The Carbon Footprint of Capital Investments - adelphi

The Carbon Footprint 

of Capital Investments 

Determination of the greenhouse gas intensity of the 

capital investments made by private households 

Daniel Wendler, Walter Kahlenborn, Hauke Dierks 

On behalf of: 

In cooperation with:

The Carbon Footprint 

of Capital Investments 

Determination of the greenhouse gas intensity of the 

capital investments made by private households 

Daniel Wendler, Walter Kahlenborn, Hauke Dierks

adelphi • The Carbon Footprint of Capital Investments 

adelphi 

Quotation proposal: 

Wendler, Daniel, Walter Kahlenborn and Hauke Dierks 2010: The Carbon Footprint on Capital 

Investments. Determination of the greenhouse gas intensity of the capital investments made by private 

households. Berlin: adelphi. 

Imprint 

1. edition 

Commissioned by: Federal Ministry for the Environment, Nature Conservation and 

Nuclear Safety 

Berlin, July 1, 2010 

ISBN 978-3-9813697-2-4 

© 2010 adelphi consult GmbH 

adelphi is a leading policy analysis and strategic 

consulting organisation. We act as a generator 

of ideas and a service provider to policy-makers, 

business and society at large in relation to global 

environmental and development policy challenges. 

Our projects help safeguard natural resources and 

promote corporate social responsibility. Our clients 

include international non-profit organisations, 

governments, public bodies, corporations and 

professional associations. We combine scientific 

and technical know-how with analytical and 

strategic expertise, a practice-oriented approach 

and constructive problem-solving. Our integrated 

approach to consulting incorporates research, 

advice and dialogue in six subject areas. 

International and interdisciplinary project teams 

are helping to shape our shared future all over the 

world, in different cultures and languages. In 10 

years we have conceived and implemented over 

400 projects for 100 clients, and have provided 

specialist technical and strategic support to key 

environmental and development policy initiatives. 

Sustainability is the foundation stone and guiding 

principle underpinning all we do, both externally 

and internally. Consequently, we have implemented 

a validated environmental management system 

and carry out all our activities on the basis of 

climate-neutral methods. 


Caspar-Theyss-Strasse 14 a 

D-14193 Berlin 

T +49 (0)30-89 000 68-0 

F +49 (0)30-89 000 68-10 

office@adelphi.de 

www.adelphi.de 

Daniel Wendler 

Daniel Wendler is a project manager with adelphi. 

Working in the field of the environment and 

finance, he advises national and international 

clients on matters of corporate responsibility, 

finance and sustainable investment. 

wendler@adelphi.de 

Walter Kahlenborn 

Walter Kahlenborn is a co-founder and director 

of adelphi. In the course of his many years as a 

consultant, Mr. Kahlenborn has coordinated 

numerous national and international projects 

relating to environmental policy, finance and 

management issues. He heads adelphi's 

Environment and Finance and Technology and 

Innovation divisions, among other functions. 

kahlenborn@adelphi.de 

Hauke Dierks 

Hauke Dierks is a project manager in the adelphi 

Environment and Finance division. He advises 

national and international clients on matters of 

corporate responsibility, finance and sustainable 

investment. 

dierks@adelphi.de 

Design: CB.e Clausecker | Bingel. Ereignisse AG 

Front cover image credit: © Mats Persson, iStockphoto 

Printed by climate-neutral methods 

No. 016-53160-0410-1092 

Sustainable print production: 

This study was produced using climate-neutral methods and 

based on FSC certification. The FSC (Forest Stewardship Council) 

is an international non-profit organisation promoting sustainable 

forestry. All products bearing the FSC mark of approval have been 

certified by a board of independent experts as originating from 

forests managed in accordance with the ecological, social and 

economic needs of current and in future generations. www.fsc.org


Executive Summary 

Climate protection and financial services are 

closely linked. Over 30 billion euros of additional 

capital investment a year will be necessary in 

future for Germany to achieve its climate protection 

goals. That capital will largely be provided through 

the finance industry. 

The object of the study is to set out the correlation 

between climate protection and capital investment. 

It compares the greenhouse gas intensity 

of conventional and climate-friendly capital investments. 

At the same time, it provides an overview 

of the situation in individual product categories. 

The carbon footprint for capital investments 

is an instrument which permits the financed 

greenhouse gas emissions of capital investment 

products to be depicted and compared. To that 

end, this study for the first time investigates a 

broad range of capital investment products. In the 

study, carried out on behalf of Germany's Federal 

Environment Ministry, adelphi differentiates 

between various product categories and sets out 

a comparison between conventional, sustainable 

and climate-friendly capital investment products. 

The results show: 

• There is a significant link between private capital 

investments and greenhouse gas emissions. 

Every 10,000 euros invested currently finances 

five tonnes of greenhouse gas emissions a year. 

• Private investors can substantially reduce 

their carbon footprint by choosing climatefriendly 

and sustainable financial investments. 

The average potential for reduction across the 

investment portfolio is 42 %. 

• Possibilities for reducing financed emissions 

exist in all investment categories. In the individual 

product categories savings of between 

35 % and 87 % can be made. 

• Within the product categories there is quite a 

wide spread in terms of greenhouse gas intensity, 

which indicates major potential for optimisation. 

Even without formulating a consciously climatefriendly 

investment strategy, conventional stock 

funds vary by well over 100 % in their greenhouse 

gas intensity. 

• There is also a considerable spread among 

sustainable and climate-friendly products. Some 

product offerings still exhibit relatively high 

intensity values. 

• The number of climate-friendly investment 

products on offer is currently still small. The 

number of products is increasing steadily, however, 

and customer interest is growing. The 

climate-friendly investment products sector is 

definitely a growth market. 

• The carbon footprint is a very suitable instrument 

for bringing greater transparency 

to bear in judging the climate-friendliness of 

capital investments. There are admittedly a 

number of hurdles to be overcome before the 

carbon footprint can deliver precise, globally 

comparable and reliable data, but the instrument 

in itself is without doubt capable of providing 

valuable assistance to private investors and 

financial services providers.

adelphi • The Carbon Footprint of Capital Investments 001 

Contents 

List of illustrations and tables 

1 Introduction 

2 Financial market and climate protection 

2.1 Control function of financial services providers 

2.2 The market for climate-friendly capital investment products 

3 Financed emissions – 

the product carbon footprint of capital investments 

4 Calculation method 

5 The carbon footprint of German investment products 

5.1 Savings products 

5.2 Company shareholdings 

5.2.1 Stocks and stock certificates 

5.2.2 Stock funds 

5.3 Bonds and pension funds 

6 The carbon footprint of private investors 

7 Abstract 

Bibliography 

002 

003 

004 

004 

004 

007 

009 

012 

012 

014 

015 

016 

019 

020 

022 

024

002 

adelphi • The Carbon Footprint of Capital Investments adelphi • The Carbon Footprint of Capital Investments 

003 

List of illustrations and tables 

1 Introduction 

Figure 1 Areas covered by the GHG Protocol 009 

Figure 2 Average breakdown of the greenhouse gas intensities of various 011 

industrial sectors 

Figure 3 Breakdown of the appropriation of funds by German banks 012 

Figure 4 Comparison of savings products 013 

Figure 5 Greenhouse gas intensity in companies 014 

Figure 6 Comparison of stock indices 016 

Figure 7 Companies' shares in the total value of the largest 

017 

sustainability and climate funds 

Figure 8 Greenhouse gas intensity of average stock funds 

018 

with variations 

Figure 9 Comparison of pension funds 019 

Figure 10 Financial assets of private households in 2008 020 

Figure 11 Reduction in average financial investment portfolio 021 

The capital of private investors worldwide finances 

industrial and commercial activities which 

contribute substantially to global greenhouse gas 

emissions. The results of this study show how, for 

example, the five largest stock funds in Germany 

alone – representing managed assets of 20.7 

billion euros – contribute to the financing of over 

23 million tonnes of greenhouse gas emissions 

a year. Extrapolated to the totality of all German 

stock funds 1 , that means some 200 million tonnes 

of greenhouse gases to which private investors 

are substantially contributing, either directly or 

indirectly through institutional investors. That 

corresponds to 20 % of all Germany's greenhouse 

gas emissions (UBA 2010). 

Private households in Germany held financial 

assets totalling 4.64 trillion euros in 2009 

(Deutsche Bundesbank 2010). These enormous 

investment sums can perform a key controlling 

function in financing climate protection and 

in the transition to a low-carbon economy. By 

their choice of where to commit their money, 

investors determine the capital investments of 

tomorrow. The study shows how private investors, 

by choosing climate-friendly and sustainable 

financial investment products, can reduce their 

personal carbon footprint and thus fulfill their 

role as capital providers in a climate-conscious 

manner. 

Climate-friendly and sustainable capital investment 

products have major potential for further 

growth. Despite growing consumer awareness and 

rising demand for climate-friendly products, the 

market potential for financial investment products 

giving due consideration to climate protection 

issues remains largely untapped. Demand for 

these products is restricted by inadequate 

consumer education, a lack of market transparency 

and a shortage of awareness among financial 

advisors as to available forms of investment. 

On the consumer goods market, the "product 

carbon footprint" provides a guide for climateconscious 

consumers to assess the impact of 

consumed products on the climate. However, no 

method has yet been established to indicate the 

product carbon footprint of financial investments. 

