Real estate service buildings


  1. Is financing of social/public buildings such as hospitals also included in the scope of target setting from SBTi? The bank has been classifying these as public sector loans
  2. If a bank finances expansion or construction of a capital goods factory, would this be classed as a real estate loan?
    Many thanks in advance for your answer

I would greatly appreciate if someone from the group here is able to answer my two questions above?
I could not find any guidance on these and before moving forward with the SBTi commitments we would like a bit of clarity. Many thanks!

Hi @PeterN @HowardS @Donald,

Could any of you perhaps help with the questions above? Many thanks

Best regards,

Hi Nikunj, I believe public sector refers to governments and the financing of expansion or construction of a building would be considered real estate project finance (i.e., embodied emissions, rather than operational emissions), which is proposed as optional under the pilot test version 2.0 of the Near-Term Criteria and Recommendations for FIs.

Thanks @HowardS for the response.

But I have a follow up question - Most of the real estate loans are in fact provided to construct the new building which will be in operation at some point during the loan lifetime. Is it so that all these loans are then optional in scope? What about their operational emission (Scope1+2) intensity? Are those also optional?

And for target setting purposes, should banks include in real estate targets, the loans that are for real estate asset but to companies that are not in real estate business and /or unlisted?

Kind regards,

Hi Nikunj, if there are operational emissions, then they should be covered.

Per the pilot Near-Term Criteria and Recommendations for FIs V2, commercial real estate asset loans refer to all loans for the purchase, refinance, maintenance, or operation of real estate assets (i.e., residential and service buildings) that are not provided to consumers. General purpose loans to REITs or real estate companies can be included under “all other sectors” of corporate loans.