Developing criteria and a toolkit to help investors to align their investments with the 2°C goal
NewClimate Institute led a consortium of Germanwatch, the 2°investing initiative and McKinsey to develop criteria and a toolkit for investors to align their investments with the internationally agreed 2°C climate limit. Whilst the international community has agreed in principle to limit global temperature increase to well below 2°C compared to pre industrial levels, current investment flows do not correspond to the scenarios which would enable us to do so. The project focussed in particular on those investors and finance institutions with a climate mandate or mission but also reached out to the wider investment community. The criteria and resulting guidance can help investors to identify 2° compatible investments and those which are not aligned and would increase carbon lock in. This involved identifying sectors, regions and technologies of highest carbon opportunity and risk. A methodology was developed to translate these findings into sector specific guidance – focussing on energy supply, building energy efficiency and transport infrastructure – to help institutions to operationalise 2°C criteria in day to day investment decisions. The project was initiated by the German Federal Environmental Agency in the context of Germany’s G7 presidency and was a contribution to the current political dialogue on addressing global climate challenges by the finance community.