Introduction
Climate change is one of the most significant global challenges today, with profound implications for the environment, economies, and societies. Financial institutions are central to addressing this challenge, given their role in allocating capital and managing investments that influence the transition to a low-carbon economy. As such, it is important for financial firms to measure, report, and mitigate the environmental impact of their activities. One of the key metrics used is the carbon footprint, which quantifies the greenhouse gas (GHG) emissions tied to their operations and investments.
In this case study, we focus on how Cardano, a leader in sustainable asset management, is working to measure and disclose its carbon footprint. The case presents an opportunity for students to learn not only how to calculate carbon emissions but also how to address the challenge of missing data in carbon reporting through econometric techniques. Cardano will host an impact study session, where students will explore methods to estimate missing carbon footprint values and the broader societal implications of this work.Case Study Objectives
This case study, hosted by Cardano, is designed to help students develop their understanding of how financial institutions estimate their carbon footprint, even in the face of incomplete data. The study offers the following learning objectives:
- Understand the importance of carbon footprint measurement in the context of financial risk management, regulatory compliance, investor demands, and societal responsibility and impact (double materiality).
- Apply econometric techniques to estimate missing carbon data, drawing on real-world datasets provided by Cardano. Students will explore different approaches, from simple proxies like industry averages to more complex methods such as regression analysis (and potentially machine learning models).
- Assess the implications of different estimation techniques and how they affect the accuracy of carbon reporting. Students will also evaluate how carbon footprint estimates can impact investment strategies and decisions.
Through this case, students will gain insight into the financial sector's role in climate change mitigation and develop essential econometric skills that are increasingly relevant in the field of sustainable finance.