New Delhi, Sep 9 (PTI) Union Bank of India on Monday announced its decision to become a signatory to the Partnership for Carbon Accounting Financials (PCAF).

This step aligns with the growing global emphasis on climate risk management and the recent draft guidelines issued by the Reserve Bank of India (RBI) on climate risk disclosures.

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PCAF is a global partnership of financial institutions working to develop and implement a harmonized approach to assess and disclose greenhouse gas emissions associated with loans and investments, Union Bank said in a statement.

By joining PCAF, Union Bank of India demonstrates its commitment to measuring and managing its financed emissions, a crucial aspect of climate risk management for banks, it said.

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"Financed emissions, often referred to as Scope 3 emissions, represent the indirect emissions that result from a Bank's lending and investment activities. These emissions can significantly outweigh a Bank's operational emissions and pose substantial risks to its portfolio in the face of climate change and evolving regulations," it said.

The importance of tracking financed emissions has been underscored by the RBI's recent draft guidelines on 'Disclosure framework on climate-related financial risks, 2024', issued on February 28, 2024, it said.

The framework mandates regulated entities to disclose information on four key areas: governance, strategy, risk management, and metrics and targets.

The RBI's draft guidelines signal a shift towards more stringent climate risk reporting for Indian banks.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)