Skip to main content

Thank you for visiting You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

Embodied carbon emissions in the supply chains of multinational enterprises


Enterprises are at the forefront of climate actions and multinational enterprises (MNEs) engage in foreign direct investment, allowing them substantial influence over the entire supply chain. Yet emissions embodied in the international supply chains of MNEs are poorly known. Here we trace the carbon footprints of foreign affiliates of MNEs and show that the gross volume of global carbon transfer through investment peaked in 2011, mainly driven by the decline in carbon intensity. Despite declining carbon footprints of developed country-based MNEs, there has been a notable increase in carbon transfer sourced from the Chinese mainland. We propose an investment-based accounting framework to allocate carbon footprints of MNEs to the investing country. Investment-based accounting of emissions could inform targeted and effective climate policies and actions. For instance, some large MNEs play a crucial role in carbon transfer, therefore their originating country should bear more responsibilities of carbon emission reduction as an investor.

This is a preview of subscription content, access via your institution

Relevant articles

Open Access articles citing this article.

Access options

Rent or buy this article

Prices vary by article type



Prices may be subject to local taxes which are calculated during checkout

Fig. 1: Changes in CO2 emissions embodied in supply chains of MNEs.
Fig. 2: Carbon transfer embodied in global FDI.
Fig. 3: Carbon footprint of MNEs at the sectoral level in 2016 (MtCO2).

Data availability

This study uses a newly published time series inter-regional input–output table61 that is constructed by the Organization for Economic Co-operation and Development (OECD) and captures firm heterogeneity for 60 regions ( The other data adopted by this study are bilateral FDI stock data from the OECD ( and the United Nations (,62, sectoral CO2 emissions data from the International Energy Agency ( and emissions data of selected MNEs from their sustainability reports (Supplementary information 3). Those data can be freely downloaded as public data. We also provide a detailed explanation of these data in the Supplementary Information.

Code availability

The code of the method is available at Mendeley Data for academic use (


  1. UN Climate Change Annual Report 2018 (United Nations Framework Convention on Climate Change, 2019).

  2. López, L.-A., Cadarso, M.-Á., Zafrilla, J. & Arce, G. The carbon footprint of the US multinationals’ foreign affiliates. Nat. Commun. 10, 1672 (2019).

    Google Scholar 

  3. Comyns, B. Climate change reporting and multinational companies: insights from institutional theory and international business. Account. Forum 42, 65–77 (2018).

    Google Scholar 

  4. Kolk, J. E. M. & Pinkse, J. M. Multinationals’ political activities on climate change. Bus. Soc. 46, 201–228 (2007).

    Google Scholar 

  5. Shan, Y. et al. China CO2 emission accounts 1997–2015. Sci. Data 5, 170201 (2018).

    CAS  Google Scholar 

  6. Dietzenbacher, E., Pei, J. & Yang, C. Trade, production fragmentation, and China’s carbon dioxide emissions. J. Environ. Econ. Manag. 64, 88–101 (2012).

    Google Scholar 

  7. Liu, Y. et al. ‘Made in China’: a reevaluation of embodied CO2 emissions in Chinese exports using firm heterogeneity information. Appl. Energy 184, 1106–1113 (2016).

    Google Scholar 

  8. Jiang, X., Guan, D., Zhang, J., Zhu, K. & Green, C. Firm ownership, China’s export related emissions, and the responsibility issue. Energy Econ. 51, 466–474 (2015).

    Google Scholar 

  9. Paelinck, J, De Caevel, J. & Degueldre, J. Analyse quantitative de certaines phénomenes du développment régional polarisé: essai de simulation statique d’itérarires de propogation. In Problèmes de conversion économique. Analyse théorique et études appliquées (ed. Génin, M.-Th.) 341–387 (Université de Liège, 1965).

  10. Los, B., Timmer, M. P. & De Vries, G. J. Tracing value-added and double counting in gross exports: comment. Am. Econ. Rev. 106, 1958–1966 (2016).

