Setting a 2030 interim target

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

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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.

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