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"Warming Stripes" | Credit: Ed Hawkins (University of Reading)
"Warming Stripes" | Credit: Ed Hawkins (University of Reading)

Measuring the alignment of financial portfolios with climate scenarios

Developed by 2° Investing Initiative with backing from UN Principles for Responsible Investment, PACTA enables users to measure the alignment of financial portfolios with climate scenarios as well as to analyze specific companies.

In September 2020, 2DII also launched PACTA for Banks, a free, open-source climate scenario analysis toolkit for the corporate lending sector. Developed with the input of leading global banks, universities, and NGOs, PACTA for Banks enables users to measure the alignment of their corporate lending portfolios with climate scenarios across key climate-relevant sectors and technologies.

Thus far, PACTA has been used by over 1,500 financial institutions worldwide, as well as by supervisors and central banks to assess their regulated entities (e.g. European Insurance and Occupational Pensions Authority (EIOPA), California Department of Insurance, Bank of England, and more). On average, more than 600 portfolios are tested every month using PACTA.

How PACTA works

Building off a vast climate-related financial database, the PACTA tool aggregates global forward-looking asset-level data (such as the production plans of a manufacturing plant over the next five years), up to parent company level. The tool then produces a customized, confidential output report, which allows investors to assess the overall alignment of their portfolios with various climate scenarios and with the Paris Agreement.

PACTA for Banks allows users to get a granular view of the alignment of their corporate loan books by sector and related technologies, at both the corporate client and portfolio level. Banks can use this information to help steer their lending in line with climate scenarios; to inform their decisions around climate target-setting; and to gain insights into their engagement with clients on their respective climate actions.

In addition to enabling users to measure the alignment of their portfolios, PACTA also helps investors implement the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), as well as comply with related regulations (Article 173 of France’s Law on Energy Transition for Green Growth, upcoming EU disclosure requirements, and more). Find out more about key figures and usership here.

About the 2° Investing Initiative

Founded in 2012, the 2° Investing Initiative (2DII) is an international, non-profit think tank working to align financial markets and regulations with the Paris Agreement goals.

Working globally with offices in Paris, New York, Berlin, and London, we coordinate the world’s largest research projects on climate metrics in financial markets. In order to ensure our independence and the intellectual integrity of our work, we have a multi-stakeholder governance and funding structure, with representatives from a diverse array of financial institutions, regulators, policymakers, universities, and NGOs.

For more information, please visit 2degrees-investing.org, or contact us at info@2degrees-investing.org.

 


Partners

The tool provided on this website is supported by the UN Principles for Responsible Investment. It has received financial support from the European Union’s Life programme under LIFE Action grant No. GIC/FR/00061 PACTA.

PACTA has also received funding from the International Climate Initiative (IKI). The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) supports this initiative on the basis of a decision adopted by the German Bundestag. The funders are not responsible for any use that may be made of the PACTA tool and/or any information on this website.

PACTA builds on research previously funded by the EU H2020 Sustainable Energy Investing Metrics project. It has also received funding from the ClimateWorks Foundation and the Swiss Environment Ministry.