Asset manager with equity REIT activities

Criteria
1

Hello,

I represent an asset manager with some equity REIT activities (only a small share of the total AuM).

Could I please have some guidance on whether these activities should be:

  • considered separately to financed emissions (i.e. treated as our Scope 1 and 2 and Scope 3 downstream leased assets)
  • considered as financed emissions, with the target pathway set by the SDA approach for real estate
2

Hi @kanga,
Welcome to the community and thanks for your question.

Table 5.2 (p. 56) in the SBTi-Finance guidance states that you can use SDA, portfolio coverage and/or temperature rating to set targets for the REITs that you manage and that you are required to include them in your target if you want your targets to be validated and approved by the SBTi.

3

Hi @Donald.

Thank you for your rapid response.

I did see you respond to similar questions in the forum with the same response, but for me, there was some doubt:

  • Upon reading the latest PCAF guidance on accounting for GHG from real estate, as we own and have operational control over the underlying assets (buildings) in the REITs, the emissions from our real estate portfolio should technically be in our Scope 1 and 2 (for e.g. common areas) and Scope 3 downstream leased assets for tenant related emissions.

  • Also for example in the Q&A 3 on page 27, it says that direct investments in real estate fall into the asset manager’s Scope 1 and 2.

  • In the SBTi’s financial sector guidance (page 19), it is explicitly stated that the approach is designed for mortgage REITs, but that equity REITs should follow the SBTi’s process for regular companies.

Given the above, there is room for considerable confusion! Therefore, could I suggest that this topic be clarified in the next update of the documentation?

1 Like
4

Hi @Donald,

Just a follow up question on this topic - does the 67% minimum coverage of base year activity apply in my situation?

Thanks in advance!

5

I have the same questions as Kanga, I’ve found confusing the approach toward REITs through the documentation.

7

Hi,

My question is similar to the original question. The FI guidance states that an equity REIT should NOT follow the FI guidance and should follow the standard guidance for corporates instead.

I work for a client that is an equity REIT and is a publicly listed company (plc). They want to set an SBT at the REIT level. The FI guidance states that equity REITs can set SBTs as normal corporations. However, what about if the REIT does not have any employees, the only emissions it has relate to the real estate assets it owns. The people who manage the REIT are its investment advisors who set it up originally but technically they are completely separate legal entities. In that case, can the REIT still set a SBT itself or must it be covered under the SBT of the investment advisor (e.g. similar to being an investment of a FI)?

8

Hi all,

Thank you for your questions. The SBTi plans to publish a draft Buildings Sector Guidance this month that aims to address several challenges. The draft will be open for public consultation so we welcome your feedback (e.g., if you feel the guidance does not sufficiently answer your needs).

Thanks,
Howard