In 2009, in the wake of the financial crisis, the G20 launched the Data Gaps Initiative to address data gaps that had hampered crisis forecasting and policy decision-making. Today, this initiative includes recommendations on the development of climate indicators, including the measurement of the carbon footprint of foreign direct investment (FDI). To meet this objective, the International Monetary Fund has proposed an estimation method based on macroeconomic data.
In France, INSEE’s carbon accounts also provide a macroeconomic approach for assessing France’s carbon footprint, which includes French emissions and the balance of imported and exported emissions. Lastly, the Banque de France recently published an estimate using a fairly similar method.
An approach based on the availability of granular data
In an article published in March 2025, we propose a granular approach, with the carbon footprint of FDI estimated in particular using the carbon assessments published by the companies themselves.
This approach supplements the conceptual framework used by the IMF. This approach is based on a particularly strong assumption of homogeneity in the carbon intensity of the production of companies owned by non-residents in different sectors of activity, or, in other words, a lack of differentiation in production processes within each sector. Drawing on microeconomic data, notably greenhouse gas (GHG) emissions for each company, makes it possible to relax the assumption of homogeneity and thus capture the diversity of companies’ production processes.
In the medium term, our granular approach will enable us to test the robustness of the assumptions of the IMF’s approach. Ultimately, our objective is similar in that it seeks to assess the extent to which French multinationals contribute to GHG emissions through their production abroad and, analogously, the GHG emissions of French subsidiaries owned by foreign parent companies.
The main challenge is to allocate the total GHG emissions reported by a multinational group to the various entities that comprise it.
A decision tree summarises the entire process (Chart 2). When a company is listed, it generally publishes a carbon footprint and its data are accessible, either in its detailed financial statements or in non-financial reports. When GHG emissions data are available, we use them directly (Case 1). However, for the few listed entities for which GHG emissions data are not available (Case 3), we have to estimate them. All links with the direct investment enterprise are determined by the direct investor’s shareholding.
Chart 2 – Decision tree for estimating GHG emissions for companies receiving FDI