PRESS

27 08, 2019

Climate Tools Workshop, Sept. 9, 2019: Aligning Climate Targets, Pledges and Actions of Financial Institutions and Corporations with the Paris Agreement

2° Investing Initiative and Beyond Ratings, with support from the Institut Louis Bachelier, are delighted to invite you to:

Climate Tools Workshop: Aligning Climate Targets, Pledges and Actions of Financial Institutions and Corporations with the Paris Agreement 

When? 9 September 2019 from 5.00pm to 7.00pm
Where? Palais Brongniart 16 place de la Bourse 75002 Paris

2° Investing Initiative will bring together asset owners, asset managers and technical experts to discuss ways to foster interaction between investors and companies, develop a more comprehensive understanding of their needs for climate-related tools, as well as showcase and gather feedback on existing and emerging tools.

Since COP21, climate alignment target-setting by investors and banks has evolved into a popular concept accepted by mainstream financial institutions and governments.

However, until now, target-setting has mostly been seen by large financial institutions as a way to measure changes in the climate assessment of their portfolio by improving the value of the underlying indicator to communicate on progress, rather than one to drive impact in the real economy.

In order to drive actual impact but also to comply with marketing regulations, it is critical to establish market standards on:

What is a relevant target from a technical perspective? (discussion on current target frameworks)
How to evaluate investment and impact opportunities triggered by the Paris Agreement objectives?
How to measure and report progress toward climate targets?How to implement a climate strategy and what existing tools can support investors’ actions?

A number of our own ongoing initiatives are related to those issues, notably the following:

  • The creation of a comprehensive PACTA climate toolkit with new functionalities such as a target-setting simulator, company reports consultation module, stress testing excel tool
  • The development of a model to identify investment opportunities arising under a 2°C carbon budget in partnership with Beyond Ratings, now part of the Information Services Division (ISD) of London Stock Exchange Group (LSEG).

Why attend ?

  • Learn from industry experts on existing and emerging climate-related tools
  • Hear from investors and corporates on how these tools are shaping their actions
  • Influence the development of emerging tools and methodologies for measuring the impact of climate actions

Programme

16h50 – 17h: Welcome
17h – 17h20: Introduction: Shifting the economy toward the objectives of the Paris Agreement
17h20 – 17h50: Support technology pathways assessment within the Financial sector: Presentation of the methodology & concept, functionalities and case study
17h50 – 18h10: Q&A and roundtable discussion
18h10 – 18h40: Setting decarbonisation targets for Institutional Investors: Deep dive into PACTA target setting module, methodology and concept
18h40 – 19h: Q&A and roundtable discussion

The workshop will be followed by an hour of networking drinks organized at Chai Brongniart 33 Place de la Bourse, 75002 Paris.

Speakers

Simon Messenger, France and UK Director, 2°investing Initiative
Rodolphe Bocquet, CEO, Beyond Ratings
Emeric Nicolas, Head of Data Science and Systems, Beyond Ratings
Emmeline Stein, Analyst, 2° Investing Initiative

To register, please email comms [at] 2degrees-investing.org

This project has received funding from the European Union’s H2020 programme under grant agreement 785087

 

7 08, 2019

Now launched: the Bank of England stress test on TransitionMonitor.com

In August, the 2° Investing Initiative officially launched the Bank of England climate insurance stress-testing tool on the Paris Agreement Capital Transition Assessment (PACTA) website. The tool uses the breakdown of exposure to different climate-relevant sectors to calculate the effects of climate stress on the portfolio’s value. UK insurance companies, as well as investors outside of the UK interested in understanding their performance under the UK stress test, can now go online to run a free, anonymised stress test. Users will be able to generate the stress test results in combination with a freely available Excel tool and the online PACTA scenario analysis software.

The tool further builds on our “Storm Ahead stress test scenario report (January 2019), which provides guidelines for integrating scenario analysis into stress tests of regulated entities.

Background

On June 18th, 2019, the Bank of England Prudential Regulation Authority launched its biennial insurance stress test, asking the biggest regulated life and general insurers to provide information about the impact of a range of stress tests on their business. The stress test also includes an exploratory exercise related to climate change, which looks into potential impacts to firms’ liabilities and investments stemming from physical and transition risks. The 2° Investing Initiative has been supporting the Bank of England with designing the climate-related aspects of the stress test.

