Paris Agreement Capital Transition Assessment (PACTA)

2DII devised PACTA in order to address a major gap in analyses conducted by investors, who historically based their assessment of climate risk and impact on backward-looking carbon footprinting – which is now widely viewed as an incomplete methodology.

PACTA also helps investors implement the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), as well as comply with related regulations (Article 173 of France’s Law on Energy Transition for Green Growth, upcoming EU disclosure requirements, and more).

2DII began developing the PACTA tool in 2014, in partnership with academic organizations including the Frankfurt School of Finance and the University of Zurich, funding from the European Commission, German and Swiss governments, and support from UN Principles for Responsible Investment.

Access the online version of tool here: TransitionMonitor.com.

How it works

PACTA for investment portfolios has been available since 2018. As of June 2020, it has been used by over 1,500 financial institutions with more than USD 106 trillion in AuM, as well as by supervisors and central banks to assess their regulated entities (e.g. European Insurance and Occupational Pensions Authority (EIOPA), California Department of Insurance, Bank of England, and more).

In 2019, 2DII also started to develop PACTA for corporate lending portfolios, which is currently being tested by leading banks such as ING, Citi, UBS, etc.

Building off a vast climate-related financial database, the PACTA tool aggregates global forward-looking asset-level data (such as the production plans of a manufacturing plant over the next five years), up to parent company level. The tool then produces a customized, confidential output report, which allows investors to assess the overall alignment of their portfolios with various climate scenarios and with the Paris Agreement.

PACTA for investment portfolios

• More than 1,500 financial institutions with over $106 trillion in AuM have used the tool to analyze their portfolios
• Users from 90+ countries
• A climate-related financial database covering:
  • 30,000+ securities
  • 40,000+ companies
  • 230,000+ energy-related physical assets

PACTA for regulators and supervisors

• Used by major regulators and central banks to perform stress-testing and assess climate-related risks to their regulated entities (e.g. California Department of Insurance, European Insurance & Occupational Pensions Authority (EIOPA), Swiss Federal Office for the Environment, the Federation of Colombian Insurers (Fasecolda), Dutch prudential supervisor (DNB), and other national insurance associations)

PACTA for corporate lending

• 17 major international banks representing approximately 20% of the top 100 worldwide are currently testing the tool: the five Katowice Pledge banks (BBVA, BNP Paribas, ING, Société Générale, Standard Chartered), as well as ABN Amro, Bancolombia, Barclays, Groupe BPCE, Citi, Credit Suisse, Itaú Unibanco, KBC, Nordea, Santander, UBS, and Unicredit
• Thus far, an estimated $550 billion in assets have been analyzed out of the banks’ ~$18 trillion in total assets (climate-relevant scope)
• Currently in the road-testing phase, with release of the free, open-source tool slated for Q3 2020

Note on the funders: The PACTA tool has received funding from the European Union’s Life programme under LIFE Action grant No. GIC/FR/00061 PACTA. It has also received support from the International Climate Initiative (IKI). The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) supports this initiative on the basis of a decision adopted by the German Bundestag.

This webpage reflects only the author’s view and the funders are not responsible for any use that may be made of the information it contains.