Investors in Germany are therefore unable to judge 

the emissions generated by the capital they invest. 

In view of that fact, this scoping study by adelphi, 

in cooperation with INrate, represents an initial 

attempt to determine the average carbon 

footprint of the German investment portfolio. 

With the greenhouse gas emissions of selected 

capital investment products calculated by INrate, 

adelphi reveals the emissions financed by private 

investors' capital investments and indicates 

the savings potential in German investment 

portfolios. The study also demonstrates to private 

investors and financial services providers how 

the carbon footprint is applied with regard to 

capital investments. This enables them to utilise 

the opportunities offered by climate change, to 

minimise its risks and at the same time to make a 

key contribution to climate protection efforts. 

1 

German stock funds manage assets with a total value of 192,205 billion euros (BVI 2010).

004 adelphi • The Carbon Footprint of Capital Investments adelphi • The Carbon Footprint of Capital Investments 

005 

2 Financial market and climate protection 

2.1 

Control function 

of financial services providers 

Limiting the global warming caused by human 

activity is one of the key challenges of our times. 

In order to fend off the most severe consequences 

of climate change, the rise in average global 

temperatures must be restricted to a maximum 

of two degrees Celsius. The Accord published on 

conclusion of the Copenhagen Climate Conference 

reaffirmed that goal. For it to be met, according to 

the IPCC (2007), greenhouse gas emissions must 

be reduced by at least 50 % relative to 1990 levels 

by the year 2050. 

Preventing emissions on such a scale demands 

massive capital investment. For the energy sector 

alone, the International Energy Agency (IEA 2008) 

puts the required investment at 770 billion euros 

a year. In order to achieve Germany's climate 

protection targets aimed at reducing greenhouse 

gas emissions by 40 % by the year 2020, additional 

capital investment of more than 30 billion euros a 

year is required (BMU 2008). Private investors will 

play a key role in providing those investment sums. 

Households in Germany have 1.3 trillion euros 

alone invested in life insurance, pension schemes 

and private pension funds 2 . Not least thanks to 

government promotion of private pensions, that 

sum will rise significantly over the coming years. 

Since the implementation of the German Pensions 

Act (Altersvermögensgesetz; AVmG) on January 

1, 2002, for example, the number of governmentsubsidised 

private pensions (known as Riester 

funds) had, by the Spring of 2009, risen to almost 

12.5 million (Geyer/Steiner 2009). Less than 10 % 

of the total financial assets of private households, 

amounting to 4.64 trillion euros (Deutsche 

Bundesbank 2009), would be required to cover the 

investment needed in order to meet Germany's 

climate protection targets by 2020. 

These investments offer major opportunities 

for the financial services sector and for private 

investors, because climate protection represents 

an enormous source of economic growth potential 

for Germany: Roland Berger forecasts that the 

environmental technology sector in Germany will 

grow 5.4 % a year on average through to the year 

2020 (Roland Berger 2009) – more than any other 

sector. The environment sector is forecast to grow 

globally at rates of up to 10.4 %. These growth 

markets offer bright prospects for investors 

(Deutsche Bank Research 2010). 

Thanks to their position as financial intermediaries, 

banks, building societies, investment companies 

and insurers play a vital role in mobilising capital 

for private-sector businesses. In total, 86 % of 

global investment and financial flows stem from 

private investors and private-sector business 

(UNFCCC 2007). In that key area, financial services 

providers can help to finance climate-friendly 

technologies and insure against the risks they 

entail (Deutsche Bank Research 2007). A key factor 

is the supply of climate-friendly capital investment 

products. 

2.2 

The market for climate-friendly 

capital investment products 

The market for climate-friendly capital investment 

products is still small, but is already quite 

distinct. In the following a distinction is drawn 

between investment products oriented directly 

to climate protection, sustainable investment 

products and conventional investment products. 

Climate-friendly capital investments give special 

consideration to climate protection factors in 

their investment strategies. They are targeted at 

enterprises, technologies and projects seeking 

to reduce emissions of greenhouse gases 

caused by human activity. Climate-friendly 

investment products, such as the established 

climate funds, invest primarily in climateprotecting 

technology companies or projects. 

Sustainable financial investments usually pursue 

a broad range of environmental and social goals as 

part of their investment strategies. They, too, view 

climate protection as a goal of their investment 

strategy. However, sustainable financial investments 

equally pursue other ecological and social 

goals. 

No comprehensive, detailed set of data currently 

exists for the overall climate-friendly 

capital investment products market or for 

the sustainable investments sector. Market 

volumes can only be portrayed on the basis 

of estimates of individual product categories. 

This study only considers the forms of financial 

investment managed or structured by financial 

intermediaries. They account for the greater part 

of the private investment market. Owing to the 

difficulty of obtaining data, no consideration is 

given to independently managed capital market 

investments. 

The market for climate-friendly and sustainable 

financial investment products is dominated by 

investment funds. According to information from 

the Sustainable Business Institute (SBI 2010), at 

the end of 2009 a total of 313 sustainable public 

funds were licensed for sale in Germany, Austria 

and Switzerland. Together with pension funds 

(4.4 billion) and Exchange Traded Funds (ETFs) 

(0.6 billion), they amounted to a total volume of 

around 30 billion euros. 3 The volumes of closed 

environmental and technology funds in 2010, 

according to Green Value, totalled 2.14 billion euros 

(Green Value 2010). Moreover, 245 sustainable 

certificates, with a total volume of 8.71 billion 

euros, were traded in Germany in 2009 (Schneider 

2009). The market in fixed-interest savings 

products is little developed as yet. According to 

information from the few providers, it totals 1.1 

billion euros 4 – though the trend is rising. 

The market for climate-friendly and sustainable 

capital investment products has grown steadily in 

recent years. The latest figures from the Forum 

Nachhaltige Geldanlagen (FNG) for 2007 report a 

69 % year-on-year growth in the capital invested 

with financial services providers in sustainable 

investment products by German-speaking clients 

(FNG 2008). The climate fund market recorded 

even stronger growth rates, being among the 

best-selling of all investment fund sectors in 2007 

(ebd.). 

Despite the major growth in sustainable and 

climate-friendly financial investment products, 

their significance relative to the market for 

conventional investment products is very low. 

They represent a minimal percentage of the total 

4.64 trillion euros of managed private household 

financial assets. 

The potential of climate-friendly financial investment 

products remains largely untapped. A 

study by the Two Degrees Initiative (Zwei-Grad- 

Initiative) revealed that climate-friendly products 

have the potential to develop into a mass market 

(Zwei-Grad-Initiative 2009). According to the 

study's results, climate protection has gained 

massively in importance as a purchase decisionmaking 

criterion in all consumer segments. This is 

also backed by environmental awareness studies: 

80 % of respondents believe that there are not yet 

enough climate-friendly products on the market. 

86 % of respondents agree with the statement that 

they can make a major contribution to climate 

protection by acting in a climate-friendly manner 

in their everyday lives (BMU 2008, p. 25 ff.). 

This growing awareness of responsibility in 

relation to climate change also applies to 

financial products. A poll among investors in 

five different countries showed that consumer 

behaviour in the financial world is becoming more 

differentiated, and thus moral considerations 

are becoming increasingly important when it 

comes to making socially responsible investment 

decisions (Williams 2005). That is also true of 

2 

This also includes professional benefit funds and supplementary benefit schemes (BVI 2010). 

3 

This 

volume comprises only portions from the capital of German investors however. These figures are therefore less informative than, 

for example, the data from Forum Nachhaltige Geldanlagen. The latest data collected by the FNG dates from 2007 however 

(Forum Nachhaltige Geldanlagen 2008). 

4 

These 

figures originate from sources of the major vendors on this market: Ethikbank, GLS Gemeinschaftsbank, Umweltbank and Triodos. A 

small number of products from smaller savings banks and Volksbanks also exist.


007 

3 Financed emissions – the product carbon 

footprint of capital investments 

German investors: According to a representative 

survey by the Climate Change Financial Forum 

(Finanz-Forum Klimawandel), 43 % of German 

fund investors would like to incorporate climate 

protection aspects into their investment portfolios 

(Finanz-Forum Klimawandel 2010). Most of the 

market experts polled by Strandberg estimate 

that up to 60 % of private clients are a potential 

target group for sustainable and climatefriendly 

financial investments (Strandberg 2005, 

p. 25 f.). The clients in question are for the most 

part highly educated and wealthy people. 

There are, however, major obstacles to private 

investments owing to the still inadequate 

advice available to investors and the low level 

of awareness among consumers about such 

investment forms. Only 14 % of fund investors 

consider themselves well informed about climatefriendly 

products. 74 % of investors call for more 

transparency about the products (Finanz-Forum 

Klimawandel 2010). The quality of advice available 

in relation to socially and ecologically sustainable 

financial investments in Germany is also still 

greatly in need of improvement. 5 According to a 

Mystery Shopping study conducted in 2003, the 

quality of investment advice given in respect of 

these product groups is classed as inadequate. 

In other words: Sustainability funds were often 

mistakenly judged by advisors as being "risky" and 

"exotic", and consequently "were recommended 

only with reservations, and if expressly wished 

by the clients" (imug 2003, p. 58). In the Mystery 

Shopping test, no financial advisor offered 

sustainable capital investment products on his or 

her own initiative. 

