Paris Aligned Investment Initiative (PAII)
The Paris Aligned Investment Initiative is a collaborative investor-led global forum enabling investors to align their portfolios and activities to the goals of the Paris Agreement.
The Paris Aligned Investment Initiative (PAII) was established in May 2019 by the Institutional Investors Group on Climate Change (IIGCC). As of March 2021, the initiative has grown into a global collaboration supported by four regional investor networks – AIGCC (Asia), Ceres (North America), IIGCC (Europe) and IGCC (Australasia). 118 investors representing $34 trillion in assets have engaged in the development of the Net Zero Investment Framework through the Paris Aligned Investment Initiative.
The initiative has the following objectives:
- Develop definitions for key concepts relating to alignment of portfolios with the goals of the Paris Agreement and build consensus around these among investors.
- Assess approaches and methodologies that can be used to measure alignment, and transition portfolios, across different asset classes to identity best practice options for achieving alignment to Paris.
- Enable investors to understand the implications of transitioning portfolios by testing the approaches and methodologies for transition using real world portfolios to analyse financial characteristics, risks and opportunities associated with transition of portfolios.
- Provide a transparent basis for investors to make commitments to achieve global net zero emissions by 2050 or sooner, in line with the Paris Agreement and take comprehensive, science-based, effective action towards this goal.
- Support investors to implement these best practice methodologies and approaches, addressing challenges and barriers, in order to drive real economy transition towards a net zero and resilient future.
- A first output of this process is a framework for ‘Paris alignment’ by investors (see the next section below). This looks to ensure investors can maximise the contribution they make in limiting global warming to no more than 1.5°C, in line with the latest science and higher end ambition of the Paris Agreement.
Putting this objective into practice means investors should look to ensure their portfolios are working to help achieve net zero emissions by 2050 at the latest. The way to achieve Paris alignment is therefore by becoming a ‘net zero investor’. IIGCC’s Net Zero Investment Framework (covered below) has been developed with this aim in mind.