2DII launches “PACTA for Banks”
In September 2020, 2º Investing Initiative (2DII) launched PACTA for Banks, a free, open-source climate scenario analysis toolkit based on the Paris Agreement Capital Transition Assessment (PACTA) methodology.
Developed with the input of leading global banks, universities, and NGOs, PACTA for Banks enables users to measure the alignment of their corporate lending portfolios with climate scenarios across key climate-relevant sectors and technologies. It represents a major step forward in climate scenario analysis for lending, by providing banks with insights into the climate alignment of their corporate clients’ capital stock and expenditure plans.
Thanks to the toolkit, banks can get a granular view of the alignment of their corporate loan books by sector and related technologies, at both the corporate client and portfolio level. Banks can use this information to help steer their lending in line with climate scenarios and to gain insights into their engagement with clients on their respective climate actions. The methodology can be used to inform decisions around climate target-setting. The toolkit can also help banks identify their exposure to transition risks associated with a disruptive shift to a low-carbon economy.
2DII developed PACTA for Banks as a free-of-charge public good, in partnership with and funding from a range of stakeholders across the banking, academic, and NGO sectors. Prior to launch, the toolkit was road-tested by 17 leading global banks from Europe, North and South America.
The toolkit consists of:
- PACTA for Banks Software: A software package written in R (basic R skills are required to run the code). It is publicly available via CRAN and open-source.
- PACTA for Banks Methodology & Supporting Documents:A series of documents providing further explanation on the methodology and input scenarios.
- PACTA for Banks Training Materials: A set of practical user guides on installing the relevant software, preparing the loan book, and running the PACTA for Banks Software.
- PACTA for Banks Free Data Set: 2DII – in cooperation with Asset Resolution – can provide interested banks with a free asset-level data set, subject to a user license agreement.