Decarbonizing portfolios: between management strategy and corporate world transformation

Understanding emission scopes

When discussing decarbonization, it is useful to distinguish between different types of emissions.

Scope 1 corresponds to a company's direct emissions (e.g., fuel consumption of an airline).

Scope 2 includes indirect emissions related to purchased energy (e.g., electricity consumed by a bank's offices). In Europe, these emissions have significantly decreased thanks to the rise of renewable energies: in 2023, nearly half of the electricity produced already came from solar, wind, or hydro sources, compared to less than a third ten years earlier.

Scope 3 covers all emissions related to a company's value chain: production of purchased goods, transportation, use, and end-of-life of sold products (e.g., for an automaker, emissions from vehicles throughout their use).

Relating companies' emissions to their revenue allows normalization of emissions and subsequently the calculation of a carbon intensity of investment portfolios or even financial markets through stock indices.

Contrasting dynamics between Europe and the United States

The decarbonization trajectories of stock indices vary by region. In Europe, the reduction in emissions is directly linked to the energy transition: the gradual closure of coal-fired power plants, massive investments in wind and solar energy, and the electrification of usages. In the United States, this trend is also explained by the rise of tech giants. These companies, which are heavily represented in stock indices, have a much lower carbon footprint than traditional industrial sectors, which mechanically contributes to the overall decrease in figures. They are among the biggest promoters of renewable energy use and energy efficiency.

The bond market, a slower pace

In the bond universe, decarbonization is progressing more slowly. Debt issuers are often industrial sectors or public utilities, where the transition requires more time and capital. But here too, things are moving: green bond issuances now exceed 800 billion dollars per year, directly financing concrete transition projects.

A useful but incomplete indicator

Carbon intensity remains a useful indicator to measure progress, but it is not perfect. It takes into account direct emissions and part of the indirect emissions, but largely ignores scope 3. That is why our approach goes beyond simple numbers: we analyze companies’ trajectories and their long-term commitments.

A 50% reduction in the carbon intensity of our portfolios

Between 2019 and 2024, the carbon intensity of our assets under management decreased by 50%. Concretely, this means that on average, the companies in your portfolios now emit half as much CO₂ per million euros of revenue as they did five years ago.
We are aware that reducing the carbon footprint of our portfolios is an important step, but it is not enough. Our goal is also to have a direct impact on the companies in which we invest. This involves ongoing dialogue with companies to encourage them to accelerate their transition, investment choices favoring actors who invest more in the transition, and financing concrete projects through instruments such as green bonds.