In fact, climate-friendly capital investment 

products can be highly attractive for many private 

investors. Climate-friendly financial products 

enable investors to attain multiple goals with one 

investment (Beal/Goyen/Philips 2005). They can 

represent an attractive option financially, thanks 

to their promising growth prospects. Enterprises 

committed to climate protection frequently also 

offer strong sales growth prospects and are 

exposed to lower risk from rising energy and 

commodity prices. This means that integrating 

climate-friendly investments into a portfolio 

is a profitable long-term strategy (Deutsche 

Bank Research 2010). Above and beyond the 

financial opportunities offered by climate-friendly 

capital investments, investors can also achieve 

non-financial goals. Climate-friendly capital 

investments enable private investors to cut their 

contribution to global greenhouse gas emissions 

and thereby reduce their personal carbon footprint. 

At the same time, with such an investment strategy 

they can actively promote climate protection by 

incentivising businesses to incorporate climate 

protection considerations more strongly into 

their corporate policy. 6 Climate-friendly capital 

investments thus offer a major advantage over 

conventional products – an advantage which can 

be easily communicated by financial advisors. 

In this context, the "product carbon footprint" 

of capital investment products can serve as a 

key instrument in presenting climate-friendly 

financial products in a more transparent and 

understandable way. It can enhance the advice 

given to clients regarding climate-friendly 

financial investment products and improve 

communication of their characteristic features to 

private investors, as well as winning new clients 

for this form of capital investment. 

While there are many instruments to measure the 

financial performance of conventional investment 

products, there are as yet few means of measuring 

extra-financial performance. All clients have to 

go on at present with standardised financial key 

performance indicators, which give no indication 

as to whether their investment strategy will also 

achieve extra-financial goals, such as reducing 

greenhouse gas emissions (Pictet 2008, p. 8 ff.). 

Calculation of the product carbon footprint 

of capital investment products can create 

transparency on the market and satisfy the 

information needs of interested investors. The 

product carbon footprint originates from the 

concept of the ecological footprint (Wackernagel / 

Rees 1996) which has become very popular within 

the framework of the climate debate over recent 

years. The product carbon footprint indicates the 

greenhouse gas emissions of goods or services. 

It depicts the emissions throughout the supply 

chain, from production to distribution, though it 

may also encompass use, disposal and recycling 

(ISA UK 2007). Consumers can thus be provided 

with a transparent picture of the impact on the 

earth's climate of the products they consume. 

This offers them the possibility to incorporate the 

product's emissions as decision-making criterion 

when choosing which products to buy. The product 

carbon footprint can ultimately serve as a guide to 

responsible consumer behaviour. 

No internationally recognised standard currently 

exists for determining the product carbon 

footprint. A large number of initiatives are, 

however, campaigning for government or privatesector 

product marking to be introduced. The basis 

of all product-related greenhouse gas emission 

assessments is the eco-balance according to 

the ISO standard 14040 (ISO 14040 ff.). It is very 

generalised, however, and in practice the different 

methods applied frequently produce results which 

are difficult to compare (Öko-Institut 2009). 7 

The greenhouse gas emissions of businesses 

are mainly recorded in accordance with the 

internationally recognised reporting standard 

of the GHG Protocol (WRI/WBCSD 2004). For 

production emissions (Scope 1) and indirect 

emissions, such as due to electricity purchasing 

(Scope 2), this standard and the data collection 

methodology applied by the companies concerned 

are relatively well developed, whereas for 

emissions arising from the rest of the value 

creation chain (Scope 3) there is an urgent need 

for more development. These Scope 3 emissions 

are only recorded by a minority of companies. 

Consequently, in early 2010 the World Business 

Council for Sustainable Development (WBCSD) 

and the World Resource Institute (WRI) initiated 

two new provisional standards: the "Product Life 

Cycle Accounting and Reporting Standard" and the 

"Scope 3 (Corporate Value Chain) Accounting and 

Reporting Standard" (WRI/WBCSD 2009a), which 

are currently undergoing testing by 60 members 

of the WBCSD and are scheduled to be presented 

in final versions in late 2010 (WRI/WBCSD 2009b). 

No German company is so far participating in 

this project however, and internationally only one 

financial services provider – Bank of America – is 

represented. 

Financial services providers and society at large 

are mostly agreed that both investors and finance 

recipients are responsible for the social and 

ecological effects of the financed projects and 

enterprises. There are consequently a number of 

initiatives in the financial sector which are already 

committed to more concerted consideration of 

such factors in the investment decision-making 

of financial services providers. As part of that 

commitment, the world's largest project financing 

entities signed up to the Equator Principles (2006), 

whereby they undertake to consider sustainability 

criteria in respect of projects with capital costs 

exceeding 10 million US dollars which may have 

significant ecological and social impact. Beyond 

that commitment, too, widespread efforts are 

being made by financial services providers 

worldwide to positively influence the social and 

ecological effects of capital funding provided. 

5 

A survey among bank staff and customers on the German market confirms this result. It found: "Bank advisors have to date been left alone 

by their bosses to deal with the issue [climate change] and to come up with product solutions" (Lord/Bub/Ramspeck 2007, p. 54). 

6 

The correlation between capital investment and active climate protection by companies is dealt with in detail in the study "Climate Protection 

through Capital Investments. Effects of climate and sustainability funds on German stock corporations" (Kahlenborn et al. 2010). 

7 

The 

most influential standard at present is the UK's Publicly Available Specification 2050 (PAS 2050) which is likewise based on ISO 14040 but 

also differs from it widely in some points.


009 

4 Calculation method 

There have to date, however, been only isolated 

efforts in the financial services sector to calculate 

the emissions arising from financed investments. 8 

The WRI recommends that financial services 

providers implement robust greenhouse gas 

emissions reporting, including data on the 

financed Scope 3 emissions (Venugopal/Rigdon/ 

Daviet 2009). Improved greenhouse gas emissions 

recording will enable financial services companies, 

especially, to implement more effective climate 

risk management, so as to be able to identify 

greenhouse gas-intensive investments – and thus 

investments susceptible to greater regulatory and 

energy costs – more precisely. 

This study includes Scope 3 emissions in the 

calculation of the carbon footprint of capital 

investments. By doing so, adelphi – in conjunction 

with INrate – has established a basis for debate 

as to how the greenhouse gas intensity of 

capital investment products can be calculated 

and communicated, and how the emissions 

financed by financial investment products can be 

comparatively depicted. The study further shows 

how vendors of financial investment products 

can utilise the product carbon footprint for their 

clients and substantially reduce the greenhouse 

gas intensity of their products by incorporating 

climate protection aspects into their portfolios. 

The object of the study is to calculate the carbon 

footprint of an average German investment portfolio 

and to set it against an alternative investment 

with a comparable climate-friendly portfolio. The 

relevant data are calculated separately for the 

various capital investment categories. To that 

end, adelphi and INrate together calculated the 

greenhouse gas intensity of savings deposits, 

bonds, shareholdings in companies, as well as 

stock and pension funds. 9 Because in the public 

perception sustainable financial investments are 

also linked very closely to climate protection, and 

climate protection is regarded as a key criterion 

of such investment strategies, sustainable 

investment products are likewise included in the 

study as a third category. 

Where the available data permits, a top-down 

approach is applied in calculating an average 

capital investment product. In this, aggregated 

data originating from national statistics for 

loan approvals (Deutsche Bundesbank 2009), 

the financial assets of private households held 

in capital investments (Deutsche Bundesbank 

2010), the appropriation of funds by German life 

insurance companies (Bafin 2008) and the national 

greenhouse gas inventory (UBA 2009) are applied. 

Figure 1: Areas covered by the GHG Protocol 

By contrast, in the case of shareholdings in 

companies (stocks, stock certificates, stock funds) 

a bottom-up approach is applied because of the 

differing data basis. The average carbon footprint 

for stocks and stock certificates is calculated on 

the basis of selected stock indices. For calculation 

of the greenhouse gas intensity of capital invested 

in investment funds, the funds managing high 

capital volumes of German investors are analysed. 

The average greenhouse gas intensity of these 

product categories is produced by calculating 

large numbers of individual corporate figures. The 

specific methods applied in this are addressed 

separately in the relevant subsections. 

In view of their major significance for the climatefriendly 

and sustainable investment market, the 

study was differentiated further in relation to 

fund products. On the one hand, representative 

portfolios are created from the accumulated 

largest funds in these categories, while on 

the other the study analyses the five largest 

conventional, sustainable and climate-friendly 

funds in order to provide an indication of the 

variance in their greenhouse gas intensities. 

GHG Protocol Scope 1 (direct) Scope 2 (indirect) Scope 3 (indirect) 

Definition 

Comprises all greenhouse 

gas emissions occurring 

directly within the company. 

Comprises only the indirect 

emissions occurring in 

supplying energy to the 

company. 

Comprises the emissions 

occurring during the entire 

life cycle of all the products 

of a company. 

Example 

Production, vehicle fleet, 

heating boiler 

Energy supply 

Input products, use, recycling; 

for finance companies also 

financed emissions 

® Sources for 

envIMPACT 

Environmental /sustainability 

reports, national statistics, 

Carbon Disclosure Project 

Environmental /sustainability 

reports, national statistics, 

Carbon Disclosure Project 

Life cycle analysis databases, 

input-output analysis data, 

life cycle inventories 

Source: GHG Protocol; envIMPACT ® , INrate 

8 

A Ceres report from 2008 analysed the climate policies of 40 large banks: Only six of the 40 banks have begun integrating climate aspects into 

their criteria for loan approvals. Nevertheless, 22 banks do at least offer a climate-oriented financial product, in response to rising demand 

(Ceres 2008). 

