Skip to main content
Back to Glossary
Definition

Portfolio carbon footprint Definition

A portfolio carbon footprint sums the GHG emissions attributed to investments and usually divides that total by portfolio value to report tonnes of carbon dioxide equivalent per million invested.

What is a portfolio carbon footprint?

A portfolio carbon footprint starts with the greenhouse gas emissions allocated to each investment, then adds them across the portfolio. The absolute sum is total financed emissions. Dividing that sum by the portfolio's value gives a normalized footprint, usually reported as metric tonnes of carbon dioxide equivalent (tCO2e) per million currency units invested.

Names and reporting units differ by method. The TCFD's 2021 Implementing Guidance, Table 3, calls the normalized result a carbon footprint and expresses it in tCO2e per US$1 million invested. The PCAF Financed Emissions Standard, third edition, calls the comparable portfolio-value ratio economic emission intensity and specifies tCO2e per €1 million or US$1 million invested or loaned. State which method, currency and emissions scopes you used rather than presenting the label alone.

Why does a portfolio carbon footprint matter to you?

A limited partner (LP), board or regulator may ask for the reporting date, portfolio boundary, absolute financed emissions, normalized footprint, Scope 1, Scope 2 and Scope 3 coverage, estimated-data share and comparison with a benchmark or target. FCA rule ESG 2.3.9R requires in-scope UK firms' product reports to include total carbon emissions, total carbon footprint and weighted average carbon intensity (WACI), plus limitations and annual history.

The figure helps you find which holdings drive the attributed total and compare portfolios of different sizes. It does not prove that an investment caused those emissions or that a lower number reflects real-world reductions. Keslio's portfolio management support covers portfolio assessment, data gathering, target setting and sustainability reporting.

How is a portfolio carbon footprint calculated?

Choose an asset-class method and one calculation date first. Under PCAF, listed equity and corporate bonds use the investment's outstanding value divided by the investee's enterprise value including cash (EVIC) as the attribution factor. Multiply that percentage by the investee's emissions, repeat for every holding and add the attributed results. Other asset classes use different denominators.

For the normalized figure, divide total attributed emissions by the portfolio value in millions: tCO2e / million invested. Keep Scope 1 and Scope 2 separate from Scope 3, state which Scope 3 sectors or categories you included, and report the percentage of portfolio value covered by reported, estimated and unavailable data. Keep emissions dates, financial values and currency conversions aligned.

What mistakes should you avoid?

  • Mixing a TCFD market-capitalization formula with PCAF's EVIC attribution and leaving the method unnamed.
  • Comparing two footprints with different Scope 3 coverage, calculation dates or portfolio boundaries.
  • Treating an estimate, market-value change or sold holding as an operational emissions reduction.
  • Publishing only the normalized ratio and hiding the absolute total, data coverage or exclusions.

Is a portfolio carbon footprint the same as financed emissions?

No. Financed emissions are the absolute tCO2e attributed to loans and investments. A portfolio carbon footprint commonly divides that absolute total by portfolio value, which helps compare differently sized portfolios. Report both so a valuation change cannot hide a rise in absolute emissions.

How does a portfolio carbon footprint differ from WACI?

A carbon footprint allocates issuer emissions to the investor, sums them and divides by portfolio value. WACI instead weights each issuer's Scope 1 and Scope 2 emissions per million of revenue by its portfolio weight. WACI measures exposure to emissions-intensive companies, not attributed emissions.

What should you send when an LP asks for the figure?

Send the calculation date, holdings file, portfolio value and currency, asset-class method, attribution denominators, investee emissions by scope, source year, data-quality score, estimated-data share, exclusions, absolute financed emissions, normalized result and prior-year comparison. Keep the emissions files and financial values used for each holding.

Example

Suppose a fund holds listed shares in an electronics contract manufacturer in Thailand. During 2026, the manufacturer records 400,000 litres of liquefied petroleum gas (LPG) used for process heat. The Keslio factors dataset lists 1.55713 kg CO2e/litre from UK DESNZ and DEFRA's 2026 Government GHG Conversion Factors for Company Reporting. Its geography is the United Kingdom, so this is a disclosed country-mismatch proxy for the example. The manufacturer must replace it with a suitable Thai factor before external reporting.

Investee emissions: 400,000 litres x 1.55713 kg CO2e/litre = 622,852 kg CO2e, or 622.852 tCO2e. At the calculation date, the fund's shares are worth THB 150 million and the manufacturer's EVIC is THB 3,000 million. The PCAF attribution factor is 150 / 3,000 = 5%. Attributed LPG emissions are 622.852 tCO2e x 5% = 31.1426 tCO2e.

The fund's other holdings contribute 368.8574 tCO2e, making total attributed emissions 400 tCO2e. With a current portfolio value of THB 800 million and a hypothetical calculation-date exchange rate of THB 40 per US dollar, the portfolio value is US$20 million. The normalized footprint is 400 / 20 = 20 tCO2e per US$1 million invested. The exchange rate is an example input, not a claim about the 2026 market rate. This covers one Scope 1 source at one company, not the fund's complete footprint. Full reporting needs the stated Scope 1, Scope 2 and Scope 3 boundary for every covered holding.

Where it comes up

PCAF listed-equity attribution and portfolio absolute-emissions and economic-emission-intensity metricsPCAF Part A, third edition, Chapter 5.1 p. 43, Box 5.1-3 pp. 50-52, and Chapter 6.1 pp. 160-166Official sourceTCFD total carbon emissions and carbon footprint definition, formula and limitationsTCFD Implementing Guidance 2021, Table 3, pp. 52-53Official sourceFCA product-report requirements for total carbon emissions, total carbon footprint, WACI, limitations and annual historyFCA Handbook ESG 2.3.9R(1)(c)-(e) and ESG 2.3.9R(2)(a)-(b)Official source

Related terms

Financed emissions

Financed emissions are the share of a borrower's or investee's gross GHG emissions allocated to a bank, fund or asset owner through the loans and investments it holds.

Weighted average carbon intensity (WACI)

Weighted average carbon intensity (WACI) measures a portfolio's exposure to carbon-intensive companies by weighting each holding's Scope 1 and Scope 2 emissions per million of revenue by its share of portfolio value.

PCAF Standard

The PCAF Standard assigns financial activities to methods for measuring and disclosing emissions associated with loans, investments, capital-markets facilitation, and insurance underwriting.

Scope 3 Emissions

Scope 3 emissions are the indirect greenhouse gas emissions from goods, services, transport, product use, investments, and other upstream and downstream activities outside your company's Scope 1 and Scope 2 boundary.

Responsible Investing

Responsible investing considers environmental, social and governance information when investors allocate capital, manage holdings and use their influence to pursue stated financial objectives and, where applicable, sustainability objectives.

Sources

Last verified 2026-08-19

Ready to start?

Tell us what you need.

Bring us the sustainability request, reporting deadline, or strategy question you are facing. We will read it and suggest a practical first step, and the first conversation is free.

Get in touch
Portfolio carbon footprint Definition | Keslio