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Visualized: An Investor’s Carbon Footprint, by Sector

In the quest for a sustainable future, investors can play a crucial role in shaping our planet’s destiny.

Understanding the carbon emissions in different sectors is a key way to make environmentally and financially conscious decisions and help make a positive impact on the planet.

This infographic, sponsored by MSCI, looks at carbon emissions by sector.

Types of Carbon Emissions

Unsurprisingly, industries heavily reliant on fossil fuels and energy-intensive processes, like energy, materials, and industrials, have significant carbon footprints. In contrast, service-based and technology industries are traditionally less carbon-intensive.

To get an accurate picture of a sector/industry’s carbon footprint, it’s important to look up and down their value chain. Here is how policymakers categorize carbon emissions:

1. Scope 1: Generated directly by the organization and within its control e.g., on-site fuel combustion and internal industrial processes.
2. Scope 2: Indirect emissions from energy use, such as purchased electricity, heat, or cooling.
3. Scope 3: Indirect emissions, but different from Scope 2 emissions. These are emissions that the company does not directly control such as the emissions produced from a supplier or emissions generated from the use of its sold product.

Only looking at all three scopes of emissions can we arrive at a complete picture of a sector’s carbon footprint.

Volume of Carbon Emissions, by Sector

The following table breaks down the greenhouse gas emissions for each sector by scope. A sector’s carbon footprint is expressed in metric tons of CO2 equivalent for every $1 million in financing.

In other words, here’s how much of a climate impact a one million dollar investment has in each of the following sectors.

The total figure represents the weighted average carbon emissions of each sector’s constituents as of August 10, 2023:

Represented by tCO₂e/USD million EVIC. EVIC is the enterprise value including cash.

Understanding carbon footprint profiles can help investors evaluate the risks faced by carbon-intensive industries, such as future regulations and reputational challenges.

MSCI’s climate metrics empower investors to make responsible investments and drive meaningful change.

Download MSCI’s Climate Metrics Report.

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