Who is the 2° Investing Initiative?
The 2° Investing Initiative (2°ii) was set up in 2012 with the mission of aligning financial markets with climate goals. It has since become the leading global think tank – with offices in Berlin, Paris, London, and New York City – on integrating climate goals and long-term risks into investment decision-making and financial regulatory regimes.
Our work has been at the forefront of climate scenario analysis, stress-testing, and sustainable finance policies. In 2015, we helped the French government initiate the first mandatory climate disclosure and target-setting frameworks for investors. In 2017, we launched a climate scenario analysis project in Switzerland in partnership with the Swiss Federal Office for the Environment (FOEN) and the State Secretariat for International Affairs (SIF), working with two-thirds of the Swiss pension fund and four-fifths of the insurance market.
Our PACTA climate scenario analysis tool, following a three year road-test and development phase, has been applied by over 600 investors to date on over 3,000 portfolios. We have partnered with the Bank of England, California Insurance Commissioner, and European Insurance and Occupational Pensions Authority (EIOPA) on integrating climate transition risks into financial supervision and stress-tests.
In order to help expand the tool's reach in new sectors, in February 2019, we began working with a group of 17 banks to road test the PACTA climate scenario methodology for corporate lending portfolios. The methodology, as well as the metrics supporting the analysis, allows banks to study the alignment of their corporate lending portfolios with 2°C benchmarks. It represents a major step forward in climate scenario analysis, by providing banks with insights into the climate impact of their clients’ capital expenditure plans across the seven sectors the methodology covers (oil & gas, coal, power, automotive, cement, steel, and shipping). By closely examining the gaps between their lending portfolios and climate benchmarks, banks can in time also leverage the methodology for other uses, including reporting and steering towards a positive climate impact. After the end of the pilot phase in Q1 2020, the IP rights-free, open source software will be released, enabling any bank to carry out the analysis entirely autonomously.
In addition to our scenario analysis and portfolio work, we also work with consumer associations, banks, and financial supervisors on integrating non-financial investment objectives into the retail investor market.
Our work covers the entire value chain of knowledge generation, from fundamental, academic research to supporting its application by commercial actors. All of our entities operate under strict non-competition rules. We have no commercial service contracts and all of our research models and software are IP-rights free and open-source.