Setting a Baseline: What is in and out of scope

  • (For PE scope 3 category 15) When setting the base year e.g. 2022 and calculating the baseline emissions, does one include the emissions of portfolio companies held at the time of 2022, even if they were divested later in 2022?
  • If a company was divested in the baseline year, should a % of the emissions relative to the time held be included in the baseline emissions calculated? Or can it be excluded?

Assuming you are setting a Portfolio Coverage target, the baseline SBT portfolio coverage % simply needs to be calculated based on the baseline portfolio (regardless of any divestments that occur later). This baseline SBT portfolio coverage % is then used to calculate the minimum ambition that is required (i.e., so that the FI is on a linear path to 100% portfolio coverage by 2040). For example, an FI starting with 10% coverage in 2020 would need to increase coverage by 4.5% per year ((100% – 10%) / (2040 – 2020)) and reach at least 32.5% (10% + [(2025 – 2020) x 4.5%]) coverage by 2025. Progress would then be calculated at a specific point in time each year based on the portfolio that the FI has at each point in time.

Could you advise what is included in the baseline portfolio as this is not clear in the guidelines. Is this the companies that we held in 2022 the base year? Or is this the companies we hold now in 2023 using their 2022 emissions at the time of submitting our intentions to commit?

The baseline portfolio is the portfolio as of the base year. The date used for that should also be the date used each year to calculate progress (e.g., calendar or fiscal year end).

Thank you,
For the baseline year, does one need to apportion the emissions for companies that are sold and acquiried during the year. E.g. if company X was bought in March we calculate only the emissions between March - December, and similarly if company Y was sold in August, we only count the emissions between January - august?

Annual emissions of all the companies that are in the portfolio as of the date of reporting shall be included.

What it if is not possible to have the annual data, once a company is sold we no longer have access to the emissions data, similarly to when one acquires a company we don’t have access to the data prior to acquisition. So shouldn’t it only be based on the data from ownership?

% SBT portfolio coverage can also be calculated based on a financial metric.

Thanks but we wish to follow the hierarchy approach and emissions data is ranked above the financial metric for preferred option.

Also why the whole year’s data? when the PE has only owned it for part of a year. From my experience in working in listed companies if they make acquisitions they only account for the part year where they have added an entity, and similar for any divestments when recalculating their scope and targets.