9 At the request of some providers, who kindly furnished data for the study, none of the products or providers studied is named.


011 

Figure 2: Average breakdown of the greenhouse gas intensities of various industrial sectors 

For some product categories, such as pension 

schemes, corporate bonds and closed funds, it is 

not possible to calculate the emissions intensity 

as no reliable data could be collected in relation 

to them. 

Calculation of the emissions financed by private 

investors is based on the assumption that 

investors finance businesses and projects through 

the capital they provide by way of the financial 

market. The greenhouse gas intensity of capital 

investment products is a measure of the financed 

emissions of a capital investment product in the 

course of a year (in CO 2 equivalents) relative to 

the investment volume. The greenhouse gas 

intensity, calculated in grams of greenhouse gas 

emissions (gGHG) per euro, can thus be applied as 

a comparative between various capital investment 

products. This takes into account the fact that 

investors only provide the portion of the finance 

for which their capital serves as a source of 

financing to the capital recipients. Consequently, 

depending on the form of financial investment, 

either the share of the capital in financing of the 

equity through company shareholdings or of the 

borrowings by way of bank loans or bonds is taken 

into account. For the various financial investment 

products there also exist different means by which 

private investors finance emissions with their 

capital. This financing logic is stringently pursued 

across all calculation methods, which is why the 

term "financed emissions" is repeatedly used. 10 

To calculate the product carbon footprint of stock 

funds, a method was devised by Trucost which 

is already in use by a number of investment 

companies and banks (Trucost 2009a/2009b). 

Utopies and Centre Info 11 – in cooperation with 

Groupe Caisse D’Epargne, a French savings bank – 

devised a method applicable to other capital 

investment products (Utopies/Groupe Caisse 

D‘Epargne 2008) and together produced a report 

on their experience in calculating emissions 

intensity (Centre Info/Utopies /Groupe Caisse 

D’Epargne 2008). Their method permits Scope 

3 emissions to be integrated into the calculation 

alongside Scope 1 and 2, thereby mapping the 

complete value creation chain of the enterprises 

and projects financed by the various financial 

products. 

The greenhouse gas emissions data for this 

study is taken from the INrate envIMPACT® 

database, which comprises all three emissions 

categories of the GHG Protocol 12 . This for the 

first time applies a differentiated methodology 

which also incorporates Scope 3 emissions of 

financed enterprises and projects to calculate the 

greenhouse gas intensity of capital investments. 

Only 33 % of the German companies participating 

in the Carbon Disclosure Project (CDP) currently 

report their Scope 3 emissions (CDP 2009, p. 37). 

Consequently, the INrate envIMPACT® database 

utilises material input/output analyses of various 

industrial sectors along the value creation chain. 13 

This means envIMPACT® differentiates between 

active and passive products, indicating the extent 

to which a product does or does not have a 

significant impact on the environment when in use. 

For many products, the influence of their usage 

phase is much greater than that of their production 

and supply chain (Utopies/Group Caisse D’Epargne 

2008). Figure 2 shows that in industrial sectors 

such as oil and gas, and in car manufacturing, 

Scope 3 emissions represent a particularly high 

percentage of the emitted greenhouse gases. 

If Scope 3 emissions were not included in their 

analysis, those sectors would be classed as 

very low-intensity greenhouse gas emitters. 

At present, envIMPACT® holds emissions data 

from 1,800 companies and has calculated averages 

for 500 industrial sectors. It should nevertheless 

be considered that the recording and reporting of 

corporate greenhouse gas emissions, in particular 

with regard to Scope 3 data, is still in need of 

some improvement. The same is true of national 

greenhouse gas inventories. The inaccuracies 

in calculating the greenhouse gas intensity of 

capital investment products are also heightened 

by the aggregation of emissions data for individual 

sectors. The study therefore makes no claim to 

3,500 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

0 

2,849 

Oil and gas 

331 

Electricity companies 

Source: envIMPACT ® , INrate 

566 

1,965 

291 

be able to deliver entirely precise figures. The 

basic message provided by the calculations is not 

decisively influenced by the inaccuracies however. 

Most especially, the comparison of investment 

products within the individual product categories 

set out in the following remains valid. 

Double counting of emissions within individual 

products is avoided. This happens where, for 

example, car manufacturers and oil producers 

are listed in the same fund. The emissions of 

the fuels produced by the oil companies would 

then be counted double when calculating the 

emissions arising in use of the vehicles. To avoid 

this, the duplicate emissions within an investment 

product are cancelled out. As a result, the Scope 3 

emissions financed by financial investments can be 

collated without producing an unrealistically high 

figure due to multiple counting. However, based 

on the current methodology applied when creating 

average capital investment portfolios, double 

counts between different product categories 

cannot be entirely avoided. Consequently, with 

regard to the overall portfolio it is a fact that 

the absolute carbon footprint figures for capital 

investment portfolios include double counts which 

cannot be precisely stated. 

Airlines 

Car manufacturers 

Building materials 

manufacturers 

634 400 50 

Semiconductor 

manufacturers 

Food producers 

IT service providers 

Scope 1 

Scope 2 

Scope 3 

In calculating the carbon footprint, the study 

records the emissions financed by the investor 

or lender pro rata along the entire value creation 

chain. For the sake of transparency, an industrywide 

consensus should be found with regard to 

system limits in determining the carbon footprint 

of capital investment products. 

10 In 

addition to the financing logic, other approaches may also be pursued. It may, for example, be argued that investors in stocks bear a greater 

responsibility than investors in bank deposits because the former actual become co-owners. For the sake of comparability of the product 

forms, however, strict application of the financing logic is the most useful approach. 

11 Centre Info recently merged with INrate. 

12 The 

GHG Protocol emerged from an initiative of the World Business Council for Sustainable Development (WBCSD) and the World Resources 

Institute (WRI). It is regularly updated in cooperation with companies in various industrial and business sectors. 

13 envIMPACT ® utilises input/output analysis data from the Green Design Institute at Carnegie Mellon University in Pittsburgh (comprising 

426 business sectors and recording the emissions data of 50 greenhouse gases) as well as the life cycle inventory (LCI) of industrial systems 

from the ecoinvent database and the life cycle assessment (LCA) data of specific products (e.g. The International Journal of Life Cycle Assessment).


013 

5 The carbon footprint of 

German investment products 

In the following the carbon footprint of capital 

investment products is calculated with the aim of 

mapping the greenhouse gas intensity of private 

financial assets. To that end, the relevant product 

categories are first analysed separately. In the 

next section, the weighted averages of the product 

categories are transferred to the full portfolio of 

German investors. 

5.1 

Savings products 

Banks and savings banks fulfill a key intermediary 

role in transforming savers' surplus capital into 

the capital required by consumers, businesses 

and banks (Hartmann et al. 2008). Private 

investors deposit funds in banks and savings 

banks which in turn make them available by way 

of the financial markets as loans to businesses, 

consumers and national governments. Even 

though most savers are not really aware that their 

money is subsequently financing the procurement 

of a machine, a building renovation or a road 

improvement scheme, nearly every savings deposit 

is ultimately linked to concrete activities in 

the real economy – and thus also to the resultant 

greenhouse gas emissions. 

The base data for calculation of the conventional 

savings product is formed from aggregated data 

from Germany's central bank, the Deutsche 

Bundesbank (as per May 2009). This reflects the 

appropriation of loan funding by German banks. To 

calculate the greenhouse gases financed by those 

loans, the total emissions of the sectors to which 

banks lend funds are analysed. The greenhouse 

gas intensity of a sector is the ratio of its emissions 

to its total value and the average debt, or finance 

ratio, in the sector concerned. 

To calculate the emissions intensity of savings 

products, the greenhouse gas intensity of the 

individual sectors is weighted according to its 

share of the loans granted by the banks. The overall 

result for a savings product is thus produced from 

the emissions intensity of individual sectors and 

their weighted shares of the loan finance from 

banks. 

Across all sectors, the result is a greenhouse 

gas intensity of 199 gGHG (grams of greenhouse 

gas emissions) per euro. The intensity of 

consumer and mortgage credit is much lower 

than that of other credit types. In spite of the 

high emissions caused by the construction and 

heating of buildings, the emissions intensity of 

this sector is low because buildings have a very 

high capital value. Businesses, on the other hand, 

are much more greenhouse gas-intensive. The 

figure here is lower than the emissions intensity 

of many businesses calculated in the other 

investment categories. One reason for this is the 

high proportion among borrowers of small and 

medium-sized enterprises, which have a lower 

emissions intensity than larger public companies. 

The greenhouse gas intensity of a climatefriendly 

savings product was calculated in 

the same way as that of conventional savings 

products. 14 This product differs fundamentally 

from the conventional savings products, as – at 

the client's request – the funds are assigned 

to the field of renewable energy. The climatefriendly 

savings product calculated in this case 

promises savers that their deposits will be used to 

finance renewable energy sources. It is available 

as an overnight money account and as a savings 

or fixed-term deposit account. Most of the funds 

are allocated to photovoltaic energy plants, along 

with wind power and pellet combined heat and 

power plants. Hydro power plants account for 

only a minor portion of the total. The emissions 

intensity of these projects is much less than that 

of the industrial sectors to which conventional 

loans are granted. The overall emissions intensity 

of the climate-friendly savings product is 66 gGHG 

per euro. The emissions are generated mainly 

in the manufacture and installation of the plant 

components. 

