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Impact measurement & target-setting

Since COP21, climate target-setting by investors and banks has evolved into an increasingly popular concept embraced by a number of financial institutions and governments. However, the lack of standardized frameworks and best practices in this field is emerging as a major obstacle to the alignment of global financial flows with the Paris Agreement goals.

In order to address this issue, the 2° Investing Initiative has been working closely with stakeholders to develop improved methodologies for target-setting and impact measurement.

In 2018 and 2019, we worked with the “Katowice Banks” (BBVA, BNP Paribas, ING, Société Générale, and Standard Chartered) to develop new target-setting frameworks and action toolkits for the banking industry. The Katowice Banks have now been joined by 12 others, together representing approximately 20% of the top 100 global banks in terms of AuM, to road test the PACTA scenario analysis methodology for corporate lending.

Additionally, since its launch in late 2018, more than 1,000+ global financial institutions and dozens of financial regulators and supervisors have used the PACTA methodology for investment portfolios, which measures portfolios’ alignment with the Paris Agreement goals and helps investors set new targets.

Building on these initiatives, the 2° Investing Initiative is managing a wide program of activities to improve impact measurement and target-setting methodologies. These include:

  • Developing a high-ambition coalition of financial institutions committed to aligning their portfolios with climate goals
  • Crafting and enhancing methodologies to align financial flows with the Paris Agreement, such as a target-setting module to complement the PACTA methodology (which will be featured in an enhanced version of the Transition Monitor platform in 2020)
  • Devising climate actions to achieve these targets and establishing a monitoring process.

 

Funders’ information: Our target-setting research is supported in part by the InvECAT project, which has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 785087.

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