Questions about SME's target validation and requirements

SBTi commitments and submissions
1

Dear SBT Team.

I am Daniela Gormaz and I am working on sustainability issues in Chile. We encourage organizations to join SBT, among other activities we do. My question is directed towards the requirements to enter through the SME route. According to the guide for this group ‘’ an SME is defined as a non-subsidiary, independent company with fewer than 500 employees ‘’, what happens if the company is a holding company that measures its carbon footprint as a business group but are still small organizations? Each organization has less than 500 employees, and as a group they also meet that requirement, but they are not independent as a holding company. I would be interested to know if this is possible to the group to enter as a SME route, or if each company must necessarily enter separately and measure their footprint separately (which is complex, as they have related activities).
I did not find the information in the FAQ section, so I hope you can help me with this query.

Thank you very much,
Best regards.

2

Hi Daniela - thank you for your question and welcome to the forum.

If the holding organisation in question acts a financial institution, regardless of its relationship between parent or group versus subsidiaries, it should be submitted as a financial institution and not via the SME route. This would either be at the group level with all subsidiaries included, or per subsidiary if not all entities within the group are included. For more information about how SBTi defines a financial institution, please reference the summary linked here: Financial institutions - Science Based Targets

As this forum currently curates questions around financial institutions, I recommend you reach out to info@sciencebasedtargets.org for a more definitive answer around corporate requirements. This would be a good point to verify via the email mentioned, if the holding company does not act as a financial institution for its subsidiaries. There are options to account for Scope 3, Category 15 emissions in the corporate standards scope that may apply instead.