Portfolio coverage calcuation clarification

Criteria
1

Hi,
I have reviewed a lot of discussions around portfolio coverage weighing methodology here but did not find answer to my question. To make it simple I ask my 2 question below with an example:

  1. In the sector capital goods, I have outstanding amount of €100 million to 10 different clients at year end 2022. 4 out of 10 clients have an approved SBTi and these 4 clients have year end outstanding amount of €30 million. Can I conclude that my baseline for portfolio coverage in this sector is 30%? I believe in this example I have selected WATS aggregation method (?)

  2. What do I need to change in the above calculation if I want to select SBTi preferred aggregation methodology such as ROTS? I also have to mention its really complicated for users to translate temperature rating formula and guidance to portfolio coverage without more details and examples. Recommend SBTi to create dedicated section for portfolio coverage methodology with examples

2

Hi,
I would appreciate a lot if anybody could provide their valuable inputs to my question above? Many thanks!

3

Hi Nikunj,
On question 1, yes that is correct, with 30m in investments or loans to companies with validated SBTi targets, the portfolio coverage would be 30% if the total of the FI’s investments is 100m.
To use ROTS, you would have to fill in company data in the tab ”fundamental data”, specifically Revenue and ghg emissions data. This would be needed for all companies in the portfolio of course.
It is also possible to do it manually in excel. In this case, replace the Temperature Score for each company (index i) in the summation formula, with either 1 or 0, representing True or False depending on the validation status of each company.