In order to help bridge te Paris Agreement Capital Transition gap, the governments of Switzerland and the Netherlands have called on Member States to sign on to a new pledge to assess and monitor the climate impact and the alignment of their financial flows with the 1.5°C temperature goal of the Paris Agreement.
The 2° Investing Initiative is providing key support to this pledge, notably via the PACTA tool which is a free, open-source methodology that analyses exposure to climate change-related sectors in equity and fixed-income portfolios, available on this platform. Thus far, the tool has been applied so far on more than 1,500 financial institutions around the world and over $10 trillion in assets under management (AuM).
More on how it works:
Governments (national or sub-national), including some of the world’s biggest financial hubs, and a growing number of financial institutions have commited at the UN Climate Action Pre-Summit to monitor their climate impact and their alignment with the 1.5°C temperature goal.
Already, in addition to Switzerland and the Netherlands, Luxembourg, Sweden, Italy, Portugal, Denmark, Norway and Spain have agreed to commit, with additional interest from other major finance hubs. Private financial institutions, their industry representatives, public financial institutions, and supervisory authorities can also voluntarily commit to take action.
Going forward, progress will be tracked to ensure the commitments made will result in climate impact in the real economy.
More on 2° Investing Initiative’s contributions: the enhanced PACTA methodology
Committed governments and financial institutions will be offered a number of free benefits, including the opportunity to participate in testing the enhanced version of our PACTA methodology in 2020. This version builds on our earlier, voluntary pilot project with Swiss pension funds and insurance companies in 2017. It also incorporates new insights from our partnership with ING and 16 other banks to road test a methodology for corporate lending.
In 2020, we’ll offer an enhanced version of the model with:
1) The consideration of climate actions in addition to portfolio exposure;
2) The ability to consider corporate loans’ climate goal alignment, and therefore make the test available for banks with global loan books;
3) A target-setting framework to be finalized in 2020
To learn more about the PACTA methodology, please contact the 2° Investing Initiative, at email@example.com.
A technical webinar will be held on October 22 at 14:00 - 15:00 (CEST). This webinar will focus on how to measure the alignment with the Paris Agreement of equity and corporate bonds portfolios as well as global bank loans with a scenario-based, free and open-source model (PACTA); how to get to impact and risk measurement as well as information on how to concretely participate in the internationally coordinated test round 2020. Information on how to register will be made available shortly.