The carbon footprint of the U.S. multinationals’ foreign affiliates

Abstract

Multinational enterprises (MNE) need to be a part of the solution in the fight against climate change, as claimed by investors and consumers, reducing emissions within their operations and supply chains. This paper measures the carbon footprint of U.S. MNE foreign affiliates (US-MNE) operating beyond the U.S. borders. Using a multiregional input-output model and information about US-MNE activities, the US-MNE carbon footprint ranks US-MNE as the 12th top emitter of the world. In relative terms, one dollar of value added generated by US-MNE affiliates operating abroad requires higher emissions than the domestic average and the ratio increases when only developing host countries are considered. Only 8% of total carbon footprint returns to the U.S. as virtual carbon embodied in the U.S. final consumption. Potential technology transfers between the U.S. parent company and affiliates to reduce US-MNE carbon footprint have been performed to evaluate potential rippled effects of mitigation actions.