SME & Financial Institution

As a PPP investor in social infrastructure we qualify as “Financial Institution”. However with less than 30 employees we qualify as SME. Which track should register to?

Thanks for your question! FIs per SBTi’s definition are not eligible to use the SME option. However, please first check if you fall under SBTi’s definition of an FI:

The SBTi defines a financial institution as a company whose business involves the arrangement and
execution of financial and monetary transactions, including deposits, loans, investments, and currency
exchange. More specifically, the SBTi deems a company a financial institution if 5 percent or more of its revenue or assets comes from the activities described above.

In practice (and for the first phase of the project from 2018 to 2020), the primary audience includes
universal banks, asset managers (mutual funds), asset owners (pension funds, closed-end funds,
insurance companies), and mortgage real estate investment trusts (REITs). The framework is also
relevant for other financial institutions that have holdings in the following asset classes where methods
are currently available:
- Real estate
- Mortgages
- Electricity generation project finance
- Corporate and consumer loans, bonds, and equity

Asset classes beyond this list are currently out of scope. Bilateral and multilateral development financial institutions (e.g., the World Bank) are not the primary audience of the project. Equity REITs, namely real estate companies that own or manage income-generating properties and lease them to tenants, are not a target audience of this project and shall pursue the regular target validation route for companies. Additional audiences and asset classes are expected to be included in Phase II of the project.

Thanks for your answer.

Our fund being a closed-ended fund, it fits the definition for a FI quoted above. When looking at the Financial Sector Targets Guidance Document, Table 5.2: “Other project finance (e.g., infrastructure)” is out of scope of the current version.

Does this confirm confirm that: As a closed-ended fund, investing directly in infrastructure assets, we are out of scope of the current SBTi framework for FI?

Many thanks.