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September 19, 2019

Progress on the PACTA methodology for corporate lending: ING publishes its first Terra progress report

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On September 19, 2019, one of our longstanding partners, ING, published their first progress report on Terra, their approach to steer its €600 billion lending book in line with the goals of the Paris Agreement to keep global warming to well-below two degrees. As ING put it: “With the Terra approach, ING aims to be a positive force in the fight against climate change. The progress report presents ING’s pathway towards climate alignment in the sectors most responsible for climate change and is intended to be published every year.

The disclosure addresses developments and climate alignment for the sectors: power generation, fossil fuels, automotive, shipping, aviation, steel, cement, residential mortgages and commercial real estate. These are the sectors in ING’s portfolio that are most responsible for greenhouse gas emissions. In a Climate Alignment Dashboard (CAD) the report presents which sectors are on track for climate alignment and where work is still in progress. This climate change disclosure is a first for banks.”

We’re proud to have partnered with ING since early 2018 to extend the PACTA climate scenario analysis methodology to corporate lending portfolios, one of the contributions which has helped further enhance the Terra approach. The methodology, as well as the metrics supporting the analysis, allows banks to study the alignment of their corporate lending portfolios with 2°C benchmarks. It represents a major step forward in climate scenario analysis, by providing banks with insights into the climate impact of their clients’ capital expenditure plans across the seven sectors the methodology covers (oil & gas, coal, power, automotive, cement, steel, and shipping). By closely examining the gaps between their lending portfolios and climate benchmarks, banks can in time also leverage the methodology for other uses, including reporting and steering towards a positive climate impact.

For more on the PACTA methodology, please visit TransitionMonitor.com

ING’s press release and full report, featuring an introduction by Jakob Thomae, managing director at the 2° Investing Initiative.

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2DII today announced it is transferring stewardship of the Paris Agreement Capital Transition Assessment (PACTA) to RMI, formerly Rocky Mountain Institute. PACTA measures financial portfolios' alignment with various climate scenarios, including those consistent with the Paris Agreement. Under RMI’s stewardship, PACTA will remain a free, independent, open-source methodology and tool, and will continue to provide the financial and supervisory community with forward-looking, science-based scenario analysis to help users make climate-aligned financing decisions. RMI will invest in scaling up PACTA’s usability and applicability in day-to-day investment decisions as well as reporting requirements.

Access the full press release here: https://2degrees-investing.org/2-investing-initiative-transfers-stewardship-of-pacta-to-rmi/In the coming weeks, we will update this website with additional information. For now, please note that all contact information remains unchanged.