Classification of Investment Trusts for energy projects, and carbon trading scheme investments

Hi there,

Do investment trusts (listed) of which the underlying assets are wind farms, social housing, homeless housing, solar farms, forestry, battery storage etc. belong in equities or projects?

These are listed invested trusts and therefore trade like listed equity - should they be under electricity generation projects, or should they be under listed equities?

Also investments in carbon through the carbon trading schemes, not sure where commodities sit? One is an ETC (same family as ETF but commodity).

Thanks so much.

Hi @EmmaL,

As they are listed investment trusts they are equities by definition, but in the eyes of SBTi we probably view them more as collective investment schemes (CIS), if we are to stay true to the spirit of the guidance and criteria.

As you can read from table 5.2 in the guidance, for CIS and equities you can use whichever method you want to set targets, SDA, Temperature Rating (TR) or Portfolio Coverage (PC). So, you should be able to use the electricity generation SDA method or TR or PC.

Having said that, if you are lending to electricity generation you need to use SDA, but as you are investing you have the option to chose.

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Hi @Donald thank you so much for taking the time and trouble to reply, it’s much appreciated.

Regarding the query about carbon investments through carbon trading schemes, - e.g an ETC - would these sit in scope would you think?

Thank you so much for your kind help


Hi Donald,
We are working for an asset manager that manages a listed fund that invests only in battery storage projects, via SPVs. Should we consider battery storage as infrastructure or electricity generation?

If it is correct to assume it is infrastructure should we exclude the fund from the boundary of the target, as other project finance? Or should it be part of the boundary using TR and PC? As the SPVs are only vehicles to hold the assets I am not sure how feasible TR and PC are.

Many thanks,

I’d say they should be covered by TR or PC, as they are more likely to be deems infrastructure.
Engagement, in the first instance, should be directed towards the entity responsible for designing/managing the SPV, like any other pooled investment vehicle. Naturally, direct engagement with the underlying assets is encouraged whenever possible, naturally depending on what the pooled investment vehicle has invested in.