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1 11, 2018

Seine, sunrise and sea-levels – A breakfast boat cruise on climate scenario analysis

The 2° Investing Initiative is pleased to invite you to a Finance for Tomorrow week-affiliated event:

 

Seine, sunrise and sea-levels

A breakfast boat cruise on climate scenario analysis

 

When? Tuesday, 27 November 2018 at 7.45am for departure at 8.00am

Where? Embarcadere Quai de l’horloge – Boat: Henri IV

Since the Paris Agreement, demand from the investment community has been rising exponentially to understand how their portfolios contribute to limiting global warming to well under 2 degrees. How much do their actions contribute to the warming or mitigate it? How aligned are their portfolios with the trajectories required by the IEA? A number of tools, initiatives and frameworks support this work, but how do they work in practice?

Come join us for a breakfast boat cruise on the Seine to find out more about climate scenario analysis in real-life and hear from industry experts on how they are tackling the question.

Dave Jones, California Insurance Commissioner, and Leon Wijnands, ING’s Global Head of Sustainability, will discuss their own approaches to scenario analysis and some of their initial results. Simon Messenger, Head of Corporate and Investor Engagement at 2° Investing Initiative will present findings from our latest research and work as well as future trends.

 

AGENDA

7.45am Arrival of guests

8.00am Departure of boat and breakfast

8.15am Scenario analysis and real-life application:

1) Scenario analysis in practice

State of California: Dave Jones, California Insurance Commissioner

2) Scenario analysis in practice

Project Terra: Leon Wijnands, ING’s Global Head of Sustainability

3) Presentation of recent research, findings and PACTA tool

Simon Messenger, Director, 2° Investing Initiative

9.00am Networking

9.30am Return to Pont Neuf

Let us know if you need any help in getting back to the Climate Finance Day venue.

 

I will attend this event

 

We look forward to seeing you in Paris.

Your 2° Investing Initiative Team

 

This conference is part of the official programme of Finance for Tomorrow week

This project has received funding from the European Union’s Life programme under grant agreement LIFE16/GIC/FR/000061

You can reach us at: comms@2degrees-investing.org

30 10, 2018

Can low-carbon benchmarks save the planet?

As a follow-up to the EU’s Action Plan on Financing Sustainable Growth, the European Commission has published a legislative proposal on low-carbon benchmarks and positive carbon impact benchmarks.

The 2° Investing Initiative and WWF are hosting an event to bring together market experts and policymakers to discuss the best way forward to shape the benchmark regulation and contribute to climate mitigation in Brussels, on 26 November 2018.

The event is by invitation only. The final agenda will be published in due course.

2 10, 2018

Webinar recording on climate scenario analysis and our PACTA tool

A recording of the webinar from 8 October 2018, in which you can hear from the Principles for Responsible Investment, the Insurance Commissioner of California and us about climate scenario analysis and the PACTA tool we have developed to assess the alignment of investor portfolios with the goals of the Paris Agreement, is now available here.

14 09, 2018

Media statement: ING reveals 2°C scenario analysis method for corporate lending portfolios

Today ING announced that it will start steering its €500 billion lending portfolio towards meeting the climate goals of the Paris Agreement after developing a cutting-edge, precise method to do this with the 2˚ Investing Initiative (2˚ii). The Paris Agreement aims to keep global warming as a result of climate change to two degrees Celsius or below.

ING had been working for several years to figure out the best way to measure the climate impact of its lending portfolio. After piloting a financed-emissions approach that ultimately could not be used, ING sought alternative methods for measuring and steering.

In early 2018, ING partnered with 2˚ii to extend the initiative’s existing 2°C scenario analysis framework for equity and bond portfolios – the so-called Paris Agreement Capital Transition Assessment or PACTA tool – to corporate lending portfolios. As a result, 2˚ii and ING have together taken the lead and successfully developed a methodology that could become the standard for how international banks set science-based targets. ING calls this the Terra approach.

“We are delighted that a multinational bank such as ING helped us pioneer this methodology for financial service providers,” said Jakob Thomä, managing director of 2˚ii. “The methodology – and its resulting 2˚C-aligned portfolios – will be an important contributor to combating climate change. We hope other banks will follow suit and adopt it as well.”

Compared to other measurement approaches, this science-based approach could ultimately have a significant impact because it enables banks to direct their money towards financing technologies that support a low-carbon future instead of those that only measure a carbon-rich past.

The approach focuses on the sectors that produce the most greenhouse gas emissions. It also concentrates on the technology changes that companies in those sectors need to make in order to be aligned with the climate goals of the Paris Agreement. For example, it is not enough for automotive companies to lower emissions by producing fewer petrol-powered cars – they have to manufacture more electric cars too.

“Banks have a responsibility to finance change and we are stepping up to that,” said Isabel Fernandez, head of ING Wholesale Banking, who will announce the Terra approach in her speech at the Global Climate Action Summit in San Francisco today. “We believe the Terra approach will enable us to make a real difference.”

Like the PACTA tool, the Terra approach is open-source. ING is collaborating with other banks and stakeholders to encourage them to also work with this methodology.