Figure 3: Breakdown of the appropriation of funds by German banks 

Figure 4: Comparison of savings products 

Credit volumes 

in million Euros 

Share 

in % 

Greenhouse gas intensity 

in gGHG per Euro 

250 

gGHG per euros 

Mortgages 1,092,084 11 109 

Loans to non-banks 

(consumers) 

3,950,518 39.78 146 

200 

150 

199 

–67 % 

Loans to 

companies 

1,346,659 13.56 420 

100 

Loans to public agencies 

529,555 5.33 225 

Loans to banks 3,012,138 30.33 199 

50 

66 

Total 9,930,954 100 199 

(weighted average) 

0 

Average 

savings product 

Renewables 

savings product 

Source: Deutsche Bundesbank: Bankenstatistik 2009 – Figures for 2008 

Source: Own data 

14 

The 

equivalent calculation of a sustainable savings product could not be produced by the study because of a lack of differentiation in providers' 

data.


015 

The comparison of the two savings products 

demonstrates how much integrating renewable 

energy into loan allocations can reduce the 

greenhouse gas emissions financed by the savings 

products concerned. Compared to the conventional 

savings product, the renewable energy savings 

product offers the potential to reduce financed 

greenhouse gas emissions by as much as 67 %. 

5.2 

Company shareholdings 

Greenhouse gas emissions are financed differently 

in the case of financial investments 

through investment products such as stocks, 

stock certificates or stock funds than in the 

Figure 5: Greenhouse gas intensity in companies 

Least greenhouse gas-intensive companies 

Sector Company gGHG 

per Euro 

1 Personnel 

service providers 

2 Software/ 

IT service 

providers 

3 Telecommunications 

4 Pharmaceuticals 

Adecco Group/ 

Randstad Holding/ 

Hays PLC 

Adobe, Oracle 

Dassault Systemes 

S. A., SAP, Symantec 

TF1, British 

Sky, Telefonica, 

Vodafone, British 

Telecom, Nokia, 

Arcor 

Sanofi-Aventis, 

Novartis, Pfizer, 

Roche, Fresenius 

5 Renewables Solarworld, 

Q-Sells, Renewable 

Energy Corp., First 

Solar, Gamesa, 

Vestas 

6 Financial service 

providers 

Source: envIMPACT ® , INrate 

Aviva, UBS, Swiss 

Life, Allianz, ANZ 

Banking Group 

case of savings products. By their investment in 

stocks, investors make equity capital available to 

companies who are looking for funding on the stock 

market. They thereby finance business activities 

and contribute indirectly to the greenhouse gas 

emissions those activities generate. 

The starting point for calculating the emissions 

financed by an investment product is the method 

applied in the GHG Protocol (WRI/WBCSD 2004). 

The so-called equity share method additionally 

takes into account the greenhouse gas emissions 

of the company's subsidiaries. Thus, if a parent 

holds 30 % of the shares in a company, that 

proportionate amount is offset against the parent's 

own emissions figure. 

Most greenhouse gas-intensive companies 

The viewed renewable energy index tracks 30 

of the world's leading stock market quoted 

companies operating in the field. Those sectors 

are not the lowest-emission ones in terms of their 

greenhouse gas balance, but by concentrating on 

this sector the index does remain well below the 

emissions figures of the comparative indices. The 

greenhouse gas intensity in this case is 165 gGHG 

per euro. The comparison of stock indices shows 

a clear correlation between the greenhouse gas 

intensity of the products and the incorporation of 

climate protection aspects in their composition. 

While the greenhouse gas intensity of sustainabi- 

Ranking 

Ranking 

Sector Company gGHG 

per Euro 

60 1 Mining El Paso, Snam 

Rete Gas, Encana, 

BHP Billiton 

Limited, Gas 

Natural SDG, 

Royal Total SA 

90–100 2 Aircraft 

and defence 

industries 

120–390 3 Building 

materials 

210–220 4 Energy 

supply 

230–440 5 Technological 

and industrial 

products 

300–800 6 Automotive 

industry 

Rolls Royce, 

EADS, Bombardier 

10,500–3,000 

9,000–6,000 

Holcim, Lafarge 5,000– 4,700 

RWE, EON, 

Enel, Energias 

de Portugal 

Komatsu, ABB, 

Lockheed, PCS 

(Fertiliser) 

Porsche, Daimler 

(armament 

manufacturing), 

Volkswagen, BMW, 

Renault 

4,700–3,500 

4,000–3,500 

3,500–2,000 

INrate expanded this method to incorporate a 

financing component. Accordingly, the greenhouse 

gases financed by capital investments are not 

calculated proportionately to their percentage of 

the total shares held in a company, but only to the 

extent to which shares contribute to the financing 

of the company by way of equity capital. This takes 

account of the fact that, by purchasing shares, 

investors increase the equity of the company 

the first time a dividend is paid on them. The 

commercial activity of the company may, however, 

also be financed by borrowings. Based on this 

approach, therefore, only the proportion of the 

emissions of a company corresponding to the 

respective equity share is included in calculating 

the emissions financed by investors. 

The decisive factor in determining the greenhouse 

gas intensity of capital investment products, apart 

from the equity share, is the greenhouse gas 

intensity of the enterprises concerned. This varies 

very widely between different sectors (figure 5). 

Greenhouse gas-intensive companies emit up to 

175 times more greenhouse gases per euro earned 

than low-emission companies. Low greenhouse 

gas emission companies are mainly in the service 

sector. Renewable energy companies are "only" in 

fifth place, as no negative Scope 3 emissions are 

taken into account. 

5.2.1 

Stocks and stock certificates 

As there is no data relating to the overall portfolio 

composition of stock investments held by German 

private investors, the study instead utilised the 

composition of stock indices to calculate the 

emissions financed by capital investments in 

stocks and stock certificates. The indices mostly 

weight the companies according to the value of 

their stock in circulation and their performance. 15 

They thus provide a guide value – if a rough 

one – for the average investment behaviour on 

the stock market. The emissions financed by a 

capital investment in stocks or stock certificates 

are produced from the different weighting of 

the companies in the respective index and their 

equity-financed greenhouse gas intensity. In this, 

a standard index is compared against a renewable 

energy index and two sustainability indices. 

The emissions financed by conventional investors 

are calculated by way of example based on a 

European standard index 16 . It maps the performance 

of the largest European blue-chips, 

representing a major portion of the total market 

capitalisation of all stock market quoted European 

companies. The calculations produce an emissions 

intensity for the index overall of 1,243 gGHG per 

euro. 

With regard to sustainability indices, two particularly 

market-relevant indices were applied 

as the calculation base. Both indices select only 

companies which have attained a certain minimum 

score in the underlying non-financial ratings. 17 

Climate aspects are covered by both ratings 

systems, but are weighted very differently. That is 

also reflected in the greenhouse gas intensities. 

The much less greenhouse gas-intensive index, at 

464 gGHG per euro, also imposes more stringent 

climate criteria than the much poorer-performing 

index, with emissions of 976 gGHG per euro. In 

this case, stricter criteria for non-financial ratings 

result in a lower greenhouse gas intensity of the 

indices. Both indices are, however, well below the 

greenhouse gas intensity of the standard index by 

comparison. Their average weighted by investment 

volume is 632 gGHG per euro. 


composition of the individual indices is mostly based on different criteria. The two criteria cited are the ones most frequently used 

however. 

16 This index represents around 50 % of the free-float shares of European stock market listed companies. 

17 Sustainability 

indices in some cases pursue very different approaches with regard to the composition of their funds (see also Fowler, 

Stephen J. and Chris Hope 2007).


017 

Figure 6: Comparison of stock indices 

Figure 7: Companies' shares in the total value of the largest sustainability and climate funds 20 

1.400 

1.200 

1,243 

–49 % –87 % 

gGHG per euros 

Sustainability funds (cumulative) 

Climate funds (cumulative) 

Company Sector Share Company Share 

1.000 

800 

Procter & Gamble 

Pharmaceuticals and 

cosmetics 

2.4 % Vestas Wind Systems 4.3 % 

600 

400 

632 

Österreichische 

Elektrizitätswirtschaft 

Power company 2.3 % Gamesa Corporacion 

Tecnologica 

4.3 % 

200 

0 

Conventional 

index 

Average 

sustainability index 

165 

Renewable 

energy index 

SolarWorld Renewable energy 2.1 % First Solar 3.0 % 

Roche Holding Pharmaceuticals 1.6 % Itron 2.6 % 


IBM Computer hardware 1.5 % SolarWorld 2.2 % 

lity funds based on this calculation is on average 

half that of standard indices, the renewable 

energy index achieves savings potential of 87 %. 

5.2.2 

Stock funds 

In the case of stock funds too, for reasons of data 

availability a calculation was made directly based 

on particularly market-relevant products. To 

determine the average greenhouse gas intensity 

of sustainability and climate funds, the data for 

each of the 20 largest funds registered in Germany 

was collated. For conventional funds, the weighted 

average of the five largest was calculated. 

