Hi,
What is the acceptable threshold for financial institutions to restate their base year emissions?
Kind regards,
Lance
Hi Lance,
FIs should currently re-baseline anytime structural changes prompt a change of 5% or greater to their overall emissions inventory and then recalculate their targets (after re-baselining) to check that the ambition and coverage is still sufficient.
Thanks,
Howard
Hi Howard,
Thank you very much for your prompt reply. Could you please refer me to where exactly I can find this recommended threshold in any formal SBTi documents?
Kind regards,
Lance
The 5% threshold is in the Mandatory target recalculation criteria in the SBTi Corporate Net-Zero Standard Criteria and the draft Version 2 of the Near-Term Financial Sector SBT Guidance as a Triggered target recalculation recommendation.
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Thank you for the answer and references Howard!
Hello - This is really helpful and clear, thanks both.
Following on from this thread, I have a related question. Whereby an asset owner is changing asset manager and therefore emissions, data quality, assets owned/invested in, funds etc. will change. Would this count as a structural change and thus a rebaselining trigger, and the above criteria would apply?
Or could this be viewed as a âdecarbonisation leverâ e.g. the asset ownerâs net zero mandate is not being fulfilled by the asset manager and hence a switch in manager to an asset manager that is more aligned to values/approach in line with decarbonisation strategy of the asset owner.
Have you had any related queries or scenarios like this with any other FIs?
I would strongly recommend rebaselining but since the Triggered Target Recalculation is currently a recommendation, the minimum requirement would be for targets to be revalidated at least every five years.
Itâs 5% of their base year total emissions to be clear, not 5% of their current year emissions
Look into operational control. If you sell the asset, you have to determine the control you have over it. If you are still operating the asset, it can still fall into your own emissions. If you have a joint venture or part financial ownership that still allows you to exert influence, then you need to look into that.
An example is sub-leasing an office, this would no longer fall under S1&2 emissions, but fall under Scope 3 downstream leased assets. But if you sold / divested part of your company, it is no longer classed as part of your emissions at all.
Your question on whether it would trigger a rebaseline isnât possible to answer based on the info youâve given. It sounds like youâre just changing the manager of your asset, that wouldnât affect anything to do with the ownership of the emissions.
Hi Howard,
Thank you for the clarification. May I please ask if it is estimated that the structural changes resulted in a >5% impact on the base year emission, when recalculating the targets, is it mandatory to resubmit them to SBTi for another round of validation no matter what, or the company can decide only to rebaseline if the internal recalculation of targets shows that the targets are still sufficient for SBTi near-term criteria?
Thanks,
Vivienne
Hi all, Howard.
We have established that we need to recalculate our base year (2019) as we have acquired another organisation. The acquired organisation has no reliable data or evidence from 2019 so we are going to estimate the emissions using our 2019 (validated and assured) emissions. The dilemma we have is which estimation methodology to use. Can we simply take the emission per scope and category, at global level, to create a CO2e/FTE or CO2e/SqM and then simply multiply by the acquired companiesâ FTE or SqM?
I can only find information on when to recalculate, but no advice on how. Any comments, links etc would be appreciated.
A different option would be to use a more recent year as the base year so that data is more readily available for both organizations.
Would using more supplier-specific data in inventory accounting methods be a reason to recalculate baseline? It seems like recalculating baseline year is deterring companies from getting more accurate data.
Hi Howard,
May I please ask if it is estimated that the structural changes resulted in a >5% impact on the base year emission, when recalculating the targets, is it mandatory to resubmit them to SBTi for another round of validation no matter what, or the company can decide only to rebaseline if the internal recalculation of targets shows that the targets are still sufficient for SBTi near-term criteria?
Hi Howard, following on from this, are you able to point me to where in the guidance it states that you are able to select a more recent year as base year? I have an example below. Under GHG Protocol guidance, from my understanding, is that re-baselining means you report the new acquisitionâs emissions at the time of the baseline. I.e. if you had a 2022 baseline, and you acquire a new BU/ division, you then âadd-onâ the new divisionâs 2022 emissions into your new 2022 baseline. Is it called out explicitly anywhere in SBTi guidance that you can just select a new baseline year altogether I.e. 2025 (the year of the new acquisition), which means that you donât have to go back and find data from 2022, as that doesnât exist of the new division in this particular organisationâs caseâŚ