The Carbon Intensity metric

Carbon Intensity is a measure of carbon dioxide equivalents emitted by a portfolio per $1 million of assets under management. Put simply, it measures how much carbon is produced for every dollar invested. It is currently applied only on the equity component of the portfolio.

As carbon becomes constrained, higher carbon intensity can imply greater exposure to carbon-related risks.

We use independent third-party carbon analytics specialist, EMMI, to provide the Portfolio Carbon Intensity.

What is a carbon footprint?

Emissions are the gases, particles or radiation released into the atmosphere. Greenhouse gas emissions (such as carbon dioxide, methane, and nitrous oxide) trap additional heat in the earth’s atmosphere, leading to a rise in global average temperatures, which drives climate change.

A company’s carbon footprint is the amount of greenhouse gas emissions produced because of its operations, across Scope 1, 2, and 3 emissions. Carbon footprint is calculated per tonne of carbon dioxide equivalent (CO2e).

How does Carbon Intensity get calculated?

The Carbon Intensity calculation is provided by EMMI and is based on the carbon footprint of the portfolio, adjusted for the size of the portfolio. It includes scope 1, 2, and 3 emissions.

• 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 other indirect emissions that occur in the value chain of the reporting company, including both upstream and downstream emissions

By monitoring Portfolio Carbon Intensity, we can compare the carbon impact of a portfolio and compare it with broad market indexes, such as the MSCI World, which is a global shares index.

Is a HIGH carbon Intensity 'bad'?

When a portfolio has a higher carbon intensity than a market index, we identify the reasons and decide whether it's acceptable. For example, companies that are still in the process of transitioning to cleaner energy may have higher carbon intensity scores today, but these should fall over time.

Last updated 13 October 2022