SDA covers parts of a borrower’s emissions/ borrower with multiple business activities

Methods
1

What target setting method is recommended if only parts of borrower’s emissions can be covered by an SDA? E.g. a borrower generates power and also refines natural gas.

Can/should the power SDA be applied for the portion of Scope 1 emissions related to power generation? If yes, how can the remaining emissions be considered under the Temperature Rating approach? (We have decided against Portfolio Coverage) Is there a % threshold of Scope 1 emissions above which the SDA should be fully applied?

1 Like
2

Dear SBTi team,

I want to follow up on the above and appreciate your guidance .
Especially if only parts of the emissions can be covered by the Power SDA.

Many thanks for your support.
Best,
Christin

3

Dear SBTi team,
I’d appreciate your reply on this question.
Thank you,
Christin

4

I would say that the power SDA can be applied for the portion of emissions related to power generation as if that portion represented one company. And the remaining emissions could be considered under the Temperature Rating (TR) method as if that portion represented another company. Since the borrower isn’t fully in electricity generation, perhaps a cleaner way would be to use TR for both portions separately (as different sectors) and then aggregate them into one company score. There is currently no explicit % threshold above which the SDA should be fully applied otherwise, though if emissions from power generation made up >95% of total scope 1+2 emissions for a company, it could exclude up to the remaining 5%.

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5

Hi Howard, building on this, I noticed the following relating to the real estate SDA on p38 of the PE guidance: If a PC is a conglomerate that’s involved in both manufacturing and real estate activities, it may be more suitable to cover the PC within the SBT portfolio coverage target, given the method is sector-agnostic
could the same logic be applied to conglomerates that only have a small part of their business representing electricity generation - i.e. for the company to then be covered within the PC target?

6

I would say that it should be fair to use the same logic in your particular case.