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It’s on You! Bringing Climate Assessments for Household Credit into the 21st Century

Report Retail investing Financial institutions

Despite their prominence, climate assessments for consumer loans have been limited to date, with few pilots and limited adoption by market actors. This report represents the first overview of climate assessment and 2°C scenario alignment analysis for consumer loans.

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The aim of this report is to take a closer look at the different consumer loan types and assess how and in what way climate indicators could be found to benchmark these investments similarly against different climate scenarios.

The report will mobilize the existing approaches for portfolio analysis, all of which can be transferred and adapted to consumer loans. The discussed methodologies are:

  • Carbon footprinting: A cross-loan assessment of exposure to GHG emissions
  • Green/brown metrics: A loan specific metric to distinguish between activities and
    technologies that are climate solutions and climate problems.
  • Climate (ESG) scores: Qualitative indicators provided by ESG (environment, social and governance) analysis based on quantitative and qualitative indicators such as carbon footprints and green/brown metrics.

Independent, non-profit think tank working to align the financial sector with international climate goals.

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© The 2° Investing Initiative

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.