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A Guide to Science-Based Target Setting for Financial Institutions

Target-setting initiatives and public climate commitments coming out of NY Climate Week, Climate Finance Day, COP, and related events have proliferated over the past years.

2° Investing Initiative has been involved in a number of these initiatives, often as a technical partner or data provider.

We think it is time to take stock of where we are, what we have learned, and to consider what science-based target-setting process for financial institutions should or could look like.

This note represents – for us – the summary of a conversation we started roughly two years ago, bringing together our learning from our real-world application of our models with NGOs, supervisors, banks, governments, and investors; as well as countless interviews and workshops, where we have tried to get a better understanding of what the way forward is for target-setting. In that sense, it synthesizes all of these conversations. In doing so, it seeks to clarify our technical perspective on the topic, while opening up the conversation to a broader market. We want to hear from you. What do you think about target-setting? Where should the journey go? What is your take on the important issue of “portfolio leakage” and can we address this?

We don’t want this note to close a chapter of a research journey, but rather start a broader chapter for the sustainable finance industry and ecosystem as to what science-based target-setting contributing to real world impacts need to look like.

Related resources

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.