PACTA COP

PACTA Coordinated Projects (PACTA COP)

About

PACTA COP is our dedicated program in which we work together with individuals or groups of governments and supervisors to help them apply PACTA to the portfolios of their regulated entities. The goal of these coordinated exercises is to measure the alignment of both the entire financial sector and the individual participating institutions. The outcome can be used by governments, supervisors as well as participating financial institutions to inform their climate finance strategies.

Already, 2DII has helped to run the assessments in Switzerland and Liechtenstein. Additional governments or supervisors, including Austria, Luxembourg, Netherlands, Norway, and New York State, are set to do the same over the course of 2021. The assessment is also expected to be deployed in France with Finance for Tomorrow as part of Finance ClimAct, an initiative to help implement the EU Sustainable Finance Action Plan.

How it works

Governments, supervisors, and industry associations who have signed onto PACTA COP act as hosts of the coordinated assessments, inviting relevant financial institutions and associations to participate in the analysis on a voluntary basis. Participants then upload their equity and corporate bond portfolios to a dedicated, secure, and confidential platform, which in turn delivers individual climate alignment results with anonymized peer comparisons. Loan book portfolios are analyzed by the participating bank themselves. As part of this process, the participating financial institutions are also asked to respond to a qualitative survey on climate-related investment strategies, in order to capture other initiatives in greening their investments. 2DII also offers participants access to a new stress-testing module to help measure their exposure to transition risks.

As a last step, the host government, supervisor, or industry association receives an aggregate-level report containing the results for the entire participating financial sector. The report provides a unique overview of financial institutions’ exposure to key climate-relevant sectors and their alignment with the Paris Agreement goals, aggregated by peer group. All reports, both the aggregated results and the individual reports for the participating institutions are confidential, and there is no obligation whatsoever to publish any information. It is the decision of the government to publish the meta results and the individual participants to publish their individual results. Please refer to the Country Results section below for more details.

Background

PACTA COP builds off a successful pilot project that 2DII ran in partnership with the Swiss government. In 2017, the Federal Office for the Environment and the State Secretariat for International Finance invited pension funds and insurance companies to use the PACTA methodology to test the climate compatibility of their investments. 79 pension funds and insurance companies, representing about two-thirds of the total market as measured by assets under management, took part in the exercise. Afterwards, 40% of participants said that the analysis triggered climate-related actions.

Thanks to the success of this engagement, in September 2019, Switzerland and the Netherlands joined forces to launch an initiative to measure and align financial flows with the Paris Agreement’s 1.5°C goal. Under the terms of the initiative, various participating governments agreed to use 2° Investing Initiative’s PACTA methodology to compare investments and financing of their financial sectors with climate benchmarks.

In February 2021, acknowledging the long-term importance of these kinds of regular national assessments, the program was rebranded to “PACTA COP.”

For more information or questions related to this project, please e-mail: pactacop@2degrees-investing.org.

Country Results

Switzerland (2017): “Out of the fog: Quantifying the alignment of Swiss pension funds and insurances with the Paris agreement

Switzerland (2020): “Bridging the Gap: Measuring Progress on the Climate Goal Alignment and Climate Actions of Swiss Financial Institutions

Liechtenstein (2020): “Assessing the Alignment of the Liechtenstein Financial Sector with the Paris Agreement

Austria (2020): Publication scheduled for May 2021

Individual institutions’ results from PACTA COP:

Each participating institution receives a free interactive report containing the PACTA results for their submitted portfolios.

Swiss, Liechtenstein, and Austrian participants can now access their results through the Transition Monitor Platform.

Briefing for investors:

Financial institutions can participate in PACTA COP with corporate bond and equity portfolios or with loan books. For more information, please refer to the participant briefings below.

Participant briefing: Equity and corporate portfolios [EN]

Participant briefing: Loan book [EN]