Think tank 2° Investing Initiative (2DII) has launched a free, open source climate scenario analysis toolkit for banks.
Based on the Paris Agreement Capital Transition Assessment methodology, Pacta for Banks is designed to help users measure the alignment of their corporate lending portfolios with climate scenarios across key sectors and technologies.
2DII says banks can use this information to help steer their lending in line with climate scenarios; to inform their decisions around climate target-setting; and to gain insights into their engagement with clients on their respective climate actions. The toolkit can also help identify exposure to transition risks associated with a disruptive shift to a low-carbon economy.
The toolkit has been road-tested over the last two years by 17 major banks, including ABN Amro, Barclays, Nordea, and UBS.
Michel van den Berg, sustainability advisor, Rabobank, says: "The Pacta methodology has provided useful insights into the level of climate alignment of our power generation portfolio and helps to build the groundwork for future portfolio simulations that support our strategic planning process."