    Google Scholar 

  11. Liu, Z. et al. Reduced carbon emission estimates from fossil fuel combustion and cement production in China. Nature 524, 335–338 (2015).

    CAS  Google Scholar 

  12. Peters, G. P. From production-based to consumption-based national emission inventories. Ecol. Econ. 65, 13–23 (2008).

    Google Scholar 

  13. Peters, G. P. & Hertwich, E. G. CO2 embodied in international trade with implications for global climate policy. Environ. Sci. Technol. 42, 1401–1407 (2008).

    CAS  Google Scholar 

  14. Peters, G. P., Minx, J. C., Weber, C. L. & Edenhofer, O. Growth in emission transfers via international trade from 1990 to 2008. Proc. Natl Acad. Sci. USA 108, 8903–8908 (2011).

    CAS  Google Scholar 

  15. Davis, S. J. & Caldeira, K. Consumption-based accounting of CO2 emissions. Proc. Natl Acad. Sci. USA 107, 5687–5692 (2010).

    CAS  Google Scholar 

  16. Davis, S. J., Peters, G. P. & Caldeira, K. The supply chain of CO2 emissions. Proc. Natl Acad. Sci. USA 108, 18554–18559 (2011).

    CAS  Google Scholar 

  17. Liu, Z. et al. Targeted opportunities to address the climate–trade dilemma in China. Nat. Clim. Change 145, 143–145 (2015).

    Google Scholar 

  18. Koch, N. & Basse, H. Does the EU emissions trading system induce investment leakage? Evidence from German multinational firms. Energy Econ. 81, 479–492 (2019).

    Google Scholar 

  19. Hanna, R. US environmental regulation and FDI: evidence from a panel of US-based multinational firms. Am. Econ. J. Appl. Econ. 2, 158–189 (2010).

    Google Scholar 

  20. Pinkse, J. & Kolk, A. Challenges and trade-offs in corporate innovation for climate change. Bus. Strateg. Environ. 19, 261–272 (2010).

    Google Scholar 

  21. Cravens, K. S. Examining the role of transfer pricing as a strategy for multinational firms. Int. Bus. Rev. 6, 127–145 (1997).

    Google Scholar 

  22. Jackson, R. B. et al. Reaching peak emissions. Nat. Clim. Change 6, 7–10 (2016).

    Google Scholar 

  23. Global Energy Statistical Yearbook 2019 (Enerdata, 2019).

  24. World Investment Report 2019 (UN, 2019).

  25. National Bureau of Statistics of China. China Statistical Yearbook (China Statistics Press, 2018).

  26. World Investment Report 2018 (UN, 2018).

  27. Wells, L. T. Third World Multinationals: The Rise of Foreign Investment from Developing Countries (The MIT Press, 1983).

  28. Meng, J. et al. The rise of South–South trade and its effect on global CO2 emissions. Nat. Commun. 9, 1871 (2018).

    Google Scholar 

  29. Kolk, A. & Pinkse, J. A perspective on multinational enterprises and climate change: learning from ‘an inconvenient truth’? J. Int. Bus. Stud. 39, 1359–1378 (2008).

    Google Scholar 

  30. Kuramochi, T. et al. Global Climate Action from Cities, Regions and Businesses: Impact of Individual Actors and Cooperative Initiatives on Global and National Emissions (New Climate Institute, 2019).

  31. Guillén, M. F. & García-Canal, E. The American model of the multinational firm and the ‘new’ multinationals from emerging economies. Acad. Manag. Perspect. 23, 23–35 (2009).

    Google Scholar 

  32. Mundell, R. A. International trade and factor mobility. Am. Econ. Rev. 47, 321–335 (1957).

    Google Scholar 

  33. Daniels, J. P. & von der Ruhr, M. Transportation costs and US manufacturing FDI. Rev. Int. Econ. 22, 299–309 (2014).

    Google Scholar 

  34. World Investment Report 2002: Transnational Corporations and Exports Competitiveness (UNCTAD, 2002);

  35. Borghesi, S., Franco, C. & Marin, G. Outward foreign direct investment patterns of Italian firms in the European Union’s emission trading scheme. Scand. J. Econ. 122, 219–256 (2020).

