Transitioning to a low carbon economy in order to limit global warming to well below 2°C involves changes in investment and lending practices, financial related regulations, and policy incentives. The concept of '2° Investing' refers to the alignment of investment strategies, lending policies and related regulation with climate policy goals (now the Paris Agreement). It has been wildly adopted by financial institutions, governments and NGOs following the adoption of the Paris agreement.
2° Investing's first study highlighted the shortcomings of the carbon footprint as a metric to inform investment decisions. To address them, we explored the possibility to apply scenario analysis to investment portfolios based on physical asset-level data from business intelligence (Decouty 2012) and raised funds to launch a first research project in 2014.
The project led to the creation of a methodology, a software (PACTA) and a database (Asset Resolution). Our approach has been applied by more than a 1,000 financial institutions including the leading banks and supervisors. It inspired other portfolio scenario analysis methods by peers and various pledges by investors and governments.
The section below includes the key papers published by 2° Investing Initiative on the topic since 2012