Insights | February 14, 2024

Scope 1 and Scope 2 account for only 18% of GHG Emissions

Asset owners will need to tackle indirect emissions to reach Net Zero targets

As we look back at the 28th Conference of Parties (COP28) and the global temperature records realized in 2023, it is clear global stakeholders need to do more to address the risk of global warming. To date, public equity owners have focused on scope 1 and scope 2 GHG emissions, a fraction of total emissions, because they are easier to measure and increasingly available. Reported scope 3 data tries to capture indirect emissions. However, since both data quality and reporting inconsistency make reported scope 3 unsuitable for portfolio measurement and management, public equity investors aiming to align with Net Zero face a significant challenge.

This paper discusses the GMO Indirect Emissions Model, which was developed to address the challenge of calculating total emissions and used to build the GMO Horizons Strategy, which seeks materially lower total emissions than its benchmark.

Contact Us to read the full research paper or contact your GMO representative.

This paper is intended for institutional, accredited investors and qualified purchasers only.
Disclaimer: The views expressed are the views of the Systematic Equity team through the period ending February 2024, and are subject to change at any time based on market and other conditions. This is not an offer or solicitation for the purchase or sale of any security and should not be construed as such. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities.
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