“All banks will benefit from having an industry-wide standard, greater transparency on their alignment with the climate goals of the Paris Agreement and, as a result, collective effectiveness in fighting climate change,” added Fernandez.

To learn more about the Terra approach, please contact sustainability@ing.com or contact@2degrees-investing.org

ENDS

For more information contact:
Marrika van Beilen
Media Relations
ING Group +31654257830
Marrika.van.beilen@ing.com

Nina Roehrbein
Head of Communications
2° Investing Initiative
comms@2degrees-investing.org

About ING
ING is a global financial institution with a strong European base, offering banking services through its operating company ING Bank. The purpose of ING Bank is to empower people to stay one step ahead in life and in business. ING Bank’s more than 52,000 employees offer retail and wholesale banking services to customers in over 40 countries. ING Group shares are listed on the exchanges of Amsterdam (INGA AS, INGA.AS), Brussels and New York Stock (ADRs: ING US, ING.N). Sustainability forms an integral part of ING’s strategy, which is reflected in ING’s ranking as a leader in the banks industry group by Sustainalytics. ING Group shares are included in the FTSE4Good Index and in the Dow Jones Sustainability Index (Europe and World), where ING is also among the leaders in the banks industry group.

About 2°ii
The 2° Investing Initiative (2°ii) was set up in 2012 with the mission to align financial markets with climate goals. It has since become a pioneering think tank – with offices in Berlin, Paris, London and New York – on the integration of long-term risks and policy objectives into financial markets and regulatory frameworks. Over the past few years, 2°ii has led one of the largest global research programmes on long-term risks in financial markets, working with over 50 research partners. A core principle of its mission is to reduce the transaction costs across companies, financial institutions and policymakers, while guiding financial markets towards the long-term future.

3 09, 2018

Launch of first online & free climate scenario-based analysis tool

The PRI, together with California Insurance Commissioner Dave Jones, is pleased to support the launch of a free-to-use, online tool – developed by the 2⁰ Investing Initiative – for assessing climate transition risk in investor portfolios.

This tool, the Paris Agreement Capital Transition Assessment or PACTA tool, analyses exposure to transition risk in equity and fixed income portfolios over multiple scenarios, thereby helping to reduce information barriers on how climate scenario analysis can be done.

Most significantly, the tool allows investors to see the gap between their existing portfolio and two-degree benchmarks. An earlier version has been used by over 250 investors – many of whom are PRI signatories – and four regulators, including the Swiss financial regulator, the California Insurance Commission and the Dutch Central Bank.

The tool offers a solution to a number of existing barriers, notably:

  • The tool, and the database behind it, is a solution to the problem of where investors can obtain data in the event that companies do not disclose information on their carbon emissions.
  • It represents the gap between a two-degree benchmark and investor portfolios and the graphs are adjustable by sector, region, type of climate reference scenario and other indicators. The tool can be downloaded in a 30-page output report, which is confidential to the user.

The launch of the tool supports the PRI’s ongoing commitment and its actions to help institutional investors transition to a low-carbon environment, including the alignment of the PRI Reporting Framework with the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD). The recommendations provide a globally consistent framework to help translate non-financial information about climate change-related risks into financial metrics.

Incorporating the TCFD recommendations requires institutional investors to obtain better information if they are to navigate their way efficiently through the energy transition. A key TCFD recommendation is the need for forward-looking analysis to assess how investors’ exposure to climate change-related risks and opportunities might impact on portfolio performance over time. Questions, however, linger about how this approach can be implemented, consistently, by investors in practice.

Speaking about the launch of the tool, PRI CEO Fiona Reynolds said: “We are delighted to partner with the 2⁰ Investing Initiative on the launch of the PACTA tool. The PRI anticipates that this tool will help reduce information barriers for investors on how climate scenario analysis could be done. The launch of this tool, as well as solutions offered by other service providers, means there are even fewer reasons for investors not to get started.”

Stan Dupré, CEO and founder of the 2° Investing Initiative, said: “We developed the PACTA tool to enable investors to conduct climate change scenario-based analysis of their portfolios. It can help them comply with the TCFD recommendations, French Article 173 and the upcoming disclosure requirements at the EU level – at no cost. The PACTA tool also fosters comparability between portfolios in the absence of a reporting standard on metrics. This is what makes it attractive to financial supervisors, such as the California Department of Insurance, and governmental authorities, such as the Swiss Federal Office for the Environment. The PRI, with its 2,000 investor signatories, is critical to the deployment of the approach, which is why we are pleased to be partnering them in the online launch of the PACTA tool.”

Also commenting on the launch, David Jones, California Insurance Commissioner, said: “I congratulate the 2° Investing Initiative and the PRI on the launch of PACTA – the free-to-use, online scenario analysis tool. Recognising the uncertainty of the future policy and market pathway as it relates to the transition to a low-carbon economy, scenario analysis can highlight the extent to which a portfolio is exposed to this uncertain and associated risk, as well as the expected evolution to this exposure over time.

