Paris Agreement Capital Transition Assessment

From Open Risk Manual


The Paris Agreement Capital Transition Assessment (PACTA) has been developed by the 2° Investing Initiative with backing from UN Principles for Responsible Investment, PACTA enables users to measure the alignment of financial portfolios with climate scenarios as well as to analyze specific companies.

Methodology Elements

The PACTA methodology (e.g. as used by the Katowice Banks [1]) maintains the following key methodological principles:

  • The approach focuses the measure of mitigation objectives not on adaptation objectives at this stage. The state of knowledge on adaptation objectives and pathways is such that there is still not the same breadth of scenarios and data to measure adaptation alignment.
  • The approach is scenario-agnostic in the sense that it can adapt to various climate transition scenarios and thus various transition pathways provided it is developed in a rigorous manner and meets the objectives of the Paris Agreement.
  • The approach is data-agnostic, meaning any input data (provided it comes from a quality-assured source) can be used in the model. Climate-related data may suffer from number of limitations, including data coverage, matching and Data Quality.
  • The approach can be applied to any Financial Instrument (financial product or Portfolio) for credit activities as well as asset management.
  • Importantly, each economic sector/activity is described by its own set of indicators and refers to its own benchmark and targets.
  • An approach of Engagement versus Divestment is prioritised
  • The approach focuses on asset-level data
  • Measuring alignment is also by essence a forward-looking exercise.

Priority Sectors and Segments

  • Fossil Fules
    • Oil & Gas
    • Coal
  • Power
  • Steel
  • Cement
  • Transport
    • Automotive
    • Shipping
    • Aviation

See Also


  1. Credit Portfolio Alignment, An application of the PACTA methodology by Katowice Banks in partnership with the 2 Degrees Investing Initiative, 2020