Footprint Displacement Index (FDI)

The Footprint Displacement Index (FDI) is an indicator that measures the percentage of a country’s or company’s total environmental footprint that occurs outside its borders through global supply chains.

The FDI quantifies the share of environmental impacts (water, carbon, land, and biodiversity) generated abroad along the supply chain of a country, region, or company. By measuring the externalisation of impacts, the FDI reveals dependencies on natural resources and extended environmental responsibilities.

Formula and interpretative ranges

FDI (%) = (Displaced environmental footprint / Total environmental footprint) × 100

• 0–25%: Low externalisation (high self-sufficiency).
• 26–50%: Moderate externalisation.
• 51–75%: High externalisation.
• >75%: Critical externalisation and elevated risk.

Components of the displaced footprint

• Embedded carbon footprint in imported raw materials and energy.
• Virtual water associated with crops, livestock, and industrial processes overseas.
• Land use and deforestation driven by production of exported commodities.
• Biodiversity loss and emissions linked to land-use change.

Global benchmark (2024)

• Japan → FDI 62% · High dependence on Brazilian soy and Middle Eastern oil.
• European Union → FDI 48% · Imports critical raw materials (cobalt, lithium).
• United States → FDI 35% · Net exporter of virtual water in grain but importer of minerals.

Applications of the FDI

• Responsible procurement: prioritising suppliers with lower displaced footprints.
• Trade negotiations: integrating FDI metrics to prevent environmental dumping.
• ESG reporting: transparency on Scope 3 impacts and alignment with CSRD.
• Public policy: border adjustment mechanisms (water and carbon CBAM) based on sectoral FDI values.

Calculation tools

• WaterStat + Eora MRIO for virtual water and embedded carbon flows.
• EXIOBASE for multiregional input–output analysis.
• Manglai FDI-Dashboard for geospatial visualisation of hot spots.

Strategies to reduce FDI

• Diversify and relocate suppliers closer to regions with strong environmental regulations.
• Substitute impact-intensive raw materials (e.g., cotton → hemp) or those with high deforestation risk.
• Invest at origin: co-finance efficient irrigation and renewable energy in supplier countries.
• Adopt traceability certifications (Rainforest Alliance, FSC, Bonsucro).
• Implement Digital Product Passports with shared life-cycle data across the chain.

Limitations and considerations

• MRIO datasets may underestimate footprints in informal sectors.
• Double counting risk when multiple companies report the same flow.
• Need for annual updates to capture supply-chain shifts.

Connections with other indicators

• Water Dependency Index quantifies water-specific externalisation.
• Embedded carbon complements the FDI when evaluating full Scope 3 emissions.
• AWARE helps prioritise actions in highly water-scarce basins within the water-related FDI.

The Footprint Displacement Index offers a comprehensive picture of how economies and companies shift their environmental impacts abroad. An FDI > 50% signals structural dependence and reputational risk; reducing it requires traceability, smart relocalisation, and cooperation with supplier countries to improve the global sustainability of value chains.