Under the terms of the pledge, participating governments and financial institutions will use the PACTA methodology devised by 2° Investing Initiative to compare their investments and financing with climate benchmarks.
The first assessments started in early 2020 and involve the governments of Austria, Denmark, Italy, Luxembourg, Norway, Portugal, Spain, and Sweden, in addition to Switzerland and the Netherlands. Private financial institutions, their industry representatives, public financial institutions, and supervisory authorities can also voluntarily participate. The expanded model will later be made available for asset managers and banks, in addition to Swiss pension funds and insurance companies.
Participants can directly access the assessment platform here.
Background: 2DII’s 2017 collaboration with the Swiss Federal Office for the Environment
This initiative is based on a successful pilot project that 2DII ran in partnership with the Swiss government. In 2017, the Federal Office for the Environment and the State Secretariat for International Finance invited pension funds and insurance companies to use the PACTA methodology to test the climate compatibility of their investments. 79 pension funds and insurance companies, representing about two-thirds of the total market as measured by assets under management, used the PACTA methodology to test their portfolios for climate compatibility. Following the exercise, 40% of participants said that the analysis triggered climate-related actions.
Thanks to the success of this engagement, Switzerland and the Netherlands joined forces to launch the 2020 PACTA initiative to measure and align financial flows with the Paris Agreement’s 1.5°C goal.
For more information on the 2017 assessment, see our report: “Out of the fog: Quantifying the alignment of Swiss pension funds and insurances with the Paris agreement.”