I would like to ask you whether it is possible to calculate a combined target for:
Different asset classes sharing the same activity data (e.g m2) and target setting method (SDA). For example for CRE and REITs asset classes, both related with service buildings?
Products sharing the same activity data (e.g kWh) and method (e.g Temperature scoring) within different asset class. For example for electricity generation project finance through bonds and corporate loans provided to elecricity generation companies?
In case the abovementioned answer is yes, is the combined target calculated as a weighted average based on e.g the Asset under Management for each separate asset class/product?
Hi, thanks again for your questions.
Targets are always set and published on an asset class basis - therefore we would only be able to combine targets if they are within the same asset class.
Hope this helps, but let us know if you need any additional clarification.
Slight clarification: what about if fx goals need to be set on asset class “equities” where the equities are in different sectors? Do the targets need to be set sector-by-sector within the asset class → fx I end up having 4 targets for 4 different high-emmitting sectors within asset class equity? Thank you in advance
Hi Flo_1, thanks for the question and your patience as we follow up. You can choose to set multiple sector targets within the same asset class. therefore, for listed equities you could set individual sector targets for key high emitting sectors and other targets e.g. portfolio coverage to cover companies in all other sectors.
Hi @Eoin - just confirming this would apply to real estate as well - e.g., an FI may choose to use SDA for their project finance CRE (where good m2 data is available); but for corporate loans with known use of proceeds for CRE (where m2 data is not available) they may choose to set a Temperature Rating based on the counterparties targets? Thanks
Hi Gregorio, this would also apply to real estate. One can think of it in terms of entity vs. asset level financing. At an asset level via project finance the SDA is ideal as the data should be available. Howerver for entity level financing e.g. loans or equity in real estate companies, this could be covered with SDA (if data is available) but could also be covered by an engagement target like temp rating.
A further clarification would be why there isn’t a separate project finance - CRE asset class within the project finance classification in the Guidance Required Activities table (but only ‘PF - Elec Gen’ and ‘PF - Other’)?
Presumably, emissions stemming from real estate project finance relates to embodied emissions, rather than in-use operational emissions. There should be more information in the upcoming Buildings Sector Guidance.