The word company is used 346 times in the Pilot Finance Sector Guidance, but I can’t see anywhere that it’s defined. If we are dealing with a group structure, does SBTI consider the individual entities within that group as ‘companies’, is the entire group the ‘company’, or is this up to the financial institution to decide?
On the financial sector guidance from April 2021, page 27-28 states the following:
FI-C5 – Subsidiaries: It is recommended that financial institutions submit targets only at the parent- or group-level, not the subsidiary level. Parent companies must include the emissions of all subsidiaries in their target submission, in accordance with boundary criteria above. In cases where both parent companies and subsidiaries submit targets, the parent company’s target must also include the emissions of the subsidiary if it falls within the parent company’s emissions boundary, given the chosen inventory consolidation approach.
Hope this helps!
Thanks Lance for helping out here! Indeed the Subsidiaries criterion helps define what SBTi means by companies and below is the corporate version of this criterion(pretty much the same). So by “company” we mostly mean parent company and subsidiaries. Currently, the SBTi also does not engage with cities, local governments, public sector institutions, educational institutions or non-profit organizations.
C5 — Subsidiaries: It is recommended that companies submit targets only at the parent- or group-level, not the subsidiary level. Parent companies must include the emissions of all subsidiaries in their target submission, in accordance with boundary criteria above. In cases where both parent companies and subsidiaries submit targets the parent company’s target must also include the emissions of the subsidiary
Thank you both, very helpful and very swift!
Hi. I think the above partly answers the question but to check. Note that this doesn’t relate to the finance sector, though.
We have a client that is required to set an SBT for two sister companies that fill the same function but in neighbouring regions. They are treated internally as one company - they publicly report their environmental impact as one company. Ideally we would set a target that covers those two companies together.
However, they are subsidiaries of a holding company that also holds oil and gas-related companies. The client only wants to set targets for the two companies - not the whole group. It seems then, that technically the only way is to treat them separately and pay the fee twice rather than pay the fee once for the holding company but exclude all the other subsidiaries from scope which doesn’t seem “fair” in a way. Note that it is not that there is a desire to exclude the oil and gas companies - it’s more that they are irrelevant as it’s only by chance that they are sister companies and they are otherwise unconnected - it’s only the main two companies that have been asked to set SBTs - the holding company has nothing to do with it. It could be that the SBT is expanded in due course to other sister companies.
Is there any way we can combine the results of the two connected companies into one SBT?
Welcome to the community @TimC,
As the thread discusses, it is recommended that targets are set at the parent/group level and not for subsidiaries. At parent level the company is generally not allowed to exclude certain business lines or subsidiaries that are included in the boundary requirement.
So, you would not be able to combine two connected companies’ targets into one SBT. So either it has to be two separate targets or much preferred a target at the group/parent level, including all its in scope business lines and subsidiaries.