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The Climate Finance Product Scanner for retail investors and banks (KliFin-Scanner) is developing a questionnaire on non-financial objectives for retail investors. The questionnaire will enable retail investors to create an investment profile based on their individual extra-financial objectives. This can then be matched to financial products. The questionnaire and matching software will be integrated in a website available to all retail investors in Germany. It will be open-source and available as a white label solution that can be integrated into banks’ infrastructure. The project runtime is from 1 January 2018 to 30 June 2020.
The Aiming for Impact project, funded by the KR Foundation and the French environmental agency ADEME, places the impact of investment-related climate actions on the agenda. So far, most actions have focused on requesting better disclosure of company activities, and are likely to have only marginal impact on investment plans.
2016 saw the launch of the SEI Metrics Projects, which provides a free and open-source portfolio test for listed equity portfolios. Over 200 institutional investors around the world have signed up to test their portfolios, including large asset managers, pension funds, insurance companies, banks, and sovereign wealth funds. Since its launch, over 2,000 portfolios have been tested for 2°C alignment with over $3 trillion in assets under management.
A key challenge to assessing long-term and climate-related risks involves what Mark Carney, the Governor of the Bank of England, called “the tragedy of the horizon”. Long-term liabilities and assets face a ‘valley of death’ in terms of the time horizons underlying capital allocation decisions in financial markets. As a response, we have initiated the ‘Tragedy of the Horizon’ research program to quantify time horizons in the investment chain and elevate long-term risk assessments in financial markets.
2016 saw the official launch of the Energy Transition Risk project (ET Risk), a EUR2.2 million project involving S&P Market Intelligence, S&P Dow Jones Indices, Oxford University, Kepler-Cheuvreux, CO-Firm, I4CE, and the Carbon Tracker Initiative. The project seeks to develop the toolbox of energy transition risk assessment – reference scenarios for financial analysis including a 2°C scenario analysis, ET risk data, as well as financial models. The project is funded by the European Commission H2020 programme.
The International Award on Investor Climate-related Disclosures (2° Invest Award) is an initiative organized by the French Ministry of Environment, Energy and the Sea, the Ministry of Finance and Economy and the 2° Investing Initiative. The award is designed to enable the fostering of innovation and promotion of existing best-practices in climate disclosure aligned with the requirements of Article 173-VI of the Energy Transition for Green Growth Law. […]
With its Action Plan on Financing Sustainable Growth, the European Commission set the ambitious goal of “reorienting capital flows toward sustainable investment”. This objective seems ideally aligned with the strong momentum of impact-related concerns as […]
Sustainability Improvement Loans: a risk-based approach to changing capital requirements in favor of sustainability outcomes
In the context of the EU Action Plan on Sustainable Finance, the European Commission plans to explore the introduction of a Green Supporting Factor […]
Financing the ‘Clean Billion’: The role of investors and policymakers in solving the climate innovation puzzle
From shifting the trillions to addressing the billions. There is a growing narrative and traction among investors around contributing to financing the transition to a low-carbon economy. While partly motivated by questions around financial risk, […]
This report provides guidelines for building an adverse climate scenario that can be used by financial supervisors as inputs into either traditional or climate-specific stress-tests of regulated entities. The […]
Connecting the dots between climate goals, investment frameworks, and financial policies
The financial sector (institutional investors, banks, and financial service providers) plays a key role in the reallocation of capital in line with 2°C climate goals. We call this mobilization and the related changes in investment frameworks ‘2° investing.’ The role of the financial sector in this mobilization can be mapped as follows:
Supplying investment capital to make the 2° transition happen: Financial institutions and policy makers influence the supply of capital for both ‘green’ and ‘brown’ activities through their decisions framework
Anticipating changes in the demand of capital: The introduction of more stringent carbon policies, new technologies, and the potential development of climate litigation will change the risk-adjusted returns of different financial assets, creating financial risk and opportunity.
The 2° Investing Initiative [2°ii – pronounced “Two Degrees Investing Initiative”] is a multi-stakeholder think tank working to align the financial sector with 2°C climate goals. Our research and engagement activities seek to:
Align investment processes of financial institutions with 2°C climate scenarios
Develop the metrics and tools to measure the climate performance of financial institutions
Mobilize regulatory and policy incentives to shift capital to energy transition financing
We look forward to starting a conversation with you and hearing your thoughts, ideas and comments! You can find all the ways to contact us below:
97 rue La Fayette, 75010 Paris, France
Tel: +33 1 42 81 19 97
Schönhauser Allee 188, 10119 Berlin, Germany
Tel: +49 30 44318588
205 E 42nd Street, New York, NY 10017, USA
40 Bermondsey St, London SE1 3UD, UK
Tel: +44 7492 397120