CO2e/CaRe Financed Emissions in Institutional Portfolios: A Call to Action

29 Pages Posted: 14 Mar 2023 Last revised: 5 Apr 2023

See all articles by Arun Muralidhar

Arun Muralidhar

AlphaEngine Global Investment Solutions; George Washington University

Sanjay Muralidhar

AlphaEngine Global Investment Solutions

Date Written: March 10, 2023


One of the key issues dominating the institutional investing industry is impact investing and the need to reduce carbon emissions (measured in Carbon Dioxide Equivalents or CO2e). Many investors have signed the Net Zero Asset Owner Alliance (NZAOA), which has specific goals and targets to be met by 2030 and 2050.

This paper takes a step back to provide a measure of how much of current global emissions can be attributed to portfolios by virtue of holdings in global stocks and bonds using (not-so-easily available) public data. All we use for this analysis is the size of the portfolio, high level asset allocation information, and measures of tons of CO2e/1$ million invested of generic indices for asset classes.

This paper provides a starting measure of current emissions attributable to institutional portfolios and a template for calculating this metric going forward. If we cannot measure a goal, then we cannot monitor or manage it. This analysis shows first that the current reporting of emissions of benchmark indices (and possibly even asset allocations) needs better standards and transparency. Second, current reporting could lead to non-obvious changes in asset allocation. Third, asset owners need to get involved in setting these standards as opposed to letting vendors report as they please. Fourth, we report the wide dispersion in emissions among institutional investors, even when normalized for number of participants/students or assets under management (AUM) and some unexpected results in comparison of public funds in blue, red and purple states. Fifth, to make these CO2e values simple for lay people to understand, we convert them into “CaR” emission equivalents (CaRe), and these values are quite revealing.

The goal of this exercise is to help investors, so inclined, set a benchmark for where they are and where they want to be in the future, and measure and monitor progress to ensure effective management of portfolios to meet these pledges. The same principles can also be applied to retail or any other portfolios.

Keywords: Climate Change, ESG, Carbon Dioxide Equivalent (CO2e), Asset Allocation, Car Emission Equivalent (CaRe), Pension Funds, Endowments, Net Zero Asset Owner Alliance, Industry Reporting Standards, Measure, Manage, Monitor (M-cube); Retail Investors

JEL Classification: G10, G11, G23, Q50, Q56

Suggested Citation

Muralidhar, Arun and Muralidhar, Sanjay, CO2e/CaRe Financed Emissions in Institutional Portfolios: A Call to Action (March 10, 2023). Available at SSRN: or

Arun Muralidhar (Contact Author)

AlphaEngine Global Investment Solutions ( email )

Great Falls, VA
United States


George Washington University ( email )

2121 I Street NW
Washington, DC 20052
United States

Sanjay Muralidhar

AlphaEngine Global Investment Solutions ( email )

Princeton, NJ
United States


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