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.


At BNP Paribas Asset Management, we started measuring the carbon footprint of our “Sustainable +” equity funds and mandates in 2011. In May 2015 we were among the first signatories of the Montreal Carbon Pledge, and committed to progressively measure and report the carbon footprint of our open-ended funds. Today we measure the carbon footprint of both equity and fixed income portfolios.


To calculate the carbon footprint of a fund, we apply the standards the GHG Protocol[1] provides, which include guidance and tools for measuring Greenhouse gas (GHG) emissions. In 2016, 92% of Fortune 500 companies that reported GHG emissions to the CDP applied GHG Protocol standards to measure and report their GHG emissions.

To be credible, the measurement of GHG emissions should cover the seven GHGs included in the Kyoto protocol: Carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PCFs), Sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3). The measurement scope of GHG emissions should take into account all the emissions associated directly or indirectly with the operations of the company.

Emissions are broken down into three categories (or scopes) that may vary in proportion depending on the company’s line of business.

  • Scope 1: Direct emissions from sources that are owned or controlled by the company.
  • Scope 2: Indirect emissions linked to the company’s companies’ purchased or acquired electricity, heat, steam and cooling.
  • Scope 3: All other indirect emissions, including those related to the use of its products.

To calculate the carbon footprint of a fund, companies’ CO2e emissions are added up and weighted by enterprise value[2] and the companies’ weight in the portfolio. The resulting indicator measures emissions generated for each euro invested in the fund.

Today, the measurement of scope 3 emissions and avoided emissions[3] is not standardised or considered sufficiently reliable to be used in reporting. As a result, the calculation of a company’s carbon footprint currently focuses on scope 1 and scope 2 emissions. As the data and indicators improve, scope 3 emissions calculations will become more reliable and the final calculation will be more relevant.

Given the importance of scope 3 emissions in certain sectors such as car manufacturing where the scope 3 emissions that occur during the life of the car account for 98% of its emissions, we developed an in-house methodology to calculate scope 3 emissions and are currently testing it.


According to the figures[4] of the Intergovernmental Panel on Climate Change (IPCC), greenhouse gas emissions (GHG) are concentrated in a limited number of sectors:

  • Electricity and heat production (25%),
  • Agriculture and forestry (24%),
  • Industry (21%),
  • Transport (14%),
  • Buildings (6.4%).

These sectors are critical in reaching the target of near zero carbon emissions by 2050. Contributing to the objective not only requires investing in low carbon sectors, but also in companies within the above sectors that are the most innovative and ambitious in terms of GHG emission reductions.


One tonne of CO2e is equivalent to:

  • 1 round trip Paris, France / Faro, Portugal by plane per person (approximately 3300 km) (or 293g CO2e/km)
  • The emissions of an average French car to drive 3800 Km (or 259g CO2e/km)
  • Sending 28,571 emails with an attachment (or 35g CO2e/email)


[1]GHG Protocol: international standard for measuring greenhouse gas emissions
[2]Simplified Enterprise Value, the sum of a company’s market cap and total debt is provided through BNPP AM’s Back to Front office tool, BlackRock Aladdin.
[3]The emissions avoided by a company as a result of the sale of products that enable end-customers to reduce their emissions.
[4]Climate Change 2014 Synthesis report


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.