Target setting method for listed equity and bonds

Hi,

1.For a company’s “listed equity and bonds” portfolio including stocks, bonds, mutual fund and ETF, can the company set targets based on percentage of assets under management of the portfolio? For example, set a Temperature Rating target covering 50% of the portfolio, and set a SBT portfolio coverage target covering the other 50% of the portfolio? If so, could you give us an example for this kind of target setting wording?

Or should the company set the “listed equity and bonds” target by asset class or sector separately?

2.If we used the Temperature Rating method to set our portfolio target, could we assume that the temperature scores of the objects which have been set SBT are consistent with their SBT? (E.g. 1.75 degrees or 1.5 degrees)

If so, some of them didn’t set S3 targets, could we assume their S1+S2+S3 temperature score equal to S1+S2 temperature score. Because their scope 3 emissions are not important.

Thank you!

Welcome to the community @CCC,

  1. Yes, you can use one method for one part of the portfolio and another method for the rest of the portfolio, as long as total coverage meets the minimum requirements in table 5.2 in our guidance. Regarding target language, please let me refer you to @SBTifinance.

  2. Please see this post that explains the difference between the CDP-WWF temperature rating method and approved SBTi targets.

On the target language question, if you are setting a temperature rating target on 50% of your stocks and bonds and a SBT portfolio coverage target on the other 50% of stocks and bonds, you can describe them as follows as per the current target language template:

SBT portfolio coverage: Investment Firm A commits that XX% of its equity and bonds portfolio by [unit] will have set science-based targets by 2025.

Temperature rating: Investment Firm A commits to align its scope 1 + 2 portfolio temperature score of its listed equity and bonds from XX°C in 2018 to XX°C by 2025. Investment Firm A commits to align its scope 1 + 2 + 3 portfolio temperature score within listed equity and bonds from XX°C in 2018 to XX°C by 2025.

Note that this not yet specifies that the 1st target covers half of the portfolio and the 2nd target covers the other half. Given how portfolio coverage targets are described, it can be slightly confusing to add that it’s 50% of the portfolio that’s covered. We will brainstorm ways to provide that target level information on the SBTi website, perhaps in a table format, to provide more details on the coverage of each target, without crowding the target language itself.

Please also note that during the validation process, the reviewer will provide guidance on revising target language wherever necessary.