2 degrees Investing Initiatives

  • Economic Opportunity, Energy and Environment, Civil Society and Governance

  • New York | France | Germany | Global Programs

  • Economically disadvantaged people

  • Non-governmental organization

  • €2,695,796 (EUR) (2016)

  • 16

Executive Summary

The Paris Agreement is a watershed moment, the success of a negotiation model where nations define their contributions, monitor progress, and ratchet commitments as necessary. Yet the agreement itself will not solve the climate mitigation puzzle without the non state actors - companies, investors, and banks - who will drive down emissions on the ground. Building on over 40 research partnerships from advocacy NGOs to several central banks, as well as models and tools tested by over 100 investors, this project seeks to bring climate action by non state actors into the 21st Century by creating a real time Big Data "Capital Transition Monitor". By linking Big Data on millions of real economic assets with companies and investors, the project will enable real time monitoring of climate action on the ground, creating a space for the next generation of climate negotiations between companies, financial institutions, and governments.

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The Problem

Despite 25 years of global effort, top down global climate policy remains hampered by a series of challenges. Challenge 1: No clearrole for non state actors (NSAs) in the centralized negotiation process. Until COP21, climate negotiations have been a top down process:GHG targets negotiated globally with burden shared between States. When states then attempt to mobilizeNon State Actorslike companies and investors, policymakers face a dilemma: 'picking winners' by being over prescriptive on technologies and burden sharing, or introducing flexible mechanisms (ETS, taxes, etc.) associated with high uncertainty. Given the expected role of NSAs post Paris, a new model for inclusion in negotiations is vital. Challenge 2: The tragedy of the horizon cannot be addressed with carbon targets.Up to now, climate negotiations and related targets are based onfuture GHG emissions. To avoid an abrupt transition, governments set targets limited in ambition for the next 5 years, and plan to ramp up afterwards. However financial analysts operate with a 3 5 year horizon: they price risks likely to materialize in this timeframe in cash flow models, and then only extrapolate. Long term policy signals are therefore ignored. As a consequence, while today's RD&D and capital expenditure decisions in key sectors (power, energy, transport, buildings...) are associated with a 20 40 years locked in effect, companies and investors have currently no incentive to invest in the disruptive zero carbon technologies required to reach 2 C. Challenge 3: Progress tracked with scattered pre internet tools. The current tools are based on aggregated backward looking statistics and reporting of vague voluntary commitments.

Proposed Solution

A NEW OPERATING SYSTEM: THE TRANSITION CAPITAL MONITOR Since Kyoto, NGOs and governments develop solutions (ETS, carbon taxes, corporate carbon disclosure...) without fixing the fundamental flaws in the paradigm described above. In a post Paris context, the 'Operating System' needs to be upgraded by: Shifting climate target setting and related incentives from GHG emissions trends in a distant future to investments made today. Leveraging the power of big data and peer to peer to allow bottom up negotiations between Non State Actors, on an ongoing basis. Concretely, we will equip governments and NSAs with a new 'Operating System', based on three layers: A global monitoring system covering all carbon relevant real assets (power plants, oil fields, car production, aircraft fleets, buildings, etc.), tracking related investments decisions (capital expenditure, retirements...) in real time, and matching the assets with their owners, parent companies, related stocks and bonds and financial institutions owning them. An online modeling tool allowing various actors to benchmark their climate trajectory against different decarbonization scenarios (based on their assets and investments) and set voluntary targets. This system will provide an interactive, real time, granular outlook of the global carbon trajectory and create a voting system for the optimum decarbonization scenario. A peer to peer platform, allowing negotiation between players on climate targets: shareholder engagement with investee companies, negotiated commitments between governments an private sector players, etc. MOBILIZING ACTORS ON 'DECENTRALIZED CLIMATE NEGOTIATIONS' 2/3 of the budget will be dedicated to the mobilization of financial institutions and their beneficiaries, companies, local and national authorities on target setting and negotiations.

