Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner. Facebook Messenger An icon of the facebook messenger app logo. Facebook An icon of a facebook f logo. Facebook Messenger An icon of the Twitter app logo. LinkedIn An icon of the LinkedIn logo. WhatsApp Messenger An icon of the Whatsapp messenger app logo. Email An icon of an mail envelope. Copy link A decentered black square over a white square.

GFANZ wants to enhance and converge on PAMs ahead of COP27

© Shutterstock / amgunDigital world map showing climate change.

GFANZ opens public consultation on guidance document assessing portfolio alignment with net zero targets for the financial sector, but accurate measurement of climate risks remains an obstacle for the sector. That makes agreement on, and standardisation of, portfolio alignment metrics (PAMs) critical to achieving net zero.

GFANZ issues a guidance document for consultation with the aim to enhance, converge, and adopt international best practices for portfolio alignment metrics (PAMs).

There is currently a proliferation of PAMs being used, which impedes on the financial sector’s ability to accurately assess the progress and risk of their portfolios in the context of net zero and climate change.

Improving climate risk analysis will be crucial to inform financial firms to optimise their portfolios for a future impacted by climate change.

The world’s largest coalition of financial institutions committed to transitioning the global economy to net zero, the Glasgow Financial Alliance for Net Zero (GFANZ), has proposed new guidance on measuring the alignment of financial institutions’ investment, lending, and underwriting activities with net zero targets.

Guidance on portfolio alignment metrics (PAMs) developed by the crowd

The guidance document released by GFANZ was developed based on input from “net zero stakeholders”, including financial institutions, financial data providers, and civil society.

It aims to increase convergence on methodological best practice approaches to be adopted by financial institutions and metric providers, as well as increase transparency on the underlying assumptions used to evaluate the net zero progress of portfolios.

“If financial institutions are to deploy the capital required to usher in the net zero transition, they need a way to measure whether their financing activities align to their ambition” said GFANZ’s vice chair Mary Schapiro.

She claims that the new report offers financial institutions the metrics needed to “assess whether their portfolio companies are 1.5 degrees Celsius-aligned or need resources to transition”.

GFANZ seeking consultation and responses

The new report is seeking consultation from relevant stakeholders on the alignment metrics used today and how to enhance critical inputs for measuring portfolio alignment. The consultation is open until September 12 2022.

The final report is due to be published ahead of COP27 in Egypt this fall, and could be an important milestone for the financial sector to enhance, converge, and adopt a set of best practices and common methodologies when it comes to assessing the progress of their portfolio companies on the road to net zero.

More from SG Voice

Latest Posts