With 40 years of expertise in index construction and maintenance, MSCI aims to set new standards for ESG indices - allowing clients to more effectively benchmark ESG investment performance, issue index-based ESG investment products, as well as to manage, measure and report on their compliance with ESG mandates.
The MSCI ESG indices are grouped into the following main categories:
MSