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PACTA for Banks

Bringing climate scenario analysis to banks

Climate scenario analysis is a crucial tool for financial institutions wishing to understand the alignment or misalignment of their investments to various climate scenarios. Financial institutions can use this information to help steer their investments in line with climate scenarios, to inform their decisions around climate target-setting, and to gain insights into their engagement with clients on their respective climate actions. Climate scenario analysis can also be used for climate-related disclosures, such as those recommended by the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures.

For too long, this tool has exclusively been available to investors for their bonds and equities portfolios. If we are to achieve the Paris Agreement goals, however, it is crucial to involve the banking sector more deeply in these efforts. After all, banks play a central role in the fight against climate change, through the lending decisions they make and the engagement they carry out with clients. PACTA has worked to extend its flagship methodology to the corporate lending sector.

Now, with the advent of new data collection techniques and more sophisticated, granular data, as well as text-matching software, we are proud to say we have laid the groundwork for banks to meaningfully assess the alignment of corporate lending practices with climate scenarios.

PACTA for Banks enables banks to measure the alignment of their corporate lending portfolios with climate scenarios across a set of key climate-relevant sectors and technologies. It represents a major step forward in climate scenario analysis for lending, by providing banks with insights into the climate alignment of their corporate clients’ capital stock and expenditure plans.

PACTA for Banks was developed as a free-of-charge public good, in partnership with and funding from a range of stakeholders across the banking, academic, and NGO sectors. Over the course of the last two years, the toolkit has been road-tested by 17 leading global banks from Europe, North and South America. It has also been reviewed by over a dozen academic institutions and designed with the input of NGOs and industry experts.


The PACTA for Banks Software is designed to allow any user to run the PACTA analysis on their corporate lending portfolio. It is free of charge and open-source (under the MIT licence). Basic programming skills in R are required.

PACTA for Banks comprises three software packages, written in R, each with a website with instructions on how to install and use it:

r2dii.data

Datasets to Align Financial Markets with Climate Goals This package provides mock inputs for the PACTA analysis. It contains mock datasets that a bank can use either to practice using r2dii packages, or as templates to structure their own data as inputs to packages.
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r2dii.match

Tools to Match Financial Portfolios with Climate Data This package matches data from financial portfolios to asset-level data from market-intelligence databases (e.g. power plant capacities) Guidance on how to use the package can be found under the Get Started tab.
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r2dii.analysis

Tools to Calculate Climate Targets for Financial Portfolios This package helps you to assess if a financial portfolio aligns with climate goals based on climate scenarios. The functions here can be used to generate the three metrics described in the PACTA for Banks Methodology. Guidance on how to use the package can be found under the Get Started tab.
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r2dii.plot

Tools to Visualize Climate Alignment Targets for Finacial Portfolios This package allows you to visualize the results outputted from the r2dii.analysis package. This allows a user to see their climate scenario alignment in graphical form. Guidance on how to use the package can be found under the Get Started tab.
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To report any issues, please see our guide here: How to raise an issue


The PACTA for Banks Methodology allows users to perform climate scenario analysis on corporate lending portfolios. It consists of three core components: physical asset-level data, financial exposures, and climate scenarios. The PACTA methodology relies on an assessment of physical assets (such as steel or power plants) linked to financial assets (such as loans, bonds, and shares) and the alignment of these assets with climate scenarios.

While a specific set of scenario input and asset-bassed company level data is provided, the methodology used to calculate the metrics is stand-alone. Any climate change scenario or asset-based company data (ABCD) set could be used to implement the methodology, provided that the ABCD and scenarios use the indicators on which the methodology is built.

The methodology document presented here is broken down into 3 sections:

  • Section 1 explains the methodology and the underlying rationale in more detail. It describes the output metrics and discusses the required inputs. Additionally, it details the scope of the methodology. Finally, it discusses different options for allocating the macro carbon budgets from sectoral pathways (scenarios) to micro-economic actors (portfolios/clients) and for allocating the physical asset-based company data to financial instruments such as loans.
  • Section 2 provides the mathematical formulas used to calculate the metrics.
  • Section 3 concludes with a breakdown of the sectors covered, including sector overviews, the metrics used, and data inputted.

This is a publicly available, “living” methodology, meaning that we are constantly exploring ways to improve it and expand its scope.

Users wishing to contribute to this process are encouraged to contact RMI via  pacta4banks@rmi.org.

PACTA for Banks Supporting Documents

RMI has provided a series of documents and additional resources for banks to use as part of the PACTA for Banks Toolkit:

Scenario Input Files: PACTA has prepared a series of climate change scenario input files. These should be used in conjunction with the PACTA for Banks Software. These scenarios range from business-as-usual to better than Paris-aligned and are explained further in the Scenario Supporting Document.

Scenario input files with 2022 start year – to be used with Q4 2022 data

Old scenarios are provided for user’s wishing to backdate their PACTA analysis. In doing so, users are encouraged to use loan book data, asset-based company data (ABCD) and scenario data from the same year.

Scenario input files with 2021 start year – to be used with Q4 2021 data

(edit made on 16/05/22 to correct starting year to 2021)

Scenario input files with 2020 start year – to be used with Q4 2020 data

Scenario Supporting Document: RMI has provided a supplementary document introducing climate change scenarios and summarising the key differences between them. Included in this document is an explanation of the methodology and assumptions used to convert third party scenario publications into the scenario input files above.

Scenario Supporting Document 2022

Emission Factor Models:

* The following correspond with Q4 2021 ABCD set from Asset Impact.

Steel Asset Level Emission Model: This document details the methodology behind the steel emission intensities used in the PACTA for Banks Free Data Set.

Cement Asset Level Emission Model: This document details the methodology behind the cement emission intensities used in the PACTA for Banks Free Data Set.

Aviation Asset Level Emission Model: This document details the methodology behind the aviation emission intensities used in the PACTA for Banks Free Data Set.

Credit Portfolio Alignment: An application of the PACTA methodology by Katowice Banks

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 the 2° Investing Initiative to contribute to the development of PACTA for Banks. This document provides an overview of the application of the PACTA methodology and the options viewed as most useful by the Katowice Banks.


The PACTA for Banks Training Materials comprises practical user guides provided to guide banks through installing the relevant software, preparing the loan book, and running the PACTA for Banks Software.

User Guide 1. Resource Planner

This guides users through planning their resources and identifying the required amount of time to run the PACTA for Banks analysis.
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User Guide 2. Prerequisites and Preparing your Loan Book

This guides users through getting the necessary materials ready to be able to implement the PACTA for Banks analysis.
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Data Dictionary

The Data Dictionary is provided for guidance when preparing a Loan Book.
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Loan Book Template

A Loan Book Template is provided for banks to format their Loan Books.
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Guidance on running the software can be found under the “Get started” and “Articles” tabs of the respective package websites.

r2dii.match

Tools to Match Financial Portfolios with Climate Data
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r2dii.analysis

Tools to Calculate Climate Targets for Financial Portfolios
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Webinars

PACTA for Banks Training Webinar 1

Introduction to the methodology and toolkit

English Version

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Slides

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German Version

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PACTA for Banks Training Webinar 2

Matching a loan book to physical assets in the real economy

English Version

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Slides

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Slides with Notes

The notes contain examples of code that you can use and further details on the slides
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PACTA for Banks Training Webinar 3

Analysis and Visualisation

English Version part 1 (Analysis)

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English Version part 2 (Visualisation)

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Slides

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