The Paris Agreement Capital Transition Assessment (PACTA) is a widely recognized methodology designed that helps financial institutions align their lending and investment portfolios with different climate scenarios.  Since PACTA was established, Asset Impact has been the sole data provider enabling financial institutions to carry out the analysis with our data.  

How does PACTA work?

In a nutshell, PACTA supports financial institutions to analyze how corporate assets and planned capital expenditures compare to what needs to happen to limit global temperature rises. The methodology ensures sector-specific considerations are taken into account by measuring alignment per sector or per technology. For example, it considers that sectors, like power generation, need reform; while others, like coal, need to be phased out. Through these forward-looking insights, PACTA helps financial institutions understand their exposure to climate-related risks and identify opportunities for more sustainable financing.

Over 1,500 banks, asset managers, insurance companies worldwide, as well as central banks and supervisors (e.g. California Department of Insurance), have used PACTA as part of their climate risk strategies to measure the alignment of their portfolios and regulated entities with sector-specific climate pathways.  

The origins of asset-based data in PACTA

The development of asset-based data within the PACTA methodology began with the 2° Investing Initiative (2DII), which initially explored using corporate-reported emissions data. However, several limitations quickly came to light: the data lacked consistency, coverage was uneven across regions and sectors, and it provided limited insight into companies’ future plans.

To address these challenges, 2DII proposed a new approach—asset-based data. Unlike traditional emissions reporting, this method offered a more transparent and consistent view across companies and sectors, with the added benefit of forward-looking detail on technologies, capital investment, and production plans.

When 2DII approached established financial data providers with the concept, it did not gain traction. In response, 2DII made the decision to develop the necessary infrastructure itself. This led to the creation of Asset Impact (formerly Asset Resolution) and embedded asset-based data as a core component of the PACTA model.

Since then, Asset Impact has deepened its integration with PACTA and expanded its product offering—enhancing data quality, increasing sector coverage, and supporting a growing number of financial institutions.

How Asset Impact’s data supports PACTA today

PACTA relies on high-quality, asset-level data to provide an accurate picture of real-world transition risks and opportunities. Asset Impact’s data is embedded within the PACTA model, offering granular insights that go beyond traditional financial metrics. Here’s how Asset Impact enhances PACTA assessments:

• Real-time, asset-level data: Asset Impact’s database is based on detailed information on corporate assets, such as power plants, vehicle manufacturing sites, and industrial facilities and mapped to each company with ownership stakes in them and is updated quarterly. This level of detail ensures that financial institutions can assess transition risks with greater precision.

• Forward-looking insights: Our asset-based data is based on companies' actual capital expenditure plans. This enables banks to evaluate how companies are transiting rather than relying on sector averages or unsubstantiated climate commitments.

• Sector-specific alignment: Asset Impact’s datasets allow PACTA users to compare portfolio holdings against climate scenarios at a sector- or technology-level. This helps banks identify misalignments and develop targeted engagement strategies with clients.

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What else can financial institutions do with asset-based data beyond PACTA?

While PACTA is a powerful tool, banks can leverage asset-based data to implement or improve a range of other critical activities, for example:

• Target setting and measuring financed emissions: Asset-based data enables banks to trace emissions back to the physical assets they finance, providing a transparent and consistent foundation for setting science-based targets and tracking progress over time.

• Credibility assessments: With asset-based insights based on actual CapEx plans, banks can independently assess the credibility of a company’s transition planning and climate commitments.

• Regulatory compliance: Asset Impact’s data supports banks in meeting regulatory requirements such as the EBA Pillar 3 ESG disclosures by providing consistency and transparency around financed emissions.

• Integrate data with other climate risk management: Asset Impact’s data complements frameworks like TCFD (Task Force on Climate-related Financial Disclosures) or PCAF and can be used for enhanced climate stress testing (the ECB outlines how to measure climate risk—and the dangers of data misalignment in a landmark report last year, read more).

With growing regulatory pressure and demands for future-proofed financing opportunities, banks need reliable, forward-looking data to make informed decisions.

Asset Impact’s integration with PACTA provides a strong foundation for understanding portfolio risks and opportunities, but its applications extend far beyond a single tool. By leveraging asset-based data, banks can take proactive steps toward aligning their portfolios with global climate goals while supporting their clients in the transition to a zero-carbon economy.