Clarification on the definition of SMEs

Hi everyone!

Could you please provide a clarification regarding the definition of SME?

Can financial institutions continue to use their own definitions of SME (e.g. CRR-based definitions) as per the Financial Sector Science-Based Targets Guidance (page 15) after the update to definition of Small and Medium-Sized Enterprises (SMEs) that qualify for the initiative’s SME target validation route?

Are there any requirements on the SME definition applied by FIs?

Thank you!

Per the recently released Financial Institutions’ Near-Term Criteria Version 2.0, FIs shall use either the SBTi definition or the relevant national or regional regulatory definition(s) of SMEs to determine the applicable coverage requirements in Table 1.

For target validation, however, companies may set targets through the streamlined validation route only if they meet the SBTi definition of an SME. They may also now choose to set targets through the standard validation route.