We are a private equity firm currently considering setting SBTs at portfolio level. We invest in renewable energy assets and understand those are considered electricity generation assets (and should therefore set SBTs using the SDA).
Could you please confirm if it is mandatory for them to set targets (given their already limited sc 1 & 2 footprint and positive contribution especially)? or would there be an alternative for us when setting portfolio targets?
In case setting SBTs for all our renewable energy assets using the SDA is mandatory, which scopes should be included for this type of companies ? Would scope 3 emissions need to be taken into consideration?
Renewable energy assets still need to be covered by targets.
However, FIs that only finance renewable electricity projects may set targets to continue doing so. For example, an appropriate target would be: [Financial Institution] commits to continue providing electricity generation project finance for only renewable electricity through 2030.
Otherwise, using the SDA is mandatory and scope 1+2 should be included.
Thanks for providing above clarification, it is very useful!
I have a few qualifying questions as I can’t see any specific guidance on the matter:
i. Can this type of target be used for other infrastructure investments in the green transition (not electricity generation), for example Power to X, electricity storage (batteries, pumped hydro etc.), biofuels, etc.?
ii. If a PE firm previously have made investments in infrastructure projects that does not fall under RE100 definition of renewable energy (e.g. have made investments in an waste-to-energy asset), can they still make such target as long as they commit to all future electricity generation investments being in only in renewable electricity?
Table 5.2 of the Near-Term Financial Sector SBT Guidance, which provides minimum coverage requirements, has been updated in the draft Version 2 with more granular specifications for each asset class. For example, infrastructure project finance and investments in infrastructure assets are currently out of scope while loans to infrastructure companies and investments in equity/debt securities issued by
infrastructure companies are in scope.
A low emissions intensity maintenance target has also been proposed for electricity generation project finance under certain conditions. This is to help accommodate FIs that have already achieved, at a portfolio level, the emissions intensity required to align with the 2030 sector intensity level in a 1.5°C pathway. Please see Section 5.4.1 and Appendix C for more details.
The proposed changes are up for public consultation so we welcome your feedback/questions on this document, and two other new documents, through the survey by Aug 14.