Shauna joined the BD team at Integrum ESG in 2021, having previously worked in similar roles within Fintech companies. She holds a BA in English and New Media Studies from the University of Limerick, Ireland.
What is CTB and what is PAB?
The Climate Transition Benchmark (CTB) and the Paris-Aligned Benchmark (PAB) are two official climate benchmarks introduced by the European Union (EU) under its Sustainable Finance framework.
Both benchmarks set out clear criteria to bring consistency, credibility, and transparency to ESG investing in Europe.
So what are CTB and PAB exclusions?
The CTB and PAB exclusions are lists of corporate activities and sectors that cannot be included in CTB- or PAB-aligned portfolios. These lists are legally defined by the EU and are mandatory for funds claiming alignment.
Activities excluded from both CTB and PAB:
Activities with stricter PAB exclusions:
Companies deriving 1% or more of revenue from coal (exploration, mining, refining, or distribution)
Companies deriving 10% or more of revenue from oil activities
Companies deriving 50% or more of revenue from gas activities
Companies generating 50% or more of electricity with a GHG intensity >100 g CO₂e/kWh
Companies involved in unconventional fossil fuel extraction, such as tar sands or Arctic drilling
CTB vs PAB Exclusions at a glance
Why do CTB and PAB exclusions matter?
Regulatory compliance: The European Securities and Markets Authority (ESMA) requires these exclusions if a fund uses terms like “sustainable,” “ESG,” “transition,” or “Paris-aligned”
Credibility: Asset managers avoid industries that conflict with climate goals, strengthening investor trust
Risk management: Excluding high-carbon sectors reduces exposure to stranded assets, litigation, and reputational risks
FAQs
Q: Who created the CTB and PAB?
A: The European Union, as part of its climate benchmark regulations under the Sustainable Finance framework.
Q: Do all ESG funds have to follow these exclusions?
A: No. Only funds using labels such as “ESG,” “sustainable,” “transition,” or “Paris-aligned” in the EU must apply CTB or PAB exclusions.
Q: Which benchmark is stricter, CTB or PAB?
A: The PAB is stricter. CTB allows some fossil fuel exposure if the company shows credible transition plans, while PAB largely excludes fossil fuels.
Q: Why are CTB and PAB often mentioned in ESG discussions?
A: Because they are standardised EU benchmarks that clearly define what activities are excluded, making them reliable references for sustainable investment strategies.
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