”We engaged the 2° Investing Initiative, an expert in climate-related financial risk and which has partnered with other financial regulators, to conduct this analysis for insurers operating in California with over US$100 million in annual premiums. One of the key aggregate results of the scenario analysis reinforced our earlier conclusion that thermal coal investments face long-term financial risks despite any short-term fluctuations in market price. In addition to publishing the aggregate data from this analysis, individual insurer reports were sent to over 100 insurance companies – by size of their investment portfolio – operating in California with more than US$100 million in annual premiums, which we believe will help these companies better evaluate their exposure to transition risks.”

Jean-Francois Coppenolle, Senior Manager at Aviva Capital, Aviva Insurance, said: “As investors like us take stock of the climate change-related risk and opportunities from companies we invest in, with regard to equities as well as corporate bonds, the open-source PACTA tool not only helps us understand how aligned we are with the global climate goals today but also provides a five-year trajectory. This informs us of how the investment decisions we make today will contribute to, or detract from, our ambition to steer the change required for a low-carbon and more sustainable future.”

A webinar on the PACTA tool – set to take place in October – will be announced in due course.

 

 

 

 

 

 

 

 

 

ENDS

For more information contact:
Joy Frascinella
Head of PRI
The Principles for Responsible Investment (PRI)
00 44 (0)203 714 3143
Joy.frascinella@unpri.org

Nina Roehrbein
Head of Communications
2° Investing Initiative
Nina@2degrees-investing.org

About the PRI
The United Nations-supported Principles for Responsible Investment (PRI) Initiative is an international network of investors working together to put the six principles for responsible investment into practice. Its goal is to understand the implications of Environmental, Social and Governance issues (ESG) for investors and support signatories to incorporate these issues into their investment decision making and ownership practices. In implementing the principles, signatories contribute to the development of a more sustainable global financial system. There are currently more than 1,900 signatories to the PRI which collectively manage over US$80 trillion in assets. Visit www.unpri.org

About 2°ii
The 2° Investing Initiative (2°ii) was set up in 2012 with the mission to align financial markets with climate goals. It has since become a pioneering think tank – with offices in Berlin, Paris, London and New York – on the integration of long-term risks and policy objectives into financial markets and regulatory frameworks. Over the past few years, 2°ii has led one of the largest global research programmes on long-term risks in financial markets, working with over 50 research partners. A core principle of its mission is to reduce the transaction costs across companies, financial institutions and policymakers, while guiding financial markets towards the long-term future.

 

25 07, 2018

2° Investing Initiative appoints Simon Messenger to lead engagements with companies and investors

Global independent think tank the 2° Investing Initiative (2°ii) has appointed Simon Messenger as Director of France and UK to lead its engagements with companies and investors on climate scenario analysis.

Stan Dupré, Founder of 2°ii, said: “We are delighted to have Simon on board. He will bring a vast amount of experience and expertise to oversee our expanding programme of work to align the financial sector with the 2°C climate goals of the Paris Agreement. Particularly exciting is that he will help to develop further our pioneering work on 2°C scenario analyses with companies and investors in response to the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).”

Simon has 15 years of academic and professional experience in sustainable finance and sustainability reporting. As Managing Director of the Climate Disclosure Standards Board (CDSB), he worked with investors, companies and regulators on the disclosure of environmental and natural capital information in mainstream financial reports. He also led CDSB’s work in relation to the TCFD recommendations. Prior to this, Simon was Head of Consulting at the Energy Saving Trust and a sustainability manager at PwC and Deloitte. He holds two first-class degrees in environmental and climate change science and was highly commended in the Young Sustainability Executive category at the BusinessGreen Leaders Awards in June 2018.

Joining 2°ii, Simon Messenger, Head of Corporate and Investor Engagement and Director for France and the UK, said: “This is an extremely exciting opportunity, and I am looking forward to working with 2°ii on its groundbreaking climate change work to enable the financial services industry to better align itself with the 2°C climate goals.”

The think tank’s scenario analysis tool – the so-called Paris Agreement Capital Transition Assessment (PACTA) tool – has been one of the most popular and successful projects 2°ii has run. To date, the tool has been applied by over 250 institutional investors, as well as several financial supervisors, including the California Insurance Commissioner’s Office and the Swiss government. It enables investors to benchmark their exposure under 2°C climate scenarios against peers. The tool is also supported by the UN Principles for Responsible Investment and is set to be made freely available online this summer.

27 06, 2018

Discussion Paper: The Elephant in the Room – Aligning global bonds markets with climate goals

June 2018: While the discussion of bond markets has largely focused on the green bond space, which currently only represents a marginal share (<0.5%) of outstanding bonds, this discussion paper focusses on creating a broader understanding of the interface between climate goals and bonds.

Full Text

28 05, 2018

Discussion paper: Shooting for the moon in a hot air balloon? Measuring how green bonds contribute to scaling up investments in green projects

May 2018: This new discussion paper aims to pave the way for the development of a framework for assessing and moving forward the “contribution of green bonds to scaling up the investments in green projects”. The paper focuses on the case of ‘Use-of-Proceeds Green Bonds’ (UoP GB) that represent 95% of the market in 2016. It discusses the link between
increasing investment in UoP-GB on the one hand, and the growth of investments in green projects by issuers on the other hand, suggesting how this approach can be enhanced to achieve further impact.

Full Text