New PACTA tool to help banks finance journey to Paris Agreement

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2C Investing Initiative launches new initaitive to support growing band of banks committed to bringing their investments into line with the Paris Agreement

An open-source toolkit to help banks analyse their loan books against the Paris Agreement Capital Transition Assessment (PACTA) methodology, and act accordingly to decarbonise their investments, has been made available by non-profit think tank the 2C Investing Initiative.

Drawing on a huge climate-related financial database, PACTA for Banks uses forward-looking asset-level information on, for example, the production plans of a car manufacturing plant for the next five years or the climate risk management of a firm at the boardroom level. It then produces a confidential report from which banks can make lending decisions based on their own climate targets.

The free tool enables users to measure the alignment of their corporate lending portfolios with climate scenarios across key climate-relevant sectors and technologies, the think tank said. It also helps banks to identify their exposure to transition risks associated with a disruptive shift to a low-carbon economy.

Maarten Vleeschhouwer, head of PACTA at the 2C Investing Initiative said: "PACTA for Banks represents a milestone in our efforts to mobilise the banking and financial services sector in the fight against climate change. Freely available for any bank worldwide, it empowers users to measure the alignment of their lending portfolios across key climate-relevant sectors, to inform their decisions around climate target-setting, and to design more sophisticated climate action strategies."

The toolkit has taken two years to develop has been road-tested by 17 leading global banks from Europe and North and South America, including Barclays, BNP Paribas, Citi, Credit Suisse, and Santander. It was developed with input from banks, NGOs, and universities.

Jan Raes, global sustainability advisor at Dutch bank ABN AMRO Bank, welcomed the launch of the new toolkit. "ABN AMRO is committed to contributing to the Paris Agreement goals and started measuring and reporting to enable the steering of portfolios in line with the Paris Agreement," he said. "Now that PACTA for Banks is freely available, we encourage our industry peers to adopt 2DII's methodology in order to ramp up their contributions to the Paris objectives."


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