Program

Measuring Paris Agreement alignment and financial risk in financial markets

The Paris Climate Agreement pursues the goal of aligning global financial flows with global mitigation targets. At the same time, however, investors have been offered few tools for incorporating associated risks into their decision-making.

Measuring Paris Agreement alignment and financial risk in financial markets

Policymakers have also lacked instruments for measuring the alignment of capital markets with the "below-2 °C target". The key point of focus for this project was a tool for modelling the risks of realigning the financial system with a low-carbon economy and so making these risks measurable. The tool will be provided free of charge for investments in low-carbon market portfolios in emerging markets and developing economies. Risks for green recovery measures have been integrated into the tool as part of the IKI’s Covid-19 Response Package. Alongside the assessment of investment risks, instruments for political decision-makers were also developed, which can help in monitoring (towards the ‘global stocktake’) at a national level.

 

Measuring Paris Agreement alignment and financial risk in financial markets