Could you help to clarify when we are required to include company Scope 3 targets in the temperature approach methodology? It is our understanding that as per SBTi, if Scope 3 emissions are <40% the total emissions profile, Category 1 - 14 emissions targets are not required for company submissions.
However it is not clear if, for financed emissions Category 15 targets, this cut-off also applies when we are incorporating company Category 1 - 14 targets for our analysis. It seems like we are required to have both language for a Scope 1 + 2 and Scope 1 + 2 + 3 target, even if Scope 3 emissions do not meet this 40% threshold.
You are correct that a company whos scope 3 (S3) is not 40% or more of scope 1 and 2 (S12) + scope 3 (S3) doesn’t have to set an S3 target. Hence, you are not required to include scope 3 targets for portfolio companies in the SBTi Finance Tool and its temperature rating method, as the S123 Temperature Score (TS) will equal to S12 TS for this company.
For companies without S3 targets and where S3 is 40% or more of S12+S3 they will get a default temperature score (TS) for S3 and this score will also weigh on the S123 TS, depending on S3’s relative weight in S12+S3. For the portfolio and company S12 TS it will naturally have no impact.
Financial institutions are unlikely to have S3 cat 15 below the 40% threshold and should therefore set S3 targets.