Reducing Carbon Emissions in Equity Portfolios : Are All Carbon Reductions the Same?

As Low Carbon portfolios have become increasingly mainstream, one finds that there are far too many seemingly equivalent products available to investors. As a result, accurately attributing the sources of carbon reduction become even more important. While there may not be one size that fits all – it is important to align the sources of carbon reduction with the investors’ stated goals and motivation. We use a simple factor attribution framework to break down the carbon reduction to attribution and selection effects