In the V1.1 standard, target setting for electricity generation could not have been counted towards the portfolio target boundary (PTB) of 67%. Our interpretation from V2 standard is such that all loans also to electricity generation sector can be accounted for when calculating PTB of 67%. Could you kindly confirm if our interpretation is correct?
This is a major update from previous version and requirement. Would be great to get few sentence also to get the input on why the SBTi has decided to make this change?
More flexibility has indeed been added to the FI Near-Term (FINT) Criteria Version 2.0 to address feasibility challenges raised by FIs but I believe you may be mixing up some terminology.
Generally, in FINT V1.1, there are separate minimum coverage requirements for loans to companies in the real estate sector (67%), electricity generation sector (100%), fossil fuel sector (95%), and then all other sectors (67% separate from the 3 aforementioned sectors). Generally, in FINT V2, there are separate minimum coverage requirements for loans to companies in the electricity generation sector (100%) and fossil fuel sector (100%), while the broader minimum coverage requirement of 67% for all other sectors can now include any mix of corporate loans (including electricity generation and fossil fuel).
The minimum coverage floor (i.e., 67% of PTB) is a separate requirement to make sure FIs are subject to an overall minimum coverage requirement that allows us to feel more comfortable with allowing more flexibility, such as with the above on corporate loans.
You can read more about the development process of FINT V2 in the Main Changes Document.
And thanks for confirmation that minimum coverage requirement of 67% on for all other sectors can now include also electricity generation loan which for us is the biggest share of our corporate loans and hence is a welcomed change from SBTi.
And I did indeed mix up the terminology. I understand 67% of PTB should consider all optional and mandatory asset classes (therefore not limited to only corporate loans)