27 NOV.


More about the scope of Carbon Footprinting

Greenhouse gas emissions are categorised into different 'scopes' by the most widely-used 
international accounting tool, the Greenhouse Gas (GHG) Protocol.

The GHG Protocol Corporate Standard classifies a company’s GHG emissions into three ‘scopes’:

  • “Scope 1” emissions are direct emissions from owned or controlled sources.
  • “Scope 2” emissions are indirect emissions from the generation of purchased energy.
  • “Scope 3” emissions are all indirect emissions (not included in scope 2) that occur in the value chain 
    of the reporting company, including both upstream (supply chain emissions) and downstream 
    emissions (emissions during use of sold products by end consumers).

Taking into account Scope 3 emissions for the carbon footprint of a portfolio investing in multiple companies doing business with each other, can give rise to double and even triple counting.

In the extreme case of these 3 companies being the only companies invested in, emission figures

  • under scope 3 of the coal-extraction company (indirect, combustion-related emissions)
  • under scope 1 of the company producing the electricity via coal combustion
  • under scope 2 of the company using the electricity purchased by the electricity network

are representing the same emissions (cf. red highlights in diagram).

This example clearly illustrates the problem of the double (triple, even) counting with which we are faced when calculating the carbon footprint.

Therefore, to avoid this, we exclude scope 3 emissions from our portfolio carbon footprint calculations.

For more information on how emissions scopes are taken into account in our SRI selection, please see "Carbon's SRI approach beyond the Carbon Footprint"