A new LSEG report shows that falling portfolio carbon intensity can be misleading. Absolute Scope 1 and 2 emissions for the FTSE All-World index stayed flat at 12.5 GtCO2e between 2019 and 2024, even as WACI dropped 34%. Much of that drop came from index composition changes, not actual company action. Telecoms and energy saw the biggest falls due to turnover, while technology emissions rose 28% as AI and data centers boosted electricity use. Only 70% of companies have a climate target, and half of constituents are still increasing emissions. Scope 3 coverage remains incomplete. Investors need to look past headline numbers and check whether reductions come from real decarbonization or from rebalancing and market effects.
