I have a listed equity portfolio where it is possible to apply SDA for some companies and calculate a sector target. For the οther companies whose sector is not covered by SDA, I will apply the TS method.
Given that these two methods will give a different output within the same portfolio (an emission intensity indicator for SDA and a temperature score for TS), I would like to ask you, for reporting purposes if it is necessary to formulate a unique target for our portfolio by combining (and how?) these two different outputs or not?
Thanking you a lot and in advance
You can use any combination of SDA, Portfolio Coverage and Temperature rating for your listed equity target. Regarding the target language, here’s a post from @ChendanY discussing the options.
Following up on this conversation, I would just like to confirm that a FI is allowed to use the temperature rating even when SDA pathways are available for the particular loan/group of loans. Could you confirm?
As long as Temperature Rating (TR), Portfolio Coverage and SDA are allowed methods for the specific asset class/activity you can use whichever method you want for that asset class. You can also mi and match within an asset class, e.g. cover certain sectors with SDA and others with TR in an equity portfolio for instance. Please review table 5.2 in the guidance for details of which methods you can use for each asset class/activity.