Working Paper: Estimating the carbon footprint of gold as a long‑term investment and reserve asset
Gold plays a crucial role, globally, in central banks’ reserve management, making it a significant asset class, particularly as a trusted and secure store of value during times of uncertainty. Any detailed analysis of the climate and sustainability implications and impacts of central banks' reserve management strategies and holdings should, therefore, also consider the climate- and sustainability-related aspects of gold investments.
As central banks expand climate‑related disclosures across their reserve portfolios, questions are increasingly being asked about how gold — a long‑held, physical reserve asset — should be treated within carbon accounting frameworks.
This Working Paper explores the methodological challenges and practical options for estimating the greenhouse gas (GHG) emissions associated with gold held as a long‑term investment or reserve asset. Drawing on recent central‑bank practice, including the Bundesbank’s climate disclosures, the paper examines how gold’s largely ‘one‑off’ embedded emissions profile differs fundamentally from that of most financial assets, which generate ongoing annual emissions.
The paper reviews existing approaches to carbon footprinting gold, assesses their strengths and limitations, and proposes refinements designed to improve accuracy, relevance, and consistency for central‑bank reporting. In particular, it considers the conceptual (‘hypothetical’) approaches to estimating the emissions profile of existing gold holdings, as annualised over long-hold periods, how sector‑specific emissions data from gold mining and refining can enhance estimates, and why life‑cycle assessment (LCA) approaches may offer limited additional value for ‘legacy’ gold holdings and reserve‑asset accounting.
What the paper covers
- Why gold presents unique challenges for climate‑related disclosures by central banks
- A review of the Bundesbank’s “hypothetical” approach to estimating the carbon footprint of gold reserves
- Methods for estimating and annualising gold’s embedded emissions to enable comparison with other reserve assets
- The use of Weighted Average Carbon Intensity (WACI) metrics for gold
- Opportunities to improve estimates using current mining and refining emissions data
- A proposed enhanced approach aligned with the structure of modern gold refining and investment markets.
Why this matters
Gold plays a significant role in central‑bank reserves globally and is typically held for decades, with minimal ongoing emissions once refined and stored. Understanding how to reflect this distinctive profile within climate‑related reporting frameworks is essential to ensuring that disclosures are meaningful, comparable, and not misleading.
This Working Paper is intended to support central banks, reserve managers, and policymakers as they consider how best to approach the carbon accounting of gold within broader sustainability and climate‑risk disclosures. It does not prescribe a single methodology, but aims to inform discussion and encourage greater consistency and transparency across approaches.
