Good afternoon,
When an FI which has committed to a 2040 net zero target score of 1.5, is there a required ratio or rule for calculating a 2030 interim target? Does this need to be linear between current score and 1.5? Or can this be less aggressive?
Thanks,
Cassandra
Hi Cassandra,
The 2030 temperature score should be calculated so that it’s on a linear trajectory to 1.5C in 2040, and it’s detailed in below in FI-C17.3, the “Target level of ambition” bullet, in the FI guidance:
FI-C17.3 – Portfolio Temperature Rating Targets: Financial institutions’ targets to align the Temperature
Rating of their corporate debt and equity portfolios with ambition of the Paris Agreement are
considered acceptable when the following conditions are met:
• Boundary: Financial institutions shall set portfolio Temperature Rating targets on corporate
instruments as specified in the Required Activities and Methods Table (Table 5.2).
• Target Level of Ambition: Financial institutions shall align their portfolio scope 1 + 2 temperature
score with a minimum well-below 2°C scenario and in addition align their portfolio to a
minimum 2°C scenario for the scope 1 + 2 + 3 portion by 2040. Alignment with more ambitious
scenarios such as 1.5°C is highly encouraged. Separate targets for scope 1 + 2 and for scope 1 + 2+ 3 shall be set.
Financial institutions shall commit to reducing their portfolio temperature scores such that the
financial institution is on a linear path to the stated goal by 2040. For example, a financial
institution starting with scope 1 + 2 portfolio temperature score of 2.9°C in 2020 would need to
decrease its portfolio temperature by at least 0.0575°C per year ([2.9°C – 1.75°C]/[2040 – 2020])
= 0.0575°C, and reach at least 2.61°C portfolio temperature score by 2025.
For example, a financial institution starting with scope 1 + 2 + 3 portfolio temperature score of
3.2°C in 2020 would need to decrease its portfolio temperature by at least 0.06°C per year
([3.2°C – 2°C]/[2040 – 2020]) = 0.06°C, and reach at least 2.9°C portfolio temperature score by
2025.
• Target Time frame: Portfolio alignment targets must be fulfilled within a maximum of five years
from the date the targets are submitted to the SBTi for an official validation.
• Scope of Borrower and/or Investee Targets: Financial institutions’ borrowers’ and/or investee’s
targets shall include coverage of scope 1 and 2 emissions, as well as scope 3 emissions when
their scope 3 emissions are more than 40 percent of total scope 1, 2, and 3 emissions.
FIs must set a 5 year short term target (as described in the “target timeframe” bullet) and can optionally set longer term targets.
Thank you Chendan, much appreciated.
thanks for the awesome information.
thanks my issue has been fixed.