Potential Carbon Liability (PCL)

Potential Carbon Liability (PCL) represents the potential economic impact on a holding or fund if a particular climate scenario plays out and a carbon price is imposed to penalize emissions exceeding the allocated budget. PCL is calculated by applying projected carbon prices of a given scenario (which vary across 1.5°C, 2°C, and 4°C scenarios) to the amount of emissions that overshoot the budget. This metric allows for a consistent assessment of transition risk across different asset classes and provides a foundation for scenario analysis.

See how PCL is used in our transition risk data.