Data on greenhouse gas emissions
The Riksbank uses data on greenhouse gas emissions from the UNFCCC. However, it is not the UNFCCC that makes the estimates of greenhouse gas emissions. This is done at national level and is shared with the UNFCCC, which then publishes the information. Reported emission data are calculated and published with a time lag. At the time of publication of this Commentary, the most recently available data on greenhouse gas emissions are from the year 2019. Emissions in 2019 will thus be used in the carbon intensity calculations for all years from 2019 and onwards. For the years prior to that, the respective year's greenhouse gas emissions are used. Some countries also report greenhouse gas emissions for their regions and the Riksbank uses these in its calculations for bonds issued by Australian States and Canadian provinces.
Gross domestic product data
The Riksbank uses data on gross domestic product in US dollars for the countries in the foreign exchange reserves from the OECD National Accounts Statistics. The data series used are already adjusted for inflation and exchange rates, where the base year is 2015. The GDP-deflator is used to correct for inflation. As a robustness test, calculations are also made using purchasing-power-adjusted GDP at a constant price level from the OECD National Accounts Statistics and for this data, too, the base year is 2015.
For the Australian states and the Canadian provinces, the gross regional product (GRP) of the respective region is used instead of the country’s GDP. These data are adjusted for inflation and exchange rates by the authors’ own calculations using data from the OECD National Accounts Statistics. The respective country’s GDP deflator is used to adjust to the 2015 price level. The exchange rate used is the annual average for 2015 for each country’s currency against the US dollar, as in the OECD calculations for each country.
The portfolio-weighted carbon intensity of the assets in the Riksbank’s foreign exchange reserves
The measure shows the exposure of foreign reserves to emission-intensive assets and is the result of a two-step calculation. First, the carbon intensity of the respective holding is calculated by dividing the issuer’s annual emissions in tonnes of carbon dioxide equivalents by GDP. This value is then multiplied by the weight the holding has in the Riksbank’s portfolio, that is the value of the holdings in relation to the total value of the portfolio, according to the following formula:
|Market value of holdingi|
The market value in Swedish kronor of a holding in the portfolio.
|Total portfolio value||The sum of the market values in Swedish kronor for all holdings in the portfolio that are included in the calculation of the carbon footprint. Only the foreign exchange reserves’ holdings of bonds issued by states and regions are included in the calculation of total portfolio value.|
|The holding’si issuer’s greenhouse gas emissions||Greenhouse gas emissions of the issuer for each holding converted into tonnes of carbon dioxide equivalents. For bonds issued by states and provinces, greenhouse gas emissions are used for the geographical region of the respective issuer.|
The holding’si issuer’s GDP
Real GDP/GDP at constant prices (2015 = 100) in billions of US dollars. The GDP deflator is used to correct for inflation. The average exchange rate for 2015 is used in cases where comparisons are made over time to eliminate the effect of fluctuations in the exchange rate between years.
To compare the carbon intensity between different countries/regions and over time See De Nederlandsche Bank (2021). , the respective country/region’s emissions have been divided by GDP at a fixed price level (real GDP). To correct for inflation, we have chosen to use the GDP deflator. For regions, the country’s GDP deflator is used. It is appropriate to use real GDP in a comparison of multi-annual statistics to adjust for price changes due to inflation. This is because a country/region with positive inflation year after year will have higher and higher nominal GDP year after year (all else being equal) which will result in a lower and lower carbon footprint as the denominator in the right-hand side of the formula above grows.
For the measure to be comparable, GDP should be expressed in terms of a single currency. GDP is converted into US dollars using the average exchange rate for the year 2015. This facilitates a comparison over several years, since we can thus eliminate the effect of fluctuations in the exchange rate.