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).
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.
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.
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.
Many thanks for all your help. I had a follow up question if that is ok. Still considering battery storage assets, that are connected to the grid. The emissions associated with battery storage are the emissions associated with any energy lost in the storage process.
The emissions associated with the operations of the storage assets are therefore going to decarbonise in line with the decarbonisation of the grid, could it therefore be appropriate to estimate a temperature rating of the assets (SPV holding the asset) based on official decarbonisation targets for the grid in question?
Dear team,
Thank you again for all your support, I just wanted to follow up on the above question with regards to the grid decarbonisation and temperature rating. Any advice would be much appreciated.
I also wanted to ask another related question, if that is ok? If we have a listed investment trust, managed by the asset manager, with only one type of asset, could we look at a temperature rating for the trust as whole (e.g. the fund as a company sets a target) or should we look at each asset individually?