The Paris Agreement Capital Transition Assessment (PACTA) is a widely recognized methodology designed that helps financial institutions align their lending and investment portfolios with different climate scenarios. Since PACTA was established, Asset Impact has been the sole data provider enabling financial institutions to carry out the analysis with our data.
In a nutshell, PACTA supports financial institutions to analyze how corporate assets and planned capital expenditures compare to what needs to happen to limit global temperature rises. The methodology ensures sector-specific considerations are taken into account by measuring alignment per sector or per technology. For example, it considers that sectors, like power generation, need reform; while others, like coal, need to be phased out. Through these forward-looking insights, PACTA helps financial institutions understand their exposure to climate-related risks and identify opportunities for more sustainable financing.
Over 1,500 banks, asset managers, insurance companies worldwide, as well as central banks and supervisors (e.g. California Department of Insurance), have used PACTA as part of their climate risk strategies to measure the alignment of their portfolios and regulated entities with sector-specific climate pathways.
The development of asset-based data within the PACTA methodology began with the 2° Investing Initiative (2DII), which initially explored using corporate-reported emissions data. However, several limitations quickly came to light: the data lacked consistency, coverage was uneven across regions and sectors, and it provided limited insight into companies’ future plans.
To address these challenges, 2DII proposed a new approach—asset-based data. Unlike traditional emissions reporting, this method offered a more transparent and consistent view across companies and sectors, with the added benefit of forward-looking detail on technologies, capital investment, and production plans.
When 2DII approached established financial data providers with the concept, it did not gain traction. In response, 2DII made the decision to develop the necessary infrastructure itself. This led to the creation of Asset Impact (formerly Asset Resolution) and embedded asset-based data as a core component of the PACTA model.
Since then, Asset Impact has deepened its integration with PACTA and expanded its product offering—enhancing data quality, increasing sector coverage, and supporting a growing number of financial institutions.
PACTA relies on high-quality, asset-level data to provide an accurate picture of real-world transition risks and opportunities. Asset Impact’s data is embedded within the PACTA model, offering granular insights that go beyond traditional financial metrics. Here’s how Asset Impact enhances PACTA assessments:
While PACTA is a powerful tool, banks can leverage asset-based data to implement or improve a range of other critical activities, for example:
With growing regulatory pressure and demands for future-proofed financing opportunities, banks need reliable, forward-looking data to make informed decisions.
Asset Impact’s integration with PACTA provides a strong foundation for understanding portfolio risks and opportunities, but its applications extend far beyond a single tool. By leveraging asset-based data, banks can take proactive steps toward aligning their portfolios with global climate goals while supporting their clients in the transition to a zero-carbon economy.
Looking for more details on using our forward-looking asset-based data? Our team is here to support you.
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