More about PACTA

The PACTA climate change scenario analysis tool was launched in September 2018 with support from the UN Principles for Responsible Investment (UNPRI), a UN-backed investor body, and California Insurance Commissioner Dave Jones. The tool builds on a previous version that has been used by more than 250 investors, many of whom are PRI signatories, as well as four regulators, including the Dutch Central Bank, the Swiss financial regulator, and the California Insurance Commission.

The tool analyses exposure to climate-change related risks in equity and fixed-income portfolios over multiple scenarios, producing a customized, confidential output report. It has an interactive feature that allows the user to study the effects of different parameters on alignment, for example by modifying the scenarios and geographies of the analysis. It also uses graphs to help investors to see the gap between their existing portfolio and 2˚ benchmarks.

The tool is housed on TransitionMonitor.com, which includes a number of other tools, all open source and IP rights-free. These include the PACTA methodology for corporate lending portfolios as well as a target-setting module designed to help set science-based targets for financial portfolios (slated for late 2019).

The PACTA project has received funding from the European Union’s Life NGO programme under grant agreement No LIFE16 GIC/FR/00061 PACTA.

3 04, 2019

Announcement: 2° Investing Initiative is now a GRESB industry partner

We are delighted to announce that 2° Investing Initiative just became a GRESB industry partner and now belongs to the GRESB Strategic Alliance Partnership!

In the scope of our collaboration with Beyond Ratings, we are currently developing a platform for national climate technology and investment transition pathways. This model will cover 10 sectors, including Real Estate*, and will fill an essential market gap in providing, at a country level, sectoral technology pathways consistent with 2°C scenarios. Such technology road maps respond to the existing market demand of governments and investors and support corporate needs to better grasp how they can plan technological investments with regards to climate performance.

When looking for industry partners in the Real Estate sector, we identified GRESB as a leader for sustainability-related data, and connection between our two organisations was natural in terms of mission alignment on sustainability and climate topics. We are looking forward to our collaboration with GRESB in the next months!

* Other sectors already covered in the 2°ii database include: Coal production, Oil&Gas production, Power generation, Aviation, Cement, Shipping, Steel, Automotive, Agriculture (ongoing)

19 12, 2018

Appointment to FRC Future of Corporate Reporting Advisory Group

We are pleased to announce that Simon Messenger has been appointed to the UK Financial Reporting Council’s (FRC) Future of Corporate Reporting Advisory Group.
The group will provide input and give advice to the FRC as it develops its project on the future of corporate reporting.

Simon Messenger

Simon Messenger

Simon Messenger, Director for France and the UK at the 2° Investing Initiative, said: “I am delighted to have been appointed to this advisory group. It is a major project for the UK financial reporting community, which will lead to a number of recommendations for changes to regulation and practice. We look forward to contributing our own experience, in particular with regard to various European corporate reporting directives and scenario analysis disclosure, in order to shape global regulatory practices.”

The group comprises of representatives from the FRC’s major stakeholder groups – companies, investors, civil society groups, academics, auditors, audit committee chairs, lawyers and design agencies. Members of the group have been selected to ensure that there is an appropriate balance of members from different backgrounds.

You can find the FRC’s press release here.

The FRC sets the UK Corporate Governance and Stewardship Codes, as well as UK standards for accounting and actuarial work. It monitors and takes action to promote the quality of corporate reporting and operates independent enforcement arrangements for accountants and actuaries. The FRC also sets auditing and ethical standards and enforces audit quality.

 

By clicking on the link above, you will be leaving the 2˚ Investing Initiative’s website.
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 significantly to understand how their portfolios contribute to limiting global warming to well under 2°C. How much do their actions contribute to global warming or the mitigation of it? How aligned are their portfolios with the trajectories required by the International Energy Agency? A number of tools, initiatives and frameworks support investors, but how do they actually work in practice?

Come and 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 issue.

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 the 2° Investing Initiative, will present findings from our latest research and work, as well as discuss 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 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.

The 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 agenda can be found here.

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.