About the Capital Markets Transition Outlook Reports

This set of reports present the transition outlook for a selection of emerging and developed markets based on the PACTA methodology.

PACTA compares what needs to happen in sectoral decarbonization pathways, here referred to as "climate scenarios", with financial actors' exposures to companies in climate-relevant sectors. PACTA provides a five-year forward-looking, bottom-up analysis. It looks at the investment and production plans of companies, which are in turn based on physical asset-based company-level data, and consolidates that information to identify the energy transition profile of the companies and their related financial instruments. This information is aggregated at the portfolio level and compared to the production plans projected in different climate scenarios. The (mis-) alignment between the portfolio and these scenarios allows users to infer on the potential exposure to transition risks and opportunities.

For the development of the analysis, the iShares ETFs that track the leading MSCI country indices were considered as a proxy of the most relevant set of listed securities for each economy. In addition, the MSCI market classification criteria were taken into account for defining the country-level ETFs that would integrate the emerging market and developed market portfolios.

Market Reports

Emerging Markets

Developed Markets

About PACTA for Investors

In September 2018, 2 Degrees Investing Initiative (2DII) introduced the Paris Agreement Capital Transition Assessment (PACTA) tool: a free software that calculates the extent to which corporate capital expenditures and industrial assets behind a financed through equity, bond, or funds are aligned with various climate scenarios.

The development of PACTA however dates back to 2014 when 2DII began developing the tool in partnership with academic organizations including the Frankfurt School of Finance and the University of Zurich, funding from the European Commission, German and Swiss governments, and support from UN Principles for Responsible Investment. Since the tool was launched, more than 4,500 individuals from more than 3,000 institutions have used it to conduct over 18,000 tests, with an average of 600+ tests per month. Overall, the total assets under management of financial institutions using the tools amounts to more than USD 106 trillion.

As of June 2022, 2DII transferred the stewardship of the Paris Agreement Capital Transition Assessment (PACTA) to RMI, in order to scale the impact of the tool in the financial sector and in the real economy. Under RMI's stewardship, PACTA remains a free, independent and open-source methodology and tool.

PACTA as part of the Climate Aligned Finance team, supports RMI's mission by providing the financial and supervisory community, with forward looking, science-based analysis with the aim of helping to shift capital flows in greener directions and enabling the financial sector to contribute to the goals of the Paris Agreement. You can access the tool here.