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  3. Portfolio 2°C Alignment Assessment

What is the 2°C target set out by the Paris Agreement?

The Paris Agreement in December 2015 saw nations collaborate in order to mitigate the effects of climate change through an agreement to limit the global temperature increase this century, made under the United Nations Framework Convention on Climate Change (UNFCCC). A total of 195 countries agreed to limit the global average temperature increase to well below 2°C above pre–industrial levels, and pursue efforts to limit the temperature increase to 1.5°C. The nations each declared their Nationally Determined Contributions to reduce emissions, and agreed to strengthen them in the years ahead.

 

Why is it important to my organization?


If the global temperature is to be kept within the required scientific limits then it is imperative that
countries and institutions within them ensure that financing decisions are also aligned with a below 2°C low carbon transition. Demonstrating the alignment of holdings, or of an investment strategy, with a low carbon transition is increasingly prevalent in recommendations, guidelines and even regulation directed toward investors. Trucost’s 2°C Alignment Assessment and data allows investors to gain a better understanding of possible risks and opportunities and supports associated reporting.