Portfolio Carbon Intensity Calculator
Our other calculator computes portfolio carbon intensity accurately. Enter measurements for results with formulas and error analysis.
Formula
WACI = Sum of (Weight_i x Emissions_i / Revenue_i)
Where Weight_i is the portfolio weight of holding i (market value of holding / total portfolio value), Emissions_i is total Scope 1+2 greenhouse gas emissions in tCO2e, and Revenue_i is annual revenue in millions USD. The sum is taken across all holdings in the portfolio.
Worked Examples
Example 1: Three-Stock Portfolio Assessment
Problem: Portfolio value $100,000. Company A: $50,000 invested, 120 tCO2e emissions, $200M revenue. Company B: $30,000 invested, 80 tCO2e, $150M revenue. Company C: $20,000 invested, 40 tCO2e, $100M revenue.
Solution: Company A: weight = 50%, intensity = 120/200 = 0.60, weighted = 0.50 x 0.60 = 0.300\nCompany B: weight = 30%, intensity = 80/150 = 0.533, weighted = 0.30 x 0.533 = 0.160\nCompany C: weight = 20%, intensity = 40/100 = 0.40, weighted = 0.20 x 0.40 = 0.080\nWACI = 0.300 + 0.160 + 0.080 = 0.540
Result: WACI: 0.54 tCO2e/$M revenue | Attributed emissions: 84 tCO2e | Rating: High Carbon
Example 2: Low-Carbon Portfolio Comparison
Problem: Portfolio value $200,000. Green Energy Co: $100,000 invested, 10 tCO2e, $500M revenue. Tech Co: $60,000 invested, 15 tCO2e, $300M revenue. Healthcare Co: $40,000 invested, 8 tCO2e, $200M revenue.
Solution: Green Energy: weight = 50%, intensity = 10/500 = 0.02, weighted = 0.50 x 0.02 = 0.010\nTech Co: weight = 30%, intensity = 15/300 = 0.05, weighted = 0.30 x 0.05 = 0.015\nHealthcare: weight = 20%, intensity = 8/200 = 0.04, weighted = 0.20 x 0.04 = 0.008\nWACI = 0.010 + 0.015 + 0.008 = 0.033
Result: WACI: 0.033 tCO2e/$M revenue | Attributed emissions: 14.2 tCO2e | Rating: Low Carbon
Frequently Asked Questions
What is portfolio carbon intensity and why does it matter?
Portfolio carbon intensity measures the greenhouse gas emissions associated with an investment portfolio, typically expressed as tons of CO2 equivalent per million dollars of revenue. It matters because investors increasingly need to understand and manage the climate-related risks embedded in their portfolios. The Task Force on Climate-related Financial Disclosures (TCFD) recommends weighted average carbon intensity as a key metric for portfolio climate analysis. High carbon intensity portfolios face greater regulatory risk, potential stranded asset exposure, and reputational concerns as the world transitions toward a low-carbon economy.
How is Weighted Average Carbon Intensity (WACI) calculated?
WACI is calculated by summing the product of each holdings portfolio weight and its carbon intensity. For each holding, the carbon intensity is computed as total Scope 1 and Scope 2 emissions (in tCO2e) divided by revenue (in millions of dollars). The portfolio weight is the market value of each holding divided by total portfolio value. The formula is: WACI = Sum of (Weight_i x Emissions_i / Revenue_i) for all holdings i. This approach, recommended by TCFD, normalizes for company size and allows comparison across portfolios of different sizes, making it the industry-standard metric for portfolio-level climate assessment.
What are Scope 1, Scope 2, and Scope 3 emissions in portfolio analysis?
Scope 1 emissions are direct emissions from owned or controlled sources, such as combustion in company vehicles or on-site manufacturing. Scope 2 emissions are indirect emissions from purchased electricity, steam, heating, and cooling. Scope 3 emissions cover all other indirect emissions in the value chain, including supply chain, product use, and employee commuting. For portfolio carbon intensity calculations, most frameworks focus on Scope 1 and 2 because the data is more reliable and standardized. However, forward-looking analyses increasingly incorporate Scope 3, which can represent 80 percent or more of total emissions for many sectors.
What is a good portfolio carbon intensity score?
A good portfolio carbon intensity score depends on the benchmark and investment strategy. As a general guide, the MSCI World Index has a WACI of approximately 150 tCO2e per million USD revenue. Portfolios targeting Paris Agreement alignment typically aim for carbon intensity below 100 tCO2e per million USD revenue, with annual reductions of 7 percent or more. Low-carbon index funds may achieve intensities 50 to 70 percent below their parent benchmarks. Net-zero aligned portfolios set even more ambitious targets, often requiring carbon intensity to halve by 2030 relative to 2019 levels, consistent with limiting global warming to 1.5 degrees Celsius.
How do financed emissions differ from carbon intensity?
Financed emissions represent the absolute greenhouse gas emissions attributed to an investor based on their ownership share, measured in tons of CO2 equivalent. Carbon intensity, by contrast, normalizes emissions by revenue, providing a ratio that allows comparison across companies of different sizes. Financed emissions are calculated as: sum of (portfolio weight x company emissions) for each holding. While carbon intensity is useful for comparing portfolios and benchmarking, financed emissions provide the actual climate impact attributable to the portfolio. Both metrics are important: intensity for relative assessment and portfolio construction, and financed emissions for setting absolute reduction targets aligned with climate science.
What data sources are used for portfolio carbon analysis?
Primary data sources for portfolio carbon analysis include company sustainability reports, CDP disclosures (formerly Carbon Disclosure Project), regulatory filings, and specialized ESG data providers such as MSCI ESG Research, Sustainalytics, S&P Global Trucost, and ISS ESG. These providers collect, standardize, and estimate emissions data for thousands of publicly traded companies. For companies that do not disclose emissions data, providers use estimation models based on sector averages, revenue, and business activities. Data coverage varies by region and market cap, with large-cap companies in developed markets typically having the best coverage, while small-cap and emerging market companies may rely more heavily on estimated rather than reported data.