In addition, the five largest sustainability and 

climate funds listed in Germany were analysed 

individually in order plot the variations in 

greenhouse gas emissions of individual funds 

within the product categories. 18 Funds with a 

clear regional investment focus outside of Europe 

and made up of capital – where traceable – not 

primarily originating from German investors were 

excluded from the analysis. The conventional 

funds analysed in the study altogether managed 

total capital of 20.7 billion euros. Sustainability 

and climate funds managed 2.2 and 5.1 billion 

euros respectively. 19 

The sustainability funds selected in the study 

pursue a strategy of investing in companies which 

integrate both ecological and social aspects into 

their core business. The annual reports of the 

20 largest such funds were analysed. These funds 

invest in an investment universe comprising 

730 different companies from a wide variety 

of sectors. All are based on regular ratings 

established externally by non-financial rating 

agencies or in-house research departments. For 

the sake of efficiency, out of the totality of all funds 

in the investment universe only those stocks listed 

more than three times in different funds were 

included in calculation of the average fund. The 

investment value of excluded stocks was relatively 

low: The investment universe of the averaged fund 

contains 219 stocks with a total value of 1.7 billion 

euros. It thus represents just under 80 % by value 

of the investments held in the fund. 

The selected largest climate funds invest according 

to their investment strategy in companies 

which make a contribution to combating climate 

change and reducing its effects. These funds state 

that they invest primarily in renewable energies 

and energy-efficiency technologies, though some 

also invest in power companies which use a 

higher percentage of renewables in their energy 

mix. The approach of the climate funds is issuebased. 

Most of these funds are constructed on the 

basis of their own investment criteria by in-house 

research departments. A very small number of 

these funds rely on assistance from non-financial 

Vestas Wind Systems Renewable energy 1.5 % Iberdrola Renovables 2.0 % 

Johnson & Johnson 


Pharmaceuticals and 

cosmetics 

rating agencies, scientific advisory boards or 

NGOs. The methodology applied in developing 

climate funds is even less differentiated than 

that applied to sustainability funds. They invest 

in a total of 547 different companies. Here, too, 

only the stocks listed more than three times were 

taken into account. The averaged climate fund 

contains 183 companies, with a share of the total 

investment value likewise just under 80 %. 

Figure 7 presents an overview of the 10 companies 

in which sustainability and climate funds invest 

most heavily. Sustainability funds and standard 

funds invest much more strongly in different 

sectors than the climate funds, which concentrate 

almost exclusively on companies closely related 

to renewable energy. All companies are well 

represented in this sector, which is why these 

1.4 % Wacker Chemie 1.8 % 

Hewlett-Packard Computer hardware 1.4 % EDP Renováveis 1.8 % 

Vodafone Telecommunications 1.4 % Renewable Energy 

Corporation 

Unilever Food 1.4 % Q-Cells 1.6 % 

1.7 % 

figures in the table do not require sector-specific 

classification. The large sustainability funds are 

nevertheless particularly strongly represented 

in two renewable energy companies: SolarWorld 

and Vestas Wind Systems. By contrast, standard 

funds invest largely in service providers 

generating low greenhouse gas intensity and 

in greenhouse gas-intensive companies in 

sectors such as mining and energy supply. 

The five conventional funds analysed deliver a 

result with major variance. In fact, some of these 

funds were found to have a greenhouse gas 

intensity below that of some sustainability funds. 

This was particularly true where the funds were 

focused on very low greenhouse gas intensity 

sectors. Their average greenhouse gas intensity 

based on the managed volumes of the funds is 


BVI data was used to determine the capital investment volume of the standard fund. Sustainability and climate funds were selected on 

20 

The results are in part based on differing closing dates. 

the basis of data from the Sustainable Business Institute (SBI 2010). 


investment volumes quoted here are based on the annual reports of the funds in 2008, which have differing closing dates.


019 

Figure 8: Greenhouse gas intensity of average stock funds with variations 

Figure 9: Comparison of pension funds 

2,000 

400 

gGHG per euro 

1,800 

350 

300 

369 

–43 % 

1,600 

250 

1,400 

200 

210 

1,200 

1,000 

–46 % –30 % 

150 

100 

50 

800 

0 

Pension funds 

Sustainability pension funds 

600 


400 

200 

0 


Conventional funds Sustainability funds Climate funds 

1,111 gGHG per euro. This roughly matches the 

result for the conventional index. 

Some sustainability funds have much lower 

greenhouse gas intensities than the supposedly 

low greenhouse gas intensity climate funds. 

Here, too, the variance in results is considerable. 

The figures are between 1,265 gGHG per euro – 

comparable to that for a conventional fund – and 

very low values around 308 gGHG per euro. The 

20 largest sustainability funds overall have an 

average greenhouse gas intensity of 605 gGHG 

per euro. This figure, too, is very close to the 

average for sustainability indices of 632 gGHG per 

euro. 

The average greenhouse gas intensity of the 

climate fund's investment universe is 776 gGHG 

per euro. This is above the intensity of the sustainability 

funds. Again here, the variance of the 

results is very high. 

The results show that many climate funds 

currently incorporate the criterion of greenhouse 

gas intensity only to a limited extent. Despite 

comparable investment strategies, some of the 

analysed climate funds include highly greenhouse 

gas-intensive stocks which, though making a 

contribution to climate protection in some of 

their business units, are generally founded on a 

greenhouse gas-intensive business model. No 

fund attained the low greenhouse gas intensity of 

the renewable energy index in the calculations. 

The conventional funds generally exhibit a higher 

emissions intensity than climate or sustainability 

funds. The wide variance shows, however, that 

there is certainly a broad framework for optimising 

greenhouse gas intensity here too. Some 

individual funds attained the level of sustainability 

and climate funds without having stated a 

conscious policy of investing in low greenhouse 

gas emission stocks. 

5.3 

Bonds and pension funds 

The calculation of pension funds in respect of 

enterprises and countries follows the same 

logic as already applied to savings deposits. 

Private investors acquire shares in the equity of 

business enterprises and other institutions by 

purchasing bonds and pension funds. With regard 

to bonds and pension funds, the study only takes 

into account sustainability products. No capital 

investment product investing in fixed-interest 

securities oriented explicitly to climate protection 

could be found. 

To illustrate calculation of the average greenhouse 

gas intensities of investment products 

in fixed-interest securities, one conventional 

and one sustainable pension fund respectively 

were analysed, both funds being among the 

leading funds on the German market and as 

such permitting maximum comparability. Since 

companies frequently issue bonds through banks, 

a bond cannot always be allocated to a single 

company in the pension funds' annual reports. 

Consequently, funds investing most of their assets 

in corporate bonds could not be analysed. But 

government bonds play a much greater role than 

corporate bonds in the eurozone anyway. In view of 

that, two funds primarily investing in government 

bonds were compared here. As the emissions 

intensity of the pension funds is to a great extent 

dependent on the scale of investment in corporate 

or government bonds, this analysis compared two 

funds, with a very similar mix of the two categories, 

which invest primarily in government bonds 

and which dominate the market in continental 

Europe. 

The results for the analysed pension funds show 

a widely differing greenhouse gas intensity. The 

sustainability pension fund exhibits a much lower 

greenhouse gas intensity – 210 gGHG per euro – 

than its conventional counterpart, at 369 gGHG per 

euro. This evidently results from the interposed 

sustainability analysis of the issuing governments. 

The sustainability fund invests in countries with 

much lower greenhouse gas intensities than the 

conventional pension fund.


021 

6 The carbon footprint of private investors 

The investment products described previously are 

utilised to differing by German private investors. 

This has a decisive influence on the greenhouse 

gas intensity of the overall investment portfolio. 

The Deutsche Bundesbank determined the 

average financial assets of private households in 

Germany for 2008 (as per May 2009). According to 

that analysis, most households invest 40 % of their 

capital in bank deposits, followed by insurance 

policies and pension provisions. Investment 

funds (11 %), fixed-interest securities (7 %) and 

stocks (4 %) together account for 22 % of the total 

investment volume. 

To determine the carbon footprint of the average 

German financial investor, the above carbon 

footprints of the individual investment products 

are applied on a weighted average. For bank 

deposits, the average of the greenhouse gas 

intensity calculated here for savings was applied. 

The same method was applied to the analysed 

stock funds for the investment fund category. For 

the insurance policies and pension provisions 

category, the appropriation of funds by conventional 

vendors of life insurance was taken into account 

(Bafin 2008). For the same product categories 

the average appropriation of funds was selected 

for sustainable and climate-friendly investment 

products based on the data reported by two 

leading providers. 

By this method the carbon footprint of a conventional 

financial investor can be compared 

to that of a climate-friendly investor. For the 

climate-friendly portfolio the weighted average 

of the sustainable and climate-related products 

is calculated, because – as noted in the previous 

sections – relevant products for both product 

categories, and thus figures for the greenhouse 

gas intensities, are not available. 