    Google Scholar 

  36. Chow, P. C. Y. The effect of outward foreign direct investment on home country’s export: a case study on Taiwan, 1989–2006. J. Int. Trade Econ. Dev. 21, 725–754 (2011).

    Google Scholar 

  37. Urata, S. in Rethinking the East Asian Miracle (eds Stiglitz, J. E. & Yusuf, S.) 409–459 (Oxford Univ. Press, 2001).

  38. Zhang, Z. Competitiveness and leakage concerns and border carbon adjustments. Int. Rev. Environ. Resour. Econ. 6, 225–287 (2012).

    Google Scholar 

  39. Zhang, Z., Zhang, Z. & Zhu, K. Allocating carbon responsibility: the role of spatial production fragmentation. Energy Econ. 87, 104491 (2019).

    Google Scholar 

  40. Zhang, Z., Zhu, K. & Hewings, G. J. D. The effects of border-crossing frequencies associated with carbon footprints on border carbon adjustments. Energy Econ. 65, 105–114 (2017).

    Google Scholar 

  41. Lenzen, M., Murray, J., Sack, F. & Wiedmann, T. Shared producer and consumer responsibility—theory and practice. Ecol. Econ. 61, 27–42 (2007).

    Google Scholar 

  42. OECD Guidelines for Multinational Enterprises 2011 Edition (OECD, 2011);

  43. IPCC: Summary for Policymakers. In Special Report on Global warming of 1.5°C (eds Masson-Delmotte, V. et al.) (WMO, 2018).

  44. Narula, R. & Zanfei, A. Globalization of Innovation: The Role of Multinational Enterprises (Oxford Univ. Press, 2006).

  45. Growth and Competitiveness in the United States: The Role of its Multinational Companies (McKinsey Global Institute, 2010).

  46. Leontief, W. W. Structure of the American Economy, 1919–1929 (Harvard Univ. Press, 1941).

  47. Wiedmann, T. & Lenzen, M. Environmental and social footprints of international trade. Nat. Geosci. 11, 314–321 (2018).

    CAS  Google Scholar 

  48. Xiao, Y. et al. The corruption footprints of nations. J. Ind. Ecol. 22, 68–78 (2017).

    Google Scholar 

  49. Wiedenhofer, D. et al. Unequal household carbon footprints in China. Nat. Clim. Change 7, 75–80 (2017).

  50. Hertwich, E. G. & Peters, G. P. Carbon footprint of nations: a global, trade-linked analysis. Environ. Sci. Technol. 43, 6414–6420 (2009).

    CAS  Google Scholar 

  51. Wang, Z., Wei, S.-J. & Zhu, K. Quantifying International Production Sharing at the Bilateral and Sector Levels Working Paper 19677 (National Bureau of Economic Research, 2018);

  52. Koopman, R., Wang, Z. & Wei, S.-J. Tracing value added and double counting in gross exports. Am. Econ. Rev. 104, 459–494 (2014).

    Google Scholar 

  53. Zhang, Z., Zhu, K. & Hewings, G. J. D. A multi-regional input—output analysis of the pollution haven hypothesis from the perspective of global production fragmentation. Energy Econ. 64, 13–23 (2017).

    Google Scholar 

  54. Chen, Q., Dietzenbacher, E. & Los, B. Structural decomposition analyses: the differences between applying the semi-closed and the open input–output model. Environ. Plan. A 47, 1713–1735 (2015).

    Google Scholar 

  55. Meng, B. et al. Spatial spillover effects in determining China’s regional CO2 emissions growth: 2007–2010. Energy Econ. 63, 161–173 (2017).

    Google Scholar 

  56. Mi, Z. et al. Chinese CO2 emission flows have reversed since the global financial crisis. Nat. Commun. 8, 1712 (2017).

    Google Scholar 

  57. Dietzenbacher, E. & Los, B. Structural decomposition techniques: sense and sensitivity. Econ. Syst. Res. 10, 307–324 (1998).

