The sustainable investor for a changing world

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Measuring Carbon Footprints

To avoid a climate crisis and limit the warming of global temperatures to well below 2°, it is necessary to cap and reduce total carbon emissions between now and the middle of the century. To be able to stay within this ‘carbon budget’ it is important to be able to measure emissions globally.

As an investor, to evaluate the environmental impact of our investments and assess the associated climate risk, we need to be able to measure the greenhouse gas emissions embedded in those investments. This measure is commonly called a carbon footprint.


A necessary step towards measuring the environmental impact of our investments, as well as assessing their associated climate risks, is to measure the quantity of greenhouse gas emissions embedded in them. We have been measuring the carbon emissions of all our equity investment solutions for sustainability since 2011. We are now measuring the carbon emissions of both equity and fixed income portfolios.

In May 2015, we were one of the first signatories of the Montreal Carbon Pledge. By signing it, we committed to progressively measuring and publicly reporting the carbon footprint of our open-ended funds in an informative and explanatory way. In December 2018, we measured and reported the carbon footprint on more than €50 billion of assets under management on open-ended fixed-income and equity funds. As part of our Global Sustainability Strategy, we committed in 2019 to reporting the carbon footprint of a wider range of our portfolios and for these portfolios to have a lower carbon footprint than their respective benchmarks. As part of our Net Zero roadmap, we have committed to reducing the carbon footprint of BNP Paribas Asset Management’s in-scope AUM by 50% by 2030. Additionally, carbon emissions measures have been a heavily weighted factor in our proprietary ESG scoring model since inception.


The GHG Protocol sets up the standards to measure Greenhouse gases (GHG) emissions that are widely used by corporates. A credible measure of GHG emissions should cover the seven GHG covered by the Kyoto protocol: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PCFs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3). By convention these GHG are measured in CO2 equivalent to ease the comparison (CO2e) GHG emissions should be measured along the operational boundaries of the company and should take into account all the emissions associated directly or indirectly with the operations of the company. Three “scopes” of emissions are defined for GHG accounting to categorize direct and indirect emissions:

  • Scope-1 emissions are the direct GHG emissions that “occur from sources that are owned or controlled by the company like emissions from combustion in owned or controlled boilers, furnaces, vehicles, emissions from chemical production in owned or controlled process equipment”.[1]
  • Scope-2 emissions are those linked to the generation of purchased electricity consumed by the company.
  • Scope-3 emissions are all the other indirect emissions that “occur from sources not owned or controlled by the company like the one linked to extraction and production of purchased materials; transportation of purchased fuels; and use of sold products and services”.  

As at today, BNPP AM uses Scope-1 & 2 to calculate companies’ emissions and portfolios’ carbon footprints. Scope-3 emissions are not yet taken into account in the calculation due to coverage and accuracy concerns related to Scope-3 emissions across BNPP AM’s investment universe. BNPP AM is currently developing a methodology to calculate Scope-3 emissions and plans to integrate it in the portfolio carbon footprint calculation as soon as possible.


The need to measure a carbon footprint for all portfolios and benchmarks means BNPP AM needs data covering global investments. While disclosure has improved since BNPP AM began its carbon footprint work, most companies worldwide still do not disclose information on their carbon emissions.  BNPP AM has therefore decided to supplement corporate disclosure with estimation methods, in order to provide better reporting of our environmental impact and to support carbon reduction in the absence of reported data.

After having reviewed different data providers, BNPP AM has decided to use a tiered approach to carbon footprint, blending data sourced from the Carbon Disclosure Project (CDP), Bloomberg, and Trucost, with final review of estimated data based on a proprietary machine learning model. We have pursued this approach to maximise both coverage of directly reported figures and confidence in the estimated data that we are using.

For the purposes of normalising carbon emissions to be comparable across issuers, a source of financial data at issuer level is necessary. For this, BNPP AM uses Factset’s Refinitiv Worldscope fundamentals data to collect the Enterprise Value for each company.

To reduce volatility, to help align Enterprise Value with CO2e Emissions, and to align with regulatory definitions, BNPP AM has selected Enterprise Value Including Cash (EVIC) as a denominator. EVIC data is extracted as of the end of the fiscal period consistent with the period over which CO2e Emissions were measured. The Carbon Footprint of a given issuer is defined as the ratio of the scope 1 and 2 emissions of a company to its respective EVIC:


For BNPP AM, a portfolio’s carbon footprint is the weighted sum of the ratios of the carbon emissions of companies to their respective EVIC. The sum is weighted by the weight of each company in the portfolio. Carbon emissions are the sum of Scope 1 and 2 emissions:


Wptf,i: Portfolio weight in company i

CO2e Emissions i: sum of Scope 1 & 2 CO2e emissions expressed in tons for company i

Enterprise Value Including Cash (EVIC) i: Market Capitalization of ordinary & preferred shares + minority interest + total debt for company i

In case some portfolio companies do not have carbon footprint data, or the portfolio holds asset classes not covered by carbon footprint methodologies (e.g., cash), the calculation will be adjusted to account for the total portfolio weight covered by carbon footprint data, to avoid any bias from lack of coverage. The coverage-adjusted portfolio carbon footprint formula will therefore be:


[1] The Greenhouse Gas Protocol, A Corporate Accounting and Reporting Standard, revised Edition, March 2004


Investment made in these funds are submitted to market fluctuations and risks inherent to securities investment. Value of investments and earned income may record uptrends and downtrends, and investors may not recover the full amount of initial investment. Funds described all contain a certain risk of capital loss.

BNP PARIBAS ASSET MANAGEMENT France, “the investment management company,” is a simplified joint stock company with its registered office at 1 boulevard Haussmann 75009 Paris, France, RCS Paris 319 378 832, registered with the “Autorité des marchés financiers” under number GP 96002.

This material is issued and has been prepared by the investment management company. It contains opinions and statistical data that are considered lawful and correct on the day of their publication according to the economic and financial environment at the time. This material  does not constitute investment advice or form part of an offer or invitation to subscribe for or to purchase any financial instrument(s) nor shall it or any part of it form the basis of any contract or commitment whatsoever.

This material is provided without knowledge of an investors’ situation. Prior to any subscription, investors should verify in which countries the financial instruments referred to in this material refers are registered and authorised for public sale. In particular financial instruments cannot be offered or sold publicly in the United States. Investors considering subscriptions should read carefully the most recent prospectus and Key Investor Information Document (KIID) agreed by the regulatory authority, available on the website. Investors are invited to consult the most recent financial reports, which are also available on the website. Investors should consult their own legal and tax advisors prior to investing. Given the economic and market risks, there can be no assurance that the financial instrument(s) will achieve its investment objectives. Their value can decrease as well as increase. In particular, changes in currency exchange rates may affect the value of an investment. Performance is shown net of management fees and is calculated using global returns with time factored in, with net dividends and reinvested interest, and does not include subscription-redemption fees.