Across all product categories, for a conventional 

investment portfolio in line with the capital 

structure of the private financial assets of German 

households (cf. figure 10) the average greenhouse 

gas intensity is 503 gGHG per invested euro. With 

conventional appropriation of funds, an average 

capital investment of 10,000 euros in line with 

the capital structure of private financial assets 

finances approximately five tonnes of greenhouse 

gases per year. This corresponds to just under 

half the average carbon footprint of a German 

citizen (ifeu 2007). By contrast, if the 10,000 euros 

were invested according to the climate-friendly 

appropriation of funds outlined, the financed 

emission could be reduced to 2.93 tonnes. A 

portfolio structured in this way thus finances 42 % 

less greenhouse gas emission, despite equal 

investment volumes. This is roughly comparable 

with a shift from car to public transport. Here 

the reduction in carbon footprint is between 34 

and 50 % per person per kilometre (UBA 2009, 

p. 31). 

Figure 11: Reduction in average financial investment portfolio 

By choosing climate-friendly and sustainable 

capital investments, private investors can make 

significant savings in terms of the emissions they 

finance. The climate-friendly and sustainable 

investments in Germany totalling just under 

40 billion euros thus bring about a reduction in 

financed greenhouse gas emissions of 17.5 million 

tonnes per year compared to conventional product 

alternatives. 

Figure 10: Financial assets of private households in 2008 

Product 

Assets (in billion 

Euros) 

Conventional 

in gGHG 

per Euro 

Climate-friendly in 

gGHG per Euro 

Reduction 

Bank deposits 1,743 199 68 –67 % 

35 % Insurance policies and 

pension provisions 

7 % Fixed-interest securities 

4 % Stocks 

4 % Other shareholdings 

Fixed-interest 

securities 

304 368 210 –43 % 

Stocks 166 1,243 632 


Investment funds 497 1,111 722 


–49 % 

–35 % 

11 % Investment funds 

Insurance policies and 

pension provisions 

1,524 645 417 –35 % 

40 % Bank deposits 

Other shareholdings 187 Not precisely 

attributable 

Not precisely attributable 

Not precisely 

attributable 

Total /Average 4,413 503 292 –42 % 

Source: Deutsche Bundesbank (2009): Financial assets and liabilities of private households 

Source: Deutsche Bundesbank (2010); own calculations


023 

7 Abstract 

This study is an initial approach aimed at achieving 

a more detailed analysis of the complex issue of 

the greenhouse gas intensity of capital investment 

products. It sets out initial results from the analysis 

of climate-friendly capital investments by 

private households which need to be refined on 

the basis of more detailed analyses. 

1. There is a significant link between private 

capital investments and greenhouse gas emissions. 

Every 10,000 euros invested currently 

finances five tonnes of greenhouse gas emissions 

a year. This corresponds to just under half the 

average carbon footprint of a German citizen. In 

view of the considerable amounts already saved 

up by German households, the question as to how 

climate-friendly that money is invested will be 

of major importance in future. By their choice of 

where to commit their money, investors determine 

the capital investments of tomorrow. 

2. Private investors can substantially reduce 

their carbon footprint by choosing climatefriendly 

and sustainable financial investments. 

The average potential for reduction across the 

investment portfolio is 42 %. If the funds currently 

already committed to climate-friendly and sustainable 

investment products were invested in 

conventional capital investments, they would be 

financing an additional 17.5 million tonnes of 

greenhouse gases per year. 

3. In all relevant product categories provenly 

climate-friendly investment products are now 

available. Even without modifying their overall 

investment strategies, and retaining the structure 

of their respective portfolios, private investors 

can cut the carbon footprint of their capital 

investments across all product categories. In the 

individual product categories savings of between 

35 % and 87 % can be made. 

4. So-called "sustainable investment products", 

like original climate-friendly investment products, 

generate significantly lower levels of financed 

emissions. Depending on product category, 

sustainable financial investments or climatefriendly 

capital investments have the lower 

carbon footprint. On average, both sustainable 

and climate-friendly investment products entail 

significantly lower greenhouse gas emissions than 

conventional products. 

5. The range of climate-friendly investment 

products available is currently still small, but 

the number of offers is rising steadily as clients' 

interest grows. The climate-friendly investment 

products sector is definitely a growth market. 

The necessary shift to a more climate-friendly 

economy, rising energy and commodity prices, as 

well as the growing awareness of consumers, are 

all factors dictating the direction of future market 

trends in climate-friendly investment products. 

6. The wide spread of financed emissions 

within individual product categories indicates 

great potential for optimisation. Even without 

formulating a consciously climate-friendly investment 

strategy, conventional stock funds 

vary by well over 100 % in their greenhouse gas 

intensity. There is also a considerable spread 

among sustainable and climate-friendly products. 

Some product offers still exhibit relatively high 

figures, which are problematic in terms of their 

own stated claims. 

7. The carbon footprint is a suitable instrument 

for bringing greater transparency to bear in 

judging the climate-friendliness of capital investments. 

Though there are still various 

methodological hurdles to overcome before the 

carbon footprint can deliver precise, globally 

comparable and reliable data, the instrument in 

itself doubtless offers a valuable aid to private 

investors. The carbon footprint provides them 

with a simple measure to determine the extent to 

which their capital investment is contributing to 

climate change and what investment alternatives 

are open to them. 

8. The carbon footprint is also a suitable instrument 

for financial services providers in optimising 

the risk of their portfolios. By integrating the 

calculation of greenhouse gas intensity into capital 

investment and loan allocation decisions they can 

better estimate the risks of changing climate 

policy and energy price rises for their investments. 

They can then also manage and optimise their 

portfolio planning based on those factors. 

9. In the medium term, it is conceivable that the 

carbon footprint will become established as a 

key performance indicator for capital investment 

products alongside return data or market risk 

factors. The carbon footprint offers vendors of 

conventional capital investment products and of 

sustainable and climate-friendly products the 

possibility to make their investment strategies 

transparent and at the same time to communicate 

the investment opportunities and climate effects 

of their products. 

The core results of the study listed here will in 

future doubtless need to be refined by further 

studies. Key research issues, such as 

• the correlation between the carbon footprint 

on the one hand and the profitability and risk of 

capital investments on the other; 

• the usefulness of the carbon footprint in structuring 

portfolios and 

• its usefulness in communicating with institutional 

investors; 

• the communicability of the greenhouse gas 

intensity of private capital investments; and 

• the still existent large gap between the stated 

interest in and practical incorporation of extrafinancial 

goals in capital investments 

can only be further underscored by the study. 

The study has further highlighted the close 

correlation between climate protection and financial 

services. It thus also embodies an appeal to all key 

market players to continue actively driving forward 

this issue and to grasp the opportunities arising 

for everyone – investors and financial services 

providers alike – offered by climate-friendly capital 

investments.

024 adelphi • The Carbon Footprint of Capital Investments 


025 

Bibliography 

Bafin 2008: Statistik der Bafin – Erstversicherungsunternehmen ’08. Retrieved March 23, 2010, from 

http://www.bafin.de/cln_179/SharedDocs/Downloads/DE/Service/Statistiken/Statistiken2008/Erstversicherungsunternehmen/st__w08__erstvu__lv,templateId=raw,property=publicationFile.pdf/st_08_erstvu_lv.pdf 

Beal, Diana J., Michelle Goyen and Peter Philips 2005: Why do we invest ethically? In: The Journal of 

Investing, 14(3), 66 –78. 

Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit (BMU) 2008: Umweltbewusstsein 

in Deutschland 2008. Ergebnisse einer repräsentativen Bevölkerungsumfrage. Retrieved February 25, 

2010, from http://www.umweltdaten.de/publikationen/fpdf-l/3678.pdf 

Bundesverband Investment und Asset Management e. V. (BVI) 2010: BVI-Investmentstatistik. 

Gesamtüberblick. Retrieved March 30, 2010, from http://www.bvi.de/de/statistikwelt/ 

Investmentstatistik/download/2010_01_31_BVI-Investmentstatistik.pdf 

Ceres 2008: Corporate Governance and Climate Change. The Banking Sector. 

Retrieved March 29, 2010, from http://www.ceres.org//Document.Doc?id=269 

Carbon Disclosure Project (CDP) 2009: Bericht 2009 Deutschland. Retrieved March 9, 2010, from http:// 

www.wwf.de/fileadmin/fm-wwf/pdf_neu/CDP_Bericht_2009_dt.pdf 

Centre Info, Utopies and Groupe Caisse D’Epargne 2008: Saving money while saving the planet? 

Feedback from the first experience of CO 2 labelling on banling products. Retrieved January 20, 2010, 

from http://www.utopies.com/docs/Saving-Money-UTOPIES-CaisseEpargne-CentreInfo-GB.pdf 

Deutsche Bank Research 2007: Klimawandel bewältigen. Die Rolle der Finanzmärkte. Retrieved March 

23, 2010, from http://www.dbresearch.de/PROD/DBR_INTERNET_DE-PROD/PROD0000000000215909. 

pdf 

Deutsche Bank Research 2010: Investing in Climate Change 2010. A Strategic Asset Allocation 

Perspective. Retrieved March 29, 2010, from http://www.banking-on-green.com/docs/ 

InvestingInClimateChange2010.pdf 

Deutsche Bundesbank 2009: Bankenstatistik November 2009. Retrieved January 20, 2010, from http:// 

www.bundesbank.de/download/volkswirtschaft/bankenstatistik/2009/bankenstatistik112009.pdf 

Deutsche Bundesbank 2010: Geldvermögen und Verbindlichkeiten der privaten Haushalte 1991–2008. 

