Welcome to the 2° Investing Initiative's climate scenario analysis hub, supported by the UN Principles for Responsible Investment.
This website hosts a range of tools & research by 2DII and its partners, designed to help financial institutions integrate climate goals and risks into their investment processes. You can find a number of different resources, all open-source and IP-rights free:
- The PACTA climate scenario analysis tool for listed equity and corporate bond portfolios, used by more than 1,800 financial institutions around the world to date
- Information on the PACTA 2020 initiative, coordinated by the Swiss and Dutch governments with support from 2DII
- The Bank of England 2019 climate stress-test scenarios for insurance companies
- Coming soon: documentation and source code for the PACTA methodology for corporate lending, which allows banks to replicate the PACTA climate scenario model
More about PACTA
2DII devised PACTA in order to address a major gap in analyses conducted by investors, who historically based their assessment of climate risk and impact on backward-looking carbon footprinting – which is now widely viewed as an incomplete methodology.
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).
2DII began developing the PACTA tool in 2014, in partnership with academic organizations including the Frankfurt School of Finance and the University of Zurich, funding from the European Commission, German and Swiss governments, and support from UN Principles for Responsible Investment.
How it works
PACTA for investment portfolios has been available since 2018. As of June 2020, it has been used by over 1,800 financial institutions with more than USD 61 trillion in AuM, 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). In 2019, 2DII also started to develop PACTA for banks, which is currently being tested by leading banks such as ING, Citi, UBS, etc.
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.
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. We have no commercial service contracts and all of our research models and software are IP-rights free and open-source.
Our work has been at the forefront of climate scenario analysis, stress-testing, and sustainable finance policymaking worldwide.
2DII coined the concept of aligning investment portfolios with climate objectives with the introduction of the Paris Agreement Capital Transition (PACTA) methodology in 2018. Since then, this concept has been integrated into the practices of major financial institutions (with more than 1,000 users worldwide), as well as by supervisors and central banks to assess their regulated entities (EIOPA, California Department of Insurance, Bank of England, and more). The PACTA tool is a critical part of our efforts to help financial sector actors study the alignment of their portfolios – and in turn, begin steering towards a more positive climate impact.
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.