Every quarter, GreenFi reports the carbon impact attributed to the Redwood Fund. This post explains the methodology behind those figures, the assumptions embedded in the calculation, and what the numbers actually mean.

The Core Calculation

Investment financed emissions are estimated using a single formula:

GHG Emissions (tCO2e) = Redwood AUM ($) x Investment Financed Emission Factor (tCO2e / $)

The emission factor represents the carbon intensity of a given portfolio — the metric tonnes of CO2-equivalent greenhouse gases attributable to each dollar invested. This approach is consistent with the Partnership for Carbon Accounting Financials (PCAF) standard for listed equities and corporate bonds.

A Key Assumption: Opportunity Cost

The baseline assumption: absent the Redwood Fund, those dollars would be invested in the S&P 500. The avoided figure is the emission factor delta between the Redwood Fund portfolio and the S&P 500 benchmark, multiplied by assets under management.

The Redwood Fund carries a lower carbon intensity than the S&P 500 by design — its portfolio excludes the energy sector sector as defined by MSCI and its Global Industry Classification Standard. That differential is the source of the avoided financed emissions figure.

Carbon Credit Retirements

Beyond portfolio construction, GreenFi retires verified carbon credits to offset the Scope 1 and Scope 2 emissions financed by the fund. Credits are retired on two third-party registries:

• Verra (Verified Carbon Standard) — the world's most widely used voluntary carbon standard for project certification and credit retirement

• American Carbon Registry (ACR) — one of the original voluntary offset program registries in the U.S.

Retirements are recorded publicly on each registry, providing a verifiable, auditable record. This means the financed emissions attributable to Redwood Fund AUM are not only reduced relative to the benchmark, they are offset by an equivalent quantity of retired, third-party verified carbon credits.

Where the Emission Factor Comes From

Each quarter, UBS Asset Management — the Redwood Fund's sub-advisor — provides the weighted average carbon intensity figures for both the Redwood Fund and the S&P 500 benchmark. These figures are expressed as tCO2e per dollar invested and are calculated at the underlying holding level using Scope 1 and Scope 2 emissions data reported by portfolio companies.

Historical Quarterly Carbon Intensity Data

What the Numbers Reflect

For any individual account holder, the avoided CO2e and retired credits attributed to their balance are calculated proportionally based on their share of Redwood Fund AUM in that quarter. The calculation uses the average balance for the period and does not adjust for partial-quarter activity.

All figures are expressed in metric tonnes of CO2-equivalent (tCO2e), which aggregates carbon dioxide, methane, nitrous oxide, and other greenhouse gases into a single standardized unit using IPCC global warming potential values.

What This Methodology Does Not Claim

• Avoided financed emissions are relative to the S&P 500 benchmark — they are a portfolio construction outcome, not a separate credit retirement.

• Carbon credit retirements cover Scope 1 and 2 financed emissions only. Scope 3 supply chain emissions of underlying holdings are not included.

• Future figures will change as Redwood Fund portfolio composition and S&P 500 carbon intensity data are updated quarterly.

Full Methodology

The complete carbon footprint calculation methodology, including how GreenFi calculates emissions impact across all feature and products, is available here: Carbon Footprint Calculation Methodology