We align financial markets with climate goals

The 2° Investing Initiative (2DII) is an international, non-profit think tank working to align financial markets and regulations with the Paris Agreement goals. Globally focused with offices in Paris, New York, Berlin, London, and Brussels, 2DII coordinates some of the world’s largest research projects on climate metrics in financial markets.

What we do

PACTA climate scenario analysis

2DII coined the concept of aligning investment portfolios with climate objectives with the introduction of the Paris Agreement Capital Transition (PACTA) methodology. Since then, this concept has been integrated into the practices of major financial institutions (with more than 1,500 users worldwide), as well as by supervisors and central banks (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.

Retail investing & consumer protection

2DII’s retail investing research program aims to empower consumers to achieve their sustainable investment objectives and to give financial advisors the tools they need to properly advise them. To accomplish this, in 2019 we launched a wide-ranging program, ranging from consumer surveys to market research to policy analysis. Our research also aims to support the European Commission’s new series of reforms on this topic, such as requirements for financial advisors to take clients’ non-financial investment objectives into account.

Risk management

The risks posed by climate change play out across two broad channels: physical risks (such as rising sea levels, storms, wildfires, etc.) and transition risks associated with the shift to a low-carbon economy. Yet while these risks can bring about significant disruption in financial markets, they remain outside the traditional time horizon of financial supervision. This research stream aims to deepen our understanding of and integrate these issues into risk management frameworks.

Impact measurement

Since COP21, climate target-setting by investors and banks has evolved into an increasingly popular concept. However, the lack of standardized frameworks and best practices in this field is emerging as a major obstacle to the alignment of global financial flows with the Paris Agreement goals. In order to address this issue, 2° Investing Initiative is working closely with stakeholders across the sustainable finance sector in order to develop improved methodologies for target-setting and impact measurement.

Our ideals

Non commercial & committed to the public good
We have no commercial contracts and provide all of our research open source and IP rights-free. This policy minimizes financial conflicts of interest and guarantees the public good-driven nature of our work.

Interest neutral
Our governance and our funding structure is designed to be diversified and multi-stakeholder. This helps ensure that our research does not represent a particular interest group, but rather our best understanding of the truth.

Science and evidence based
We continuously aim to expand and improve the evidence base for decision-making in sustainable finance.

Our theory

One of the three long-term goals of the Paris Agreement is “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development” (Article 2.1c). At the 2° Investing Initiative, we work to reform investment frameworks and mobilize the financial sector to reallocate capital in line with below-2°C climate goals.

Eight years after our founding in 2012 with the mission to “Promote the integration of climate constraints in financial institutions’ investment strategies and financial regulation”, many of the core concepts we devised have become integrated into market practices, as well as being placed on the regulatory agenda in the EU and beyond.

  • We helped draft the first version of France’s groundbreaking article 173, the first climate-related financial regulation in Europe, in addition to the first report commissioned by the European Commission on sustainable finance and HLEG recommendations on disclosure, supervisors and retail investors;
  • Through our research projects, SEI Metrics (2013) and the introduction of PACTA in 2015, we coined the concept of aligning portfolios with climate goals. This concept has been taken up by investors and banks with some $61 trillion in AuM, in addition to being embedded in EU regulations and the Task Force on Climate-Related Financial Disclosures (TCFD);
  • We introduced scenario analysis and climate stress tests in regional and national regulatory practice through our partnerships in the Netherlands, UK, California and EIOPA.

Annual reports