Credit Portfolio Alignment: An application of the PACTA methodology

At the 2018 COP24 in Katowice, five international banks – BBVA, BNP Paribas, ING, Société Générale and Standard Chartered – publicly pledged to develop an open-source methodology to progressively steer (or ‘align’) their lending portfolios with the goals of the Paris Agreement.

Since 2018, in addition to undertaking individual efforts, the Katowice Banks as a group has worked collectively with a think tank- the 2 Degree Investing Initiative (2DII), which has developed an approach to measure the alignment of lending portfolios with climate scenarios. This approach, the Paris Alignment Capital Transition Assessment (PACTA) for Corporate Lending Portfolio takes the form of a methodology and an open-source tool which can be applied by any interested bank. Close to twenty “systemically important” banks have taken part in this pilot and the ambition is to expand this coalition further.

This document provides an overview of the application of the PACTA methodology and the options viewed as most useful by the Katowice Banks.