What is the minimum to be considered a financial institution?

Criteria
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For real-economy companies going through the corporate target validation route that have some financial activities, the general approach proposed for incorporating their financed emissions (if/when relevant) is for the company to:

  1. Disclose if it is involved in any kind of financial services (e.g., lending, equity, debt, project finance). If yes, then calculate the % revenue coming from all financial services. If the revenue from financial services represents more than 5% of revenue, then check the asset classes involved.

  2. Calculate the % of revenue coming from in-scope asset classes as listed in Table 5.2 in the SBTi FI Guidance. Only in-scope asset classes (e.g., corporate loans, equity and debt investments (including the management of them), electricity project financing) would be relevant. Financing of all other assets (e.g., personal loans, credit card debt) would currently be out of scope.

  3. If those activities are in scope and represent >5% of total company revenue, then a financed emissions inventory would need to be compiled to see how relevant they are in emissions terms relative to the other scope 3 categories. Since real-economy companies (that are going through the corporate target validation route but have some financial activities) must set one or more near-term targets that collectively cover(s) at least two-thirds (67%) of their total (reported and excluded) scope 3 emissions (considering the minimum boundary of each scope 3 category in conformance with the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard), then it may be the case that the company would not need to cover their financed emission sources with FI targets if their other scope 3 categories made up over 67% of their total scope emissions and are already being covered by near-term targets.

  4. Once the financed emissions inventory is compiled, the target boundary should be defined, and the need to include the financed emissions will depend on their size relative to the other scope 3 emissions.

  5. If the company wants or needs to cover these financed emissions sources, then it can use this Guidance document to set FI targets.

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