Several white arrows pointing upwards on a wooden wall

Art 2c of the Paris Climate Agreement has set a CAP Alignment for finance. The objective of the project is to develop a standard methodology for aggregating climate alignment measures practiced by individual financial institutions at the consolidated level of a given category group: federation, market place, country or net-zero initiative, in order to assess collective performance in terms of alignment with this cap.

Based on a preliminary analysis of existing tools to define the optimal conditions for developing a standard aggregation methodology, the project aims to test the consolidation options on real data in order to confirm our methodological choices.

The third phase consists of using the standard method developed to produce reports (“gap to cap”) measuring at different scales the gap between the commitments made, the estimate to date of the real trajectory of groups of financial institutions and the scientific scenarios of the low-carbon transition.

The Institut Louis Bachelier coordinates the CAPA project, mainly funded by ADEME as a winning project within the Call for Research Projects on Finance and Climate (APR ClimFi), 2021-2022 edition. The EDHEC Scientific Analytics, the Institute for Climate Economics (I4CE) and the ILB Labs are also partners in the project.

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Photo credits: Unsplash photo by Jungwoo Hong