the Pensions Regulator.
That regime is not UK SRS and not an FCA rule, and schemes are outside the FCA’s listing rules.
In practice
Banks, insurers and asset managers: where the work falls
Banks. The work is the loan book: counterparty emissions, exposure by industry and asset class, and a data-quality score that starts high and falls as borrowers report.
Insurers. Two portfolios: the investments, attributed like an asset manager’s, and insurance-associated emissions from underwriting under PCAF Part C.
Asset managers. The binding work is in the ESG sourcebook and SDR; UK SRS applies only if the manager itself is listed in scope.
In every case the defensible order is the same: fix the boundary, pick and disclose the method, then improve data quality.
Scope 3 across all sectors is covered in our UK SRS Scope 3 guide, and the energy sector’s regimes, relevant to many loan books, in our energy and utilities guide.
To talk a specific question through, you can book a free 15-minute call or contact us.
What does not change the number
Credits and avoided emissions are never netted off gross financed emissions.
PCAF’s avoided-emissions guidance is separate from the core inventory, and PCAF says so.
Sources: UK SRS S2 ¶29(a); PCAF standard page
Frequently asked
Questions people ask
What are financed emissions?
Financed emissions are the greenhouse gas emissions of the companies and assets a financial institution lends to or invests in, attributed to it in proportion to its exposure. Under the GHG Protocol they sit in Scope 3 category 15 (investments). UK SRS S2 requires additional information about them from entities whose activities include asset management, commercial banking or insurance.
Is PCAF mandatory in the UK?
No. PCAF is a voluntary accounting methodology published by the Partnership for Carbon Accounting Financials. UK SRS S2 requires financed-emissions disclosures and the methodology used, but does not name PCAF, and the FCA Handbook does not mandate it. Many institutions choose it because it gives an attribution method for each asset class.
How does PCAF attribute emissions to a lender or investor?
By an attribution factor: the outstanding amount divided by the value of the counterparty. For listed equity, corporate bonds and loans to listed companies the denominator is enterprise value including cash (EVIC); for loans to and equity in private companies it is total equity plus debt; for mortgages and commercial real estate it is the property value at origination. Financed emissions are the sum of each attribution factor multiplied by the counterparty's emissions.
Is a PCAF data quality score of 1 good or bad?
Good. PCAF scores data quality from 1, the highest quality, to 5, the lowest. PCAF says institutions should publish a score weighted by outstanding amount, or explain why they cannot. CDP uses a separate scale that runs the other way, which is a common source of confusion.
Do UK SRS rules apply to banks and insurers?
Only if they are listed in one of the five categories the FCA's final rules cover: UKLR 6, 14, 15, 16 and 22. PS26/19, published on 30 September 2026, applies comply or explain across UK SRS for accounting periods beginning on or after 1 January 2027. Closed-ended investment funds (UKLR 11) and open-ended investment companies (UKLR 12) are excluded, because the FCA regulates investment vehicles through obligations on the asset manager.
Do asset managers still have to publish TCFD product reports?
Not in the old form. From 25 September 2026, FCA 2026/59 replaced product-level TCFD reporting in the ESG sourcebook with two rules: ESG 2.3.1BR, on climate risks in retail communications, and ESG 2.3.5AR, which requires Scope 1, 2 and 3 data to be supplied on request. The entity-level TCFD report under ESG 2.2 remains for in-scope firms above the £5bn exemption threshold.
Does the anti-greenwashing rule apply to banks?
Yes. ESG 4.3.1R applies to all FCA-authorised firms from 31 May 2024 when they refer to the sustainability characteristics of a product or service to UK clients or in UK financial promotions. It requires those references to be consistent with the product's characteristics and fair, clear and not misleading. Claims a firm makes about itself as a firm fall under other rules, such as the FCA Principles and consumer law.
Is PRA SS3/19 still the PRA's climate expectation?
No. PRA Supervisory Statement SS5/25 commenced on 3 December 2025 and replaced SS3/19 in its entirety. It sets out the PRA's expectations of banks and insurers in managing climate-related risks; it is not a disclosure rule.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner. Secondary commentary is never the source for a number.
- Financial Conduct AuthorityPS26/19 — final UK SRS listing rules (PDF)
Comply or explain across UK SRS (¶¶1.2, 1.7); the five categories (¶3.6) and the exclusion of closed-ended funds and OEICs (¶3.7); periods from 1 January 2027 (¶3.12).
- Department for Business and TradeUK SRS S2 Climate-related Disclosures, ¶29(a)(vi)(2) and ¶¶B59–B63A
Financed emissions by activity: asset management (B61), commercial banking (B62–B62A), insurance (B63–B63A); the UK-only B59A plan-and-timeline duty.
- PCAFThe Global GHG Accounting and Reporting Standard for the Financial Industry
Part A 3rd edition (2025), Part B (December 2023), Part C 2nd edition (2025).
- PCAFFinanced Emissions, Part A, third edition (December 2025), pp42–155 and p167
Attribution factors by asset class; weighted data-quality score as a "should".
- PCAFPCAF launches the standard for capital markets (Part B), 1 December 2023
Facilitated emissions reported with a 33% weighting that must be disclosed.
- PCAFInsurance-Associated Emissions, Part C, second edition, Table 5.2-2
"score 1 = highest data quality; score 5 = lowest data quality".
- FCA HandbookESG 2.2 — TCFD entity report (ESG 2.2.1R)
The entity-level report that survives the September 2026 changes.
- FCA HandbookESG 2.3 — product-level reporting (ESG 2.3.1BR, ESG 2.3.5AR)
Last updated 25 September 2026; ESG 2.3.9R no longer in the section.
- Financial Conduct AuthorityHandbook Notice No 144, ¶¶1.3 and 2.24–2.26
FCA 2026/59, made 24 September 2026, in force 25 September 2026.
- FCA HandbookESG 1A.1 — TCFD in-scope business and the £5bn exemption
Exempt below £5bn, calculated as a three-year rolling average.
- FCA HandbookESG 4.1 — sustainability labels
Four labels, drafted as a prohibition with a carve-out; 70% of gross asset value.
- FCA HandbookESG 4.3 — anti-greenwashing rule and naming and marketing
ESG 4.3.1R applies to all firms from 31 May 2024; thirteen restricted terms in ESG 4.3.2R.
- FCA HandbookESG 5 — SDR disclosures
Entity-level SDR report regardless of labelling (ESG 5.4.2R); £5bn exemption (ESG 3.1.3R).
- Financial Conduct AuthorityFG24/3 — anti-greenwashing guidance
The rule relates to products and services; firm-level claims fall under other rules (¶2.15).
- Financial Conduct AuthoritySustainability Disclosure Requirements
The FCA's overview of the SDR regime.
- Bank of England / PRASS5/25 — Enhancing banks' and insurers' approaches to managing climate-related risks
§3.1: commenced 3 December 2025 and replaced SS3/19 in its entirety.
- legislation.gov.ukOccupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 (SI 2021/839)
The separate DWP and Pensions Regulator regime for trust-based schemes.
- Financial Stability BoardTask Force on Climate-related Financial Disclosures
The recommendations behind the four pillars; the task force disbanded in 2023.