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June 3, 2021

2DII launches expert-led, multisector Advisory Group to advise on new governance for PACTA

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The group’s mission is to recommend a long-term, multi-stakeholder governance framework, ensuring PACTA’s long-term scientific integrity, promoting co-ownership of the open-source methodology, and contributing to the harmonization of disparate climate alignment methods

The independent, non-profit think tank 2° Investing Initiative has launched an expert-led advisory group to advise on a new multistakeholder governance approach for the Paris Agreement Capital Transition Assessment (PACTA) climate scenario analysis and alignment methodology. As PACTA’s community of users and capacities has expanded, 2DII is keen to address key governance, operational, and conceptual questions in collaboration with a diverse array of climate finance specialists.

The Advisory Group’s main mission will be to propose a long-term governance framework, which in turn will help ensure the methodology’s scientific integrity and independence; promote co-ownership of the open-source methodology by its stakeholders; and contribute to the harmonization of the growing number of climate alignment concepts and methodological choices.

In addition to this core mission, over the course of the next nine months, the group will also be consulted on any methodological changes that arise, such as the integration of new metrics to enable target-setting, changes in accounting principles, or the inclusion of new sectors. To ensure full transparency, the Advisory Group will publish key meeting outcomes, an interim governance proposal targeted before COP26, and the final governance proposal slated for release in Q1 2022.

The group is composed of experts from the financial, NGO, academic, and government/international organization sectors, as well as observers from climate-focused philanthropies and investor coalitions. All of the members are acting in a personal capacity. Find the full list of members in alphabetical order below.

Members:

  • Nicolette Bartlett, CDP
  • Julia Bingler, ETH Zurich
  • Giorgio Capurri, UniCredit
  • Charlotte Gardes, Paris II-University
  • Eniko Horvath, PRI (Principles for Responsible Investment)
  • Lars Erik Mangset, KLP
  • Jennifer de Nijs, Luxembourg Ministry of Finance
  • Brian O’Hanlon, RMI
  • Nicola Ranger, UK Center for Greening Finance and Investment
  • Martijn Regelink, World Bank
  • Silvia Ruprecht/Gabriela Blatter, Swiss Federal Office for the Environment
  • Michel van den Berg, Green Mountain Climate Consultancy (chair)
  • Jan Vandermosten, WWF European Policy Office
  • Jared Westheim, Goldman Sachs Group

Observers:

  • Ilmi Granoff, ClimateWorks Foundation
  • Anna Irmisch, European Climate Foundation
  • Noémie Klein, Asset Resolution
  • Jose Lazuen, Institutional Investors Group on Climate Change (IIGCC)
  • Simon Messenger, 1Planet Advisory

Dr Nicola Ranger, Deputy Director, UK Centre for Greening Finance and Investment, said: “PACTA is already helping investors, governments and wider financial institutions around the world to manage risks and align their strategies and investment portfolios with the transition to a low-carbon economy. Information is crucial to integrate climate into financial decisions and PACTA’s open, independent, and science-based approach makes it a powerful tool in our global arsenal. I am delighted to be part of helping PACTA to continue evolve as a vital public good alongside such a fantastic group of experts.”

Lars Erik Mangset, Chief Advisor Climate Change, KLP, said: “As asset owners are seeking to align their investment portfolio to the ambitions in the Paris agreement, it is critical that we move towards a standardisation on how such Paris alignment assessment should be conducted. The combination of scientific integrity, access to actual company-level climate data, and public accessibility positions PACTA in a leadership position. A multistakeholder governance approach ensures that different stakeholders’ views are considered, which increases the uptake of this alignment tool in the years to come.”

Jan Vandermosten, Senior Sustainable Finance Policy Officer at the WWF European Policy Office said: “This Advisory Group will boost the transparency of the PACTA tool and the way it’s run. The fact that PACTA is open source and free of charge has played a huge role in bringing climate assessments into the mainstream. Investors will continue to need tools and methodologies like this due to the increasing requirements on them to show whether their portfolios align with the Paris climate goals, such as the EU Disclosure Regulation.”

Maarten Vleeschhouwer, Head of PACTA at 2DII, said: “With an ever-growing PACTA community of users among financial institutions, governments and supervisors, it’s important to develop a more permanent governance of the open source PACTA methodology. We are grateful to this amazing group of experts that will tackle a crucial question: how to ensure that PACTA remains a truly public good?”

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More on PACTA & the Advisory Group

The 2° Investing Initiative (2DII) is an independent, non-profit think tank working to align financial markets and regulations with the Paris Agreement goals. Founded in 2012, it has a multi-stakeholder governance and funding structure, with representatives from a diverse array of financial institutions, regulators, policymakers, universities, and NGOs. In 2015, 2DII coined the concept of aligning financial portfolios with climate benchmarks with the launch of PACTA.

PACTA is a free, open-source methodology and tool that measures the alignment of corporate bonds, loans, and listed equities in eight sectors with various climate change scenarios consistent with the Paris Agreement. It was developed by 2DII with a wide range of partners, including WWF EU, CBI, Kepler Chevreux, University of Zurich, Frankfurt School of Finance, and with support from the UN Principles for Responsible Investment. So far, it has been used by more than 3,000 financial institutions around the globe. Notable partnerships with governments, supervisors, and international organizations include: the European Insurance & Occupational Pensions Authority (EIOPA), the Dutch Central Bank, the California Department of Insurance, Swiss and Austrian governments, the IFC and IDB. On average, more than 600 portfolios are analyzed with PACTA each month.

Historically, despite the fact that PACTA was developed in partnership with several stakeholders, 2DII has acted as the main gatekeeper of the methodology. However, as PACTA’s capabilities, userbase, and range of methodological choices have expanded, it is time to expand the base of decisionmakers beyond 2DII and its team. This will have a number of benefits:

  1. Ensuring that PACTA’s future evolution will be reviewed by a range of experts coming from multiple backgrounds and perspectives, strengthening the scientific integrity and independence of the methodology.
  2. Enabling buy-in and a sense of co-ownership for PACTA as an open-source, public good, by ensuring that a range of views and expert opinions are integrated into future enhancements of the methodology.
  3. Supporting harmonization of key alignment concepts and methodological choices. In recent years, as the number of “alignment methodologies” has ballooned, a minimum level of common understanding of key concepts and methodological choices is needed to ensure scientific rigor and comparability for governments and supervisors. A revised governance approach will thus help articulate how PACTA interplays with and complements other approaches.

More on PACTA: https://www.transitionmonitor.com/

Contact/questions: please email comms at 2degrees-investing.org.

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