    Google Scholar 

  58. Dunning, J. H. & Lundan, S. M. Multinational Enterprises and the Global Economy (Edward Elgar, 2008).

  59. Measuring International Investment by Multinational Enterprises: Implementation of the OECD’s Benchmark Definition of Foreign Direct Investment 4th edn (OECD, 2015).

  60. Bloom, N., Sadun, R. & Van Reenen, J. Americans do IT better: US multinationals and the productivity miracle. Am. Econ. Rev. 102, 167–201 (2012).

    Google Scholar 

  61. Cadestin, C. et al. Multinational Enterprises and Global Value Chains: The OECD Analytical AMNE Database (OECD, 2018).

  62. Bilateral FDI Statistics (United Nations Conference on Trade and Development, 2014).

  63. CO2 Emissions from Fuel Combustion (International Energy Agency, 2018).

Download references


The authors gratefully acknowledge the financial support from National Key R&D Program of China (grant no. 2018YFC0213600), National Natural Science Foundation of China (grant nos. 71974141, 71690243, 71603179, 71834004, 71733002, 71673198, 41921005 and 91846301), UK Natural Environment Research Council (grant nos. NE/N00714X/1 and NE/P019900/1), British Academy (grant no. NAFR2180103) and the Fundamental Research Funds for the Central Universities in UIBE (grant no. CXTD7-06).

Author information

Authors and Affiliations



D.G., H.D. and Z.Z. designed the research. Z.Z. and K.Z. determined the calculation method. Z.Z. J.M., H.Z. and R.W. carried out the calculation and analysis. Z.Z and D.G. wrote the manuscript and all authors contributed to this manuscript.

Corresponding authors

Correspondence to Dabo Guan, Jing Meng or Huibin Du.

Ethics declarations

Competing interests

The authors declare no competing interests.

Additional information

Peer review information Nature Climate Change thanks Yuhuan Zhao and the other, anonymous, reviewer(s) for their contribution to the peer review of this work.

Publisher’s note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Extended data

Extended Data Fig. 1 Changing trends of CO2 emissions embodied in supply chains of MNEs’ foreign affiliates.

The changing trends of the annual volume of the carbon footprints of MNEs’ foreign affiliates and the share of MNEs’ carbon footprints to global emissions. Please refer to Supplementary Information 1.1 for detailed explanation.

Extended Data Fig. 2 Trade-related and investment-related carbon emissions.

The volume of carbon emissions embodied in supply chains of MNEs is comparable to the volume of carbon emissions embodied in international trade at global level. Please refer to Supplementary Information 1.1 for detailed explanation.

Extended Data Fig. 3 Carbon footprint of MNEs hosted by and originated in different regions.

MNEs hosted by the Chinese mainland correspond to the largest volume of carbon footprint, followed by the EU and the U.S. The volume of carbon footprints of MNEs originating from the Chinese mainland was significantly lower than that of the U.S. and the EU. There was a significant increasing trend in the carbon footprint of MNEs originating from the Chinese mainland. Please refer to Supplementary Information 1.2 for detailed explanation.

Extended Data Fig. 4 CO2 emissions related to MNEs under investment-based and production-based accounting in 2016 (Mt).

The figure shows that the developed countries outsourced embodied carbon emissions to the developing countries through FDI. Please refer to Supplementary Information 1.3 for detailed explanation.

Extended Data Fig. 5 Share of CO2 emissions and value added induced by foreign-owned firms.

The figure shows that the share of CO2 emissions related to foreign-owned firms is greater than the share of value added for most regions. Please refer to Supplementary Information 1.5 for detailed explanation.

Supplementary information

Supplementary Information

Supplementary discussion, Figs. 1–7 and Tables 1–6.

Rights and permissions

Reprints and Permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Zhang, Z., Guan, D., Wang, R. et al. Embodied carbon emissions in the supply chains of multinational enterprises. Nat. Clim. Chang. 10, 1096–1101 (2020).

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI:

This article is cited by


Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing