Are the formula written in Table E1 of the Guidance actually not relevant for calculating portfolio coverage under the PCA methodology? For example:
i) Can you use revenue as a portfolio coverage metric using the following formula: Percentage SBT coverage for a general corporate lending portfolio = (sum of revenues of all companies with an approved SBTi target) / (sum of revenue of all companies within the lending portfolio)?
ii) Can you use asset value as a portfolio coverage metric using the following formula: Percentage SBT coverage for a invested bank bonds = (sum of asset value of all banks with an approved SBTi target) / (sum of asset value of all banks within the bank bond investment portfolio)?
Thanks for your help with this.
To define the coverage of the Portfolio Coverage target, FIs shall use one of the weighting approaches
in the SBTi Finance Tool (listed in Appendix E) consistently throughout the target period. As the
Portfolio Coverage (PC) method is binary and we’re using the Temperature Rating aggregation
methods, we can replace the outcome from the Temperature Rating method for the companies, i.e. TS,
in the formula with the outcome of the PC-assessment, i.e. 1 if the company has an approved target or
0 if the company does not have an SBTi-approved target. This means that you can use the same
weighting methods for both Temperature Rating and Portfolio Coverage. Simply replace TS with PC in
the formula.