Evidence of Effectiveness

The documents described below can be downloaded here: https://goo.gl/FrB2h4 EVIDENCE ON THE PROBLEM The publications of the SBT consortium and 2Dii provide evidence of the difficulties to set relevant targets for NSAs; This presentation https://goo.gl/5bohAb and the publications from 2Dii illustrate the 'tragedy of the horizon', concept introduce by Mark Carney (head of the FSB and the Bank of England); Our report with Oxford evidences of the underexploited potential of real asset databases. THE NEED FOR THE PLATFORM AND RELATED RESEARCH The IPCC report and the annual outlooks from the International Energy Agency and BNEF exemplify the state of the art of progress monitoring and evidence the lack of real time global monitoring system allowing deep dive at company, city or investor level. The Nazca platform provide an evidence of the difficulties to set, aggregate and track NSA targets. THE INCREASING ROLE OF NSA IN CLIMATE GOALS ACHIEVEMENT The expected role of NSAs is evidenced by the Paris Agreement and related UN level speeches; The NAZCA platform and C40 project provide evidence of willingness of various NSA to set voluntary targets; THE KEY ROLE OF THE FINANCE SECTOR The willingness of financial institutions to set decarbonization targets and contribute to achieving climate goals is evidenced by the various pledges, including the Montreal Pledge and Portfolio Decarbonization Coalition see https://goo.gl/QslEIO The ambition of governments to provide a legal framework and start negotiating commitments is evidenced by the article 173 of the French Energy Transition Law and the traction it gets on other governments.

Previous Performance

OUR TRACK RECORD 2Dii was created from scratch by Stan Dupre without any external financing. In just four years, 2Dii has: Introduced the concepts of alignment of investment portfolios with climate goals and greening of financial regulation, helped put them on the agenda of the G20 and the Financial Stability Board, and embedded them in public policies in France (2015), Switzerland (2016), China (2016). Turned the concept into an assessment framework, tested by +100 investors, and currently being tested by two central banks Partnered with the UNFCC to co chair a proposed International Standards Organization (ISO) standard on climate finance, Started development of a beta version of the platform in partnership with major players including Bloomberg and S&P, Developed joint projects and partnerships with almost all key players of the ecosystem and demonstrated our ability to work across stakeholders. Opened offices in Paris, New York, London and Berlin. WHAT MAKES 2Dii UNIQUE? Entrepreneurial approach. Rooted in strong leadership from a CEO with consulting background, 2Dii designs and executes projects quickly, creating the ability to grow and reprioritize quickly. Market presence. 2Dii has developed formal partnerships and led projects with most key players in the financial sector, giving us an unparalleled capacity to recruit talent and subcontract tasks to partners. Independence. 2Dii's multi stakeholder governance is (to our knowledge) unique and provides a strong guarantee of independence (key to resisting greenwashing), allowing us to collaborate with all types of stakeholders. LOOKING FOR EVIDENCE? See the hundreds of support letters on our projects: https://goo.gl/OI2Wh5

The Team

Team Purpose

The 2 Investing Initiative (2Dii) is a global think and do tank founded to align financial markets with climate goals. 2Dii acts as an agenda setting thought leader that designs, builds, and executes solutions directly with decision makers. 2Dii develops coalitions, networks, and ideas that circumvent business as usual, combining a unique convening ability (from advocacy NGOs to central banks) with direct solutions (from investment applications to regulatory tools). Within four years, 2Dii is leading on the nexus between climate change and financial markets, with projects involving over 40 partners across the globe. Its partners (S&P, Bloomberg...) are turning its research into tools. The French and Swiss government have integrated the 2Dii frameworks into regulatory initiatives, with 2Dii co initiating the first mandatory climate disclosure law for investors globally. 2Dii is able to partner both with central banks involving two projects, as well as UNFCCC on a planned ISO process.

Team Structure

LEGAL RESPONSIBILITY Thegrant recipientis '2 Investing Initiative': French based, non for profit, non commercial organisation, NGO source certified, Governed by a board of directors elected by its members (one by stakeholder group) that will have legal responsibility for implementingthegrant agreement. This organization isaffiliated with two other legal entities (same brand, same work program, resources pooled, executive decisions delegated to a single CEO): a 501c3 organizationincorporated in NYC, and a gemeinnütziger Vereinbased in Berlin. MANAGING THE IMPLEMENTATION TheCEO Stan Dupre will manage the project, assisted by a core team of 60 people (currently25 + 35 new recruits) working for the 3 legal entitiesandbased in NYC, DC, Paris, London and Berlin. An MoU (attached) has been signed by the three entities. The implementation will also mobilizeexternal teamsworking for existing partners, as well as new partners that will be selectedduring the scoping phase. SUPERVISION AND ADVICE OurAdvisory Committee(alreadyrecruitedby 2Diitoreview existing multi partner research projects) will beextended during the scoping phase. The Steering Committeecomposed ofrepresentatives of all the main partners,to review progress and adjust the plan. It will meet on a quarterly basis.