The Principles for Responsible Investment (PRI) and California Insurance Commissioner Dave Jones are backing a new, free-to-use climate scenario analysis tool, which can tell investors how aligned their fixed-income and equities portfolios are with the Paris Agreement.
The Paris Agreement Capital Transition Assessment (PACTA) is an online tool developed by climate think-tank 2° Investing Initiative, based on a model it says has already been used by more than 250 investors, in addition to Jones’s office, Switzerland’s financial regulator and the Dutch Central Bank.
It uses a number of different climate-related scenarios – including a 2° one – to look at investors’ exposure to transition risk. The process is underpinned by a database that tallies physical, real-economy assets with financial securities.
Stan Dupré, CEO of 2°II, said the tool enabled investors to comply “at no cost” with the recommendations of the Taskforce on Climate-related Financial Disclosures, France’s seminal climate law Article 173, and imminent new rules from the EU on climate disclosure.“The PACTA tool also fosters comparability between portfolios in the absence of a reporting standard on metrics,” he added. “This is what makes it attractive to financial supervisors, such as the California Department of Insurance, and governmental authorities, such as the Swiss Federal Office for the Environment.”
“Reduce information barriers for investors”
The tool is adjustable by sector, region and scenario, providing a five-year outlook. The results are confidential to the user.
“The PRI anticipates that this tool will help reduce information barriers for investors on how climate scenario analysis could be done,” said CEO Fiona Reynolds.
A webinar on the PACTA tool – set to take place in October – will be announced in due course. Link