As a financial institution specializing in providing corporate loans to small and medium-sized enterprises (SMEs), we are actively seeking to reduce the emissions from our investments and financing. However, since all our clients are SMEs, we face certain limitations with the TR and PC methods and can only apply the SDA method. The challenge we face is that SMEs encompass a wide range of industries (our SME clients include sectors such as steel, cement, and other industries that follow cross-sector pathways). But according to FINT V2.0, SME loans are not further broken down by industry to set specific targets, except for fossil fuels (which are addressed using the FFF method), and instead, a general target is set for all SMEs. Therefore, we would like to understand how we can set reduction targets for our SME loans.
Currently, we have three ideas:
1.Set reduction targets for all SME loans based on Economic Intensity, with the unit as financing emissions per total loan balance.
2.Reference the approach used by other financial institutions and apply the SDA method for the Service-Buildings Sector, which covers multiple industries, setting our target in terms of kCO2e/m² (though, as mentioned above, we are uncertain whether our steel and cement SME clients can be included, or if we must use CO2e per ton of product instead).
3.Set a cross-sector pathway target for our SME loans, reduce 42% of emission by 2030 from a 2023 base year.
If any of the three approaches outlined above is feasible, please let us know.