SSBJ Exposure Draft ofSustainability DisclosureStandards based on IFRS
Sustainability DisclosureStandards
RESPONSE TO THE SSBJ EXPOSURE DRAFT BY THE
PARTNERSHIP FOR CARBON ACCOUNTING FINANCIALS
July 31st 2024

RESPONSE TO THE SSBJ EXPOSURE DRAFT
Dear Sustainability Standards Board of Japan,
Thank you for the opportunity to provide feedback on the Exposure Drafts of Sustainability
Disclosure Standards based on IFRS Sustainability Disclosure Standards (IFRS S1 “GeneralRequirements for Disclosure of Sustainability-related Financial Information” and IFRS S2“Climate-related Disclosures”).
The following response is provided on behalf of the Partnership for Carbon Accounting
Financials (PCAF) Secretariat. PCAF represents a collaborative industry-led initiative of morethan 500 financial institutions worldwide, striving to establish and execute a standardized
methodology for assessing and disclosing GHG emissions associated with financial activities. By
having developed the Global GHG Accounting & Reporting Standard (Part A), PCAF equips
financial institutions with a consistent, transparent, and harmonized methodology to quantify
and report the emissions associated with their financial activities (Scope 3, Category 15).
PCAF acknowledges the relevance of establishing mandatory disclosure metrics for social,environmental and climate risks and opportunities, that are based on global standards, including
the international standards developed by the International Sustainability Standards Board (ISSB)
and the Task Force on Climate-related Financial Risks (TFCR), respectively.
Please find the comments to selected consultation questions 1 and 11 by the PCAF Secretariat
below.
In the following comments, the PCAF Secretariat will refer to the Global GHG Accounting &Reporting Standard - Part A for financed emissions.
Thank you for considering our detailed feedback.
Sincerely,
Lina Fromme and Dylan Hauser
PCAF Secretariat

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Question 1: What do you think about the degree and method of consistency withinternational standards?
As a global standard, PCAF strongly supports the importance of international standards inensuring consistency and comparability of sustainability reports and disclosures. For instance, inorder to ensure the comparability of calculated emissions figures, a globally applied standard iscrucial. Similar to the PCAF standard, ISSB aims to develop and implement a harmonizedapproach to assessing and disclosing information on sustainability-related topics.
Nonetheless, PCAF recognizes the different and unique regional circumstances and challenges
that may exist between countries and regulatory frameworks. Rather than deviating from theinternational standard, PCAF sees additional support and resources for Japanese companies as asolution to meet the international standards.
Question 11: If you have any other comments regarding this Exposure Draft, please statethem here.
COMMENT TO THE PROPOSED CLIMATE STANDARD
PCAF acknowledges the relevance of establishing a disclosure framework for theJapanese financial industry and believes that it is essential to underscore the significance ofintegrating a reference to the Global GHG Accounting & Reporting Standard developed by PCAF
into the disclosure framework.
More precisely, we propose to add a comment or footnote to the recommendation todisclose the disaggregated Scope 3 greenhouse gas emissions in accordance with theScope 3 categories described in the Greenhouse Gas Protocol Corporate Value Chain(Scope 3) Accounting and Reporting Standard (2011) (paragraph 58 of the Climate ED):“An entity shall disclose the disaggregated Scope 3 greenhouse gas emissions by categories
relevant to the activities of the reporting entity in accordance with the Scope 3 categories
described in the Greenhouse Gas Protocol. The Partnership for Carbon Accounting Financials(PCAF) offers the Global GHG Accounting & Reporting Standard for the Financial Industry whichbuilds on the Greenhouse Gas Protocol and extends the methodology for the financial industry tomeasure greenhouse gas emissions associated with financial activities (Scope 3, Category 15).”
The following rational justifies the recommended inclusion of the footnote and therelevance of an international standard for the reporting of Scope 3 Category 15 emissions.
PCAF’s Global GHG Accounting & Reporting Standard Part A offers a globally applied
methodology to calculate financed emissions. Measuring financed emissions is central to activities
that enable financial institutions to embed climate action throughout their lending and investment
activities. Reporting financed emissions is important for showing stakeholders the climate impact

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of a financial institution’s activities. Furthermore, the act of making a public disclosure shows thatthe organization holds itself accountable for these impacts.
Financed emissions are a necessary input for climate scenario analysis. As such, financed
emissions are a key metric for financial institutions that want to understand and manage climate
related transition risks and opportunities. PCAF focuses on standardizing the measurement andreporting of emissions associated with loans, investments, insurance liabilities and other financial
products and services. A globally applied standard is crucial to ensure comparability between
calculated emission numbers. The PCAF standard Part A offers different calculation
methodologies to calculate financed emissions for different asset classes. This enables thefinancial sector to report on Scope 3 Category 15 emissions for various assets of their portfolio,including listed equity and corporate bonds, business loans and unlisted equity, project finance,commercial real estate, mortgages, motor vehicles loans and sovereign bonds. PCAF isconstantly working on expanding the calculation methodologies.
The PCAF standard plays an enabling role for international sustainability reporting anddisclosing standards by enabling the reporting of Scope 3 Category 15. Firstly, PCAF
complements the Greenhouse Gas Protocol, which offers guidance for GHG accounting for Scope
1, Scope 2, and Scope 3. The Greenhouse Gas Protocol currently does not offer a detailed
calculation methodology for Scope 3, Category 15. PCAF's methodology is closing this gap byproviding a common methodology and guideline for financial institutions to calculate emissions
associated with financial activities – which also received the Built-on Greenhouse Gas Protocol
mark. Secondly, PCAF Standard is referenced by the Task Force on Climate-Related FinancialDisclosures (TCFD) for the disclosure of GHG emissions of lending and other financial activities.
The TCFD states that emissions "should be calculated in line with the Global GHG Accountingand Reporting Standard for the Financial Industry developed by the Partnership for Carbon
Accounting Financials (PCAF Standard) or a comparable methodology" (Metrics and Targets TCFD Knowledge Hub).
Thirdly, PCAF's Global GHG Accounting & Reporting Standard assists with complying with theInternational Financial Reporting Standards (IFRS), enabling financial institutions to disclose theirfinanced emissions in accordance with IFRS S1 and S2 standards for loans, project finance, andinvestments. A guideline for disclosures of undrawn loans is currently up for development.
Moreover, IFRS observed in their effects analysis (effects-analysis.pdf (ifrs.org)) the "rapidly
expanding support of the GHG Protocol Corporate Standard and membership in the PCAF".
According to this effects analysis, companies applying the PCAF Standard are likely to face lower
costs of implementing IFRS S1 and S2, if they have the necessary processes and systems inplace.

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