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The Transition Risk-o-Meter

Report Low-carbon transition Risk management & supervision Financial institutions

This report constitutes the first attempt to develop transition scenarios involving over 30 parameters across 8 sectors directly tailored for financial risk and scenario analysis by companies, equity and credit research analysts, and financial institutions.

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The report contains two transition risk scenarios – a limited climate transition (LCT) scenario associated with 3°-4°C decarbonisation range and an ambitious climate transition (ACT) scenario, seeking to approximate an outcome associated with a 2°C transition and building in particular on the 2°C scenarios of the International Energy Agency (IEA). The report develops over 30 individual risk parameters across 8 sectors (fossil fuels, electric power, automobile, cement, steel, aviation, and shipping). You can get access to the dynamic version of the indicators through the ET Risk project Scenario Selector online tool here. Part I presents the analytical framework for the scenarios. Part II provides the detailed parameters and indicators for use in financial modelling.

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.