Attribution Factor — Definition and GHG Accounting Context
A bank does not cause all of a borrower’s emissions, and it cannot ignore them either. The attribution factor is the rule that settles the question: of a company’s total greenhouse gas emissions, how much belongs on the lender’s books? Get the ratio wrong — wrong numerator, wrong denominator, wrong currency — and every downstream financed-emissions figure is wrong with it.
The number also moves when a company’s market value moves, even if its actual emissions do not.
The attribution factor is a financial institution’s share of a financed entity, used to attribute a proportional slice of that entity’s emissions to the institution. It equals the outstanding amount ÷ the total value of the financed entity, and is the engine of every financed-emissions calculation under the PCAF Standard.
Attribution Factor at a Glance
| Property | Value | Notes |
|---|---|---|
| Formula | Outstanding amount ÷ entity value | The institution’s share of the financed entity |
| Numerator | Outstanding amount | Drawn loan balance or market value of the holding |
| Denominator | Varies by asset class | EVIC, equity + debt, asset value, or PPP-adjusted GDP |
| Governs | How much | Data quality score governs how reliable |
| Market sensitivity | Yes (listed classes) | Moves with share price even if emissions are unchanged |
| Timing | Same period as emissions | Denominator and emissions from the matched reporting year |
| Governing standard | PCAF Part A | Aligned with the GHG Protocol Scope 3 Standard |
Definition and Formula
The attribution factor expresses how much of a financed entity a financial institution holds, so that the same proportion of the entity’s emissions can be attributed to the institution. It is defined in the PCAF Global GHG Accounting and Reporting Standard for the Financial Industry, which aligns with the GHG Protocol Scope 3 Standard.
Attribution factor = Outstanding amount ÷ Total value of the financed entity
Financed emissions = Attribution factor × Financed entity’s emissions
The numerator is the institution’s actual exposure — the drawn loan balance, or the market value of an equity or bond holding. The denominator is the total value of the thing being financed, and choosing it correctly is the whole skill. If an institution finances ten percent of a company’s capital structure, it reports roughly ten percent of that company’s emissions.
Denominators by Asset Class
The denominator is the part that changes from one asset class to the next. The numerator is always the institution’s outstanding exposure; the denominator is the relevant measure of total entity value.
| Asset class | Denominator |
|---|---|
| Listed equity & corporate bonds | EVIC (enterprise value including cash) |
| Business loans & unlisted equity | Total company equity + debt |
| Project finance | Total project equity + debt |
| Commercial real estate & mortgages | Property value at loan origination |
| Motor vehicle loans | Total value at origination |
| Sovereign debt | PPP-adjusted GDP |
Because each asset class has its own denominator, the same institution applies several different attribution formulas across one portfolio — which is why GreenCalculus provides a separate calculator per class, starting with the listed equity & corporate bonds calculator. For the listed-asset denominator specifically, see the dedicated EVIC explainer; it is the field most often miscalculated.
Worked Example
An investor holds €10 million of equity in a listed company whose EVIC is €500 million and whose reported emissions are 40,000 tCO₂e. The holding value and the EVIC are both in euros and drawn from the same reporting period.
Outstanding equity holding = €10,000,000
EVIC of the company = €500,000,000
Attribution factor = €10m ÷ €500m = 0.02 (2%)
Financed emissions = 0.02 × 40,000 tCO₂e = 800 tCO₂e
The PCAF Listed Equity & Corporate Bonds Calculator computes the attribution factor and the resulting financed emissions automatically, and returns the data quality score alongside.
Why the Number Moves with Market Value
For listed asset classes the denominator is a market value, so the attribution factor — and therefore the reported financed emissions — changes when the market moves, even if the company’s physical emissions are unchanged. A falling share price raises the attribution factor (the same holding is now a larger share of a smaller EVIC), pushing financed emissions up. PCAF has identified this market-value fluctuation as one of the methodology’s central limitations, and reporters increasingly decompose year-on-year change to isolate it.
PCAF directs reporters to take emissions and the attribution denominator from the same reporting period, and to distinguish the part of any year-on-year change driven by real decarbonisation from the part driven by market-value movement. Reporting the former without the latter overstates progress — a portfolio can show falling financed emissions purely because share prices rose.
Common Mistakes
- Market cap instead of EVIC. Market cap ignores debt and cash and breaks comparability across capital structures.
- Property value at reporting date instead of origination for mortgages and real estate — the denominator is fixed at loan origination, not revalued each year.
- Currency mismatch between the outstanding amount and the entity value; both must be in the same currency and period.
- Forgetting the data quality dimension. The attribution factor governs how much; the data quality score governs how reliable. Both are required for a compliant disclosure.
Frequently Asked Questions
It is a financial institution’s share of a financed entity — its outstanding amount divided by the entity’s total value — used to attribute the same proportion of the entity’s emissions to the institution. It is the core mechanism of financed-emissions accounting under the PCAF Standard.
It depends on the asset class: EVIC for listed equity and corporate bonds, total equity plus debt for business loans and unlisted equity, total project value for project finance, property value at origination for mortgages and commercial real estate, total value at origination for motor vehicle loans, and PPP-adjusted GDP for sovereign debt.
Divide the outstanding amount — the drawn loan balance or the market value of the holding — by the total value of the financed entity for that asset class. For a €10m equity holding in a company with a €500m EVIC, the attribution factor is €10m ÷ €500m = 2%. Multiply that factor by the company’s emissions to get the financed emissions: 2% × 40,000 tCO₂e = 800 tCO₂e.
For listed asset classes the denominator is a market value, so a change in share price changes the attribution factor and therefore the financed emissions — even with no change in the company’s actual emissions. PCAF directs reporters to separate market-driven movement from real decarbonisation when explaining year-on-year change, so that a rise in share prices is not mistaken for emissions progress.