Q&A: Removal of Caterpillar from Several MSCI ESG Indices
July 4, 2012 10:36 AM
The purpose of this page is to address commonly asked questions regarding the removal of Caterpillar Inc. (ticker: CAT) from several MSCI ESG Indices.
Why was Caterpillar removed from several MSCI ESG Indices?
Caterpillar was removed from several MSCI ESG Indices due to an Environmental, Social and Governance (ESG) rating downgrade. The company was removed from the MSCI World ESG Index, the MSCI USA ESG Index and the MSCI USA IMI ESG Index on March 1, 2012, following the February Quarterly Index Review.
The MSCI Global ESG Indices are broad, diversified equity indices comprised of companies with high ESG ratings relative to their sector peers. Applying a Best-in-Class methodology, the MSCI ESG Indices target companies with the highest ESG ratings making up 50% of the market capitalization in each sector. A minimum 'B' rating is required to qualify for the MSCI ESG Indices. MSCI ESG Indices are managed using transparent, rules-based methodologies that are publicly available on this website. The methodologies are designed so that the standards for inclusion and removal are objective and consistent.
To determine the composition of the MSCI ESG Indices, MSCI utilizes ESG ratings and other information compiled by MSCI ESG Research. MSCI ESG Research provides research products and services to asset owners and asset managers for incorporating ESG factors into their investments. MSCI ESG Research provides a range of products and services, including ESG ratings, controversy assessments, and business involvement screens. MSCI ESG Research is the successor to ESG pioneers KLD, Innovest and IRRC, which were acquired through MSCI's acquisition of RiskMetrics. The MSCI ESG Indices use ratings and other data, analysis and information supplied by MSCI ESG Research. MSCI ESG Research is produced by MSCI’s subsidiary, Institutional Shareholder Services Inc. ("ISS") or its subsidiaries.
In February 2012, Caterpillar’s ESG rating was downgraded by MSCI ESG Research due to declining ESG performance associated with the management of its Employees & Supply Chain challenges.