Publication / 15 Oct 2015

How to Account for Greenhouse Gas Emissions of Derivatives

A white paper by Threshold Group & Trucost.

Threshold Group, a registered investment advisor, and Trucost have formed a strategic partnership to advance carbon audits of investment portfolios.

In order to contribute to the development of greenhouse gas (GHG) accounting for investments, Trucost and Threshold Group have developed, to the best of our knowledge, a first-of-its-kind methodology to assess the carbon risk exposures of underlying assets in derivative investments. The approach can be applied to derivatives of listed equities, corporate bonds and indexes that consist of listed equities or corporate bonds.

Trucost and Threshold Group recommend that investors consider using this methodology to measure the GHG exposure of derivative investments to supplement GHG emission inventories for their investments in public equity and corporate debt. It is our hope that this recommended methodology helps support future development of GHG accounting standards by the World Resource Institute and World Business Council for Sustainable Development.

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