Carbon footprint
What is Carbon footprint?
A carbon footprint is an estimate of greenhouse-gas emissions associated with an entity, activity, product, financed asset, or portfolio over a defined boundary.
Portfolio carbon numbers should disclose enterprise-value date, emissions year, currency, scope coverage, estimation rate, and denominator. Comparing two portfolios without aligning these inputs can create a larger apparent difference than the underlying emissions exposure and may reward missing or stale company data. Restatements must remain visible in historical series.
Scopes and boundary
Scope 1 covers direct emissions from controlled sources, Scope 2 covers purchased energy, and Scope 3 covers other value-chain emissions in defined categories. Organizational control, equity share, geography, gases, consolidation, and time period affect totals. Scope 3 can be much larger but is harder to measure and can be counted by several companies along a value chain.
Measurement
Companies combine activity data with emissions factors or use direct measurement. Carbon dioxide equivalent converts gases using stated global-warming potentials. Reported values can be assured, estimated, restated, or missing. Comparability requires aligned methodology, fiscal period, market- versus location-based electricity treatment, and scope coverage. Precision should not exceed the quality of inputs.
Financed emissions
Financial institutions attribute a share of company or asset emissions using an exposure and attribution method. Results depend on asset class, enterprise value, debt treatment, ownership, and data quality. Financed emissions describe portfolio association, not necessarily emissions caused by the investor. Adding asset classes requires compatible boundaries and explicit treatment of cash, derivatives, sovereigns, and funds.
Portfolio interpretation
A footprint can identify concentration and establish a baseline, but changes can reflect trades, market values, company activity, estimation, acquisitions, or methodology. Selling a high emitter reduces reported financed emissions without directly reducing atmospheric emissions. Assess absolute levels alongside intensity, targets, capital expenditure, transition plans, and engagement, while preserving sector and regional context.
Practical reporting
Disclose scopes, coverage, estimation, data year, attribution factor, denominator, currency, restatements, and assurance. Avoid adding overlapping Scope 3 data without explaining double counting. Do not label emissions as avoided or reduced without a counterfactual and evidence. Historical series should preserve contemporary methodology or clearly restate every period on a consistent basis.
Sources and further reading
- Corporate Standard, Greenhouse Gas Protocol
- The Global GHG Accounting and Reporting Standard Part A, Partnership for Carbon Accounting Financials