Retrieved March 29, 2010, from http://www.bundesbank.de/statistik/statistik_wirtschaftsdaten_ 

tabellen.php 

Equator Principles Financial Institutions 2006: The Equator Principles. A financial industry benchmark 

for determining, assessing and managing social & environmental risk in project financing. Retrieved 

March 20, 2010, from http://www.equator-principles.com 

Finanz-Forum Klimawandel 2010: Herausforderung Klimakompetenz. Kundenerwartungen an 

Finanzdienstleister. Ergebnisse einer Befragung von Privat- und Geschäftskunden. Retrieved January 

19, 2010, from http://www.bmbf.de/_media/press/pm_20100119-003.pdf 

Forum Nachhaltige Geldanlagen e.V. 2008: Statusbericht Nachhaltiger Anlagemarkt 2008. Retrieved 

March 8, 2010, from http://www.forum-ng.de/upload/pdf/Interne_Studien/Statusbericht_FNG_2008.pdf 

Fowler, Stephen J. and Chris Hope 2007: A Critical Review of Sustainable Business Indices and their 

Impact. In: Journal of Business Ethics, 76(3), 243 –252. 

Geyer, Johannes and Viktor Steiner 2009: Zahl der Riester-Renten steigt sprunghaft – aber 

Geringverdiener halten sich noch zurück. In: Deutsches Institut für Wirtschaftsforschung (DIW), 

Weekly Report 32, p. 534–542. 

Green Value 2010: Informationsportal für Umwelt- und Erneuerbare Energie Beteiligungen und Projekte 

mit internationaler Projektbörse. Retrieved March 29, 2010, from http://www.greenvalue.de 

Hartmann, Phillip, Florian Heider, Elias Papaioannou and Marco Lo Duca 2008: The role of financial 

markets and innovation in productivity and growth. In: Europe Occasional Paper Series, 72. Retrieved 

February 9, 2010, from http://www.ecb.int/pub/pdf/scpops/ecbocp72.pdf 

Imug 2003: Marktkommunikation und Kundenberatung für sozial-ökologische Geldanlagen. Empirische 

Einsichten in die Praxis der Finanzdienstleister. Imug Arbeitspapier 14 prepared within the framework 

of the BMBF-project „Investorenentscheidungen als Determinanten nachhaltiger Unternehmensführung“. 

Hannover: imug. 

Initiative „2 ° – Deutsche Unternehmer für den Klimaschutz“ 2009: Klimaschutz für Alle! 

Klimafreundlicher Konsum als neue Säule für den Klimaschutz. Retrieved March 30, 2010, from http:// 

www.initiative2grad.de/images/pdfs/strategiebericht_klimas.pdf 

Institut für Energie und Umweltforschung (ifeu) 2007: Die CO 2 Bilanz des Bürgers. Recherche für 

ein internetbasiertes Tool zur Erstellung persönlicher CO 2 Bilanzen. Endbericht. Retrieved March 8, 

2010, from http://www.ifeu.org/energie/pdf/UBA_IFEU_CO2_Rechner.pdf 

ISA UK Research & Consulting 2007: A Definition of a ’Carbon Footprint’. ISA UK Research Report 

07-01. Retrieved March 29, 2010, from http://wiki.epfl.ch/hdstudio/documents/articles/a % 

20definition %20of %20carbon %20footprint.pdf 

International Energy Agency (IEA) 2008: Energy Technology Perspectives: Scenarios and Strategies to 

2050. Paris: OECD Publishing. 

International Panel on Climate Change (IPCC) 2007: Klimaänderung 2007. Synthesebericht. Retrieved 

February 26, 2010, from http://www.de ipcc.de/_media/AR _SynRep_Gesamtdokument.pdf 

Kahlenborn, Walter, Hauke Dierks, Daniel Wendler and Matthias Keitel 2010: Climate Protection 

through Capital Investments. Effects of climate and sustainability funds on German stock corporations. 

Berlin: adelphi. 

Lord, Stefan, Roland Bub and Reiner Ramspeck 2007: Kreditinstitute in Deutschland, ihre Kunden 

und der Klimawandel. Eine Grundlagensammlung über aktuelle ökologische Trends. Erwartungen 

von Bankkunden und die Haltung der Kreditinstitute. Saarbrücken: Vdm. 

Öko-Institut 2009: Memorandum Product Carbon Footprint. Positionen zur Erfassung und 

Kommunikation des Product Carbon Footprint für die internationale Standardisierung und 

Harmonisierung. Retrieved March 25, 2010, from http://www.bundesumweltministerium.de/files/pdfs/ 

allgemein/application/pdf/memorandum_pcf_lang_bf.pdf 

Pictet 2008: SRI-Performance-Paradox. Messung und Reporting extra-finanzieller Performance 

nachhaltiger Anlagen. Retrieved March 30, 2010, from http://www.pictet.com/en/home/about/ 

sustainability/sri_reports/sri_performance_paradox.Par.0004.FileRef1.pdf/SRI_Performance_ 

paradox_en.pdf 

Roland Berger 2009: Innovation, Wachstum, Beschäftigung. Für eine nachhaltig effiziente Wirtschaft. 

Retrieved March 30, 2010, from http://www.bmu.de/files/pdfs/allgemein/application/pdf/wwk_ 

leitlinien_bf.pdf

026 adelphi • The Carbon Footprint of Capital Investments 

Schneider, Stefan 2009: Studie zum Markt für nachhaltige Zertifikate und Exchange Traded Funds in 

Deutschland. Retrieved March 30, 2010, from http://www.deutscher-derivate-verband.de/DE/MediaLibrary/Document/Studies/Studie 

%20nachhaltige %20Zertifikate %20und %20ETFs %20per %2030062009. 

pdf 

Strandberg, Coro 2005: The future of socially responsible investment. Thought leader study. Retrieved 

February 25, 2010, from https://www.vancity.com/SharedContent/documents/Future_of_SRI-Study.pdf 

Sustainable Business Institute 2010: Nachhaltiges Investment. Retrieved March 29, 2010, from http:// 

www.nachhaltiges-investment.org 

Trucost 2009a: Carbon Counts USA. The Carbon Footprints of Mutual Funds in the US. Retrieved March 

29, 2010, from http://www.pewclimate.org/docUploads/CarbonCounts-USA_5_V-ONLINE.pdf 

Trucost 2009b: Carbon Risks in UK Equity Funds. Trucost study of the carbon footprints of portfolios and 

carbon management in pension funds assets. Retrieved March 29, 2010, from http://www.responsibleinvestor.com/images/uploads/resources/research/11248189355CarbonRisksUKEquityFunds.pdf 

Umweltbundesamt (UBA) 2009: Daten zum Verkehr 2009. Retrieved March 23, 2010, from http://www. 

umweltdaten.de/publikationen/fpdf-l/3880.pdf 

Umweltbundesamt (UBA) 2010: Presseinformation 13. Retrieved March 23, 2010, from http:// 

www.umweltbundesamt.de/uba-info-presse/2010/pdf/pd10-013_treibhausgasemissionen_grafiken.pdf 

United Nations Framework Convention on Climate Change (UNFCCC) 2007: Investment and 

Financial Flows to Address Climate Change. Retrieved March 30, 2010, from http://unfccc.int/ 

files/cooperation_and_support/financial_mechanism/application/pdf/background_paper.pdf 

Utopies and Group Caisse D’Epargne 2008: Sustainable Development Labeling of banking products. 

Initial methodological approach (V1, June 2008). Retrieved February 3, 2010, from http://www.utopies. 

com/docs/Methodologie-Generale-Juin2008-GB.pdf 

Venugopal, Shally, Clay Rigdon and Florence Daviet 2009: Accounting for Risk. Conceptualizing a Robust 

Greenhouse Gas Inventory for Financial Institutions. Retrieved March 8, 2010, from http://pdf.wri.org/ 

accounting_for_risk.pdf 

Wackernagel, Mathis and William E. Rees 1996: Our ecological footprint. Reducing Human Impact on 

the Earth. Gabriola Island: New Society Publishers. 

Williams, Goeffrey 2005: Some determinants of the socially responsible investment decision. A cross 

country study. In: Journal of Behavioral Finance, 8(1), 43–57. 

World Resources Institute (WRI), World Business Council for Sustainable Development (WBCSD) 2004: 

The Greenhouse Gas Protocol. A Corporate Accounting and Reporting Standard. Retrieved March 30, 

2010, from http://pdf.wri.org/ghg_protocol_2004.pdf 

World Resources Institute (WRI), World Business Council for Sustainable Development (WBCSD) 2009a: 

GHG Protocol Product & Supply Chain Initiative. Stakeholder Workshops. Summary of Feedback 

Received on Draft Standards. Retrieved March 30, 2010, from http://www.ghgprotocol.org/files/ 

ghg-protocol-summary-feedback-from-stakeholder-workshops.pdf 

World Resources Institute (WRI), World Business Council for Sustainable Development (WBCSD) 2009b: 

The Greenhouse Gas Protocol . Product Life Cycle. Accounting and Reporting Standard. Retrieved 

March 30, 2010, from http://www.ghgprotocol.org/files/ghg-protocol-product-life-cycle-standard-draftfor-stakeholder-review-nov-2009.pdf


Caspar-Theyss-Strasse 14a 

14193 Berlin 

T +49 (0)30-89 000 68-0 

F +49 (0)30-89 000 68-10 

www.adelphi.de 

office@adelphi.de

The Carbon Footprint of Capital Investments - adelphi

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?