In order to foster technological progress, realign capital flows with the Paris Agreement’s objectives, and prevent institutions from setting inaccurate targets, it is urgent to address this deficit.
Since 2018, 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 a group of leading banks, the Katowice Banks, who committed to supporting the development of target setting frameworks and action toolkits with us. Additionally, 17 banks – representing approximately 20% of the top 100 global banks – are now part of our road testing group, and our PACTA methodology is separately being applied by 900+ global financial institutions and tens of financial regulators and supervisors.
Other recent initiatives, such as the UNEP-FI Principles for Responsible Banking, the Climate Action 100+ coalition, and the Net Zero Asset Owners Alliance, demonstrate that the market is currently shifting towards the creation of more stringent and empirically based definitions of climate targets, climate actions and their associated impact.
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 and tools to align 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)
- Beginning to set and implement climate actions to achieve these targets and establishing a monitoring process.