Estimating coporate carbon emissions with machine learning

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In January 2022, EDHEC Business School has launched a new online monthly speaker series on “The Future of Finance”. The objective is to address the most recent advances in the financial industry and discuss how finance can be a powerful tool for tackling key economic and social challenges. To do so, this series gather all year long international renowned industry experts and academic scholars reflecting the research culture and intellectual commitment of EDHEC Business School #makeanimpact. The targeted audience is the current EDHEC Business School finance graduate students, the EDHEC alumni, and the members of the enlarged EDHEC community and guests.


On Tuesday April 4th, 2023, EDHEC welcomed Raul Leote De Carvalho, Deputy Head of the Quantitative Research Group at BNP Paribas on "Estimating Corporate Carbon Emissions with Machine Learning".

As of 2022, greenhouse gases (GHG) emissions reporting and auditing are not yet compulsory for all companies. We propose a machine learning-based model to estimate scope 1 and scope 2 GHG emissions of companies not yet reporting them.

The model is designed to be transparent, is able to estimate GHG emissions for a large universe of companies and shows good out-of-sample performance. Unlike mainstream approaches, which tend to construct one model for each industry, we construct one single global model that uses industries as a factor.

This addresses the problem of lack of breadth or lack of reported data in some industries and generates practical results even for industries where other approaches have failed.

EDHEC discussants were Dominic O'KANE, Professor of Finance, EDHEC Business School and Research Director at EDHEC-Risk Institute and Emmanuel Jurczenko, Director of Graduate Finance Programmes, EDHEC Business School.