FAQ

Why doesn't PACTA assign a single indicator for alignment, such as "financed emissions" or "temperature"?

Climate scenarios are expressed in almost all cases in real economic units (either emissions over a unit of production or a technology unit over a unit of production). The analysis must similarly be expressed in the same units. By extension, financed emissions are disqualified as an indicator to measure warming potential or alignment of portfolios, since they are expressed as an emission intensity relative to a financial value.

Where climate scenarios use investment or financing volume figures, these are absolute figures that would require ‘absolute’ volume analysis for portfolios. Given the uncertainty of both the actual investment roadmaps, their volatility over time, and data gaps, alignment analysis based on the investment or financing footprints are currently impossible. However, it may be useful to consider investment / financing indicators from a steering perspective where these control for external changes and as a way to understand exposure evolution and targets. Such approaches however – given the lack of meaningful scenarios as a reference point and challenges of downscaling them – are currently not integrated into the PACTA methodology proper, although perhaps useful in certain cases.

Why does PACTA only consider 5-year time horizon?

The model assesses the 2°C alignment of financial portfolios with a 5-year time horizon /forecast period. The time horizon is limited to the time horizon of capital expenditure planning for which data can be tracked at a meaningful level. Additionally the time horizon considered by investment analysts was found to be on average 3 years (research on Time Horizons available here).

How are asset data aggregated to the company level?

The asset level data is aggregated ultimately to a parent company. The databases generally provide an ownership stake. Production is allocated to the owner on a fair share principle, in that if 30% of the production is owned, then 30% of the total capacity is allocated to that company. This is then rolled up to the ultimate parent company. The company structure is determined from Bloomberg data. The plant owner as identified in the asset level database is matched to the company name from the Bloomberg databases based on a process of fuzzy matching to determine the corresponding company. Depending on what level the owner is, if there are parent owners, this is rolled up until an ultimate parent company is determined and the total assets owned by this parent are aggregated.

To what extent does the tool take into account company investment plans?

The data sources that we use reflect publicly available company investment plans as collated by commercial data providers. This data is collated using a mixture of methods including data mining from websites, press releases and project applications as well as company interview for validation purposes. Therefore, the data sources reflect publicly announced CAPEX plans rather than announced changes.