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End-to-end carbon footprints

The carbon footprint of a company's product derived by the end user is often overlooked. In industry parlance it's known as carbon scope. Scopes one and two consider the carbon usage, generally energy-related emissions related to product manufacturing, while scope three refers to the carbon used after the product is sold.

The energy and utilities sectors have the largest carbon footprint among the major GICS sectors by metric ton. However, how those emissions are produced are starkly different from one another. For the energy sector, the bulk of the atmospheric carbon produced comes after the product is sold and consumed. The utilities sector creates far more carbon during production than it does in consumption.

The total environmental impact a company's business has will become more apparent as climate change efforts become increasingly mandated rather than suggested. Opportunity may exist for investors looking to hedge against their risk of being over exposed to carbon, particularly when accounting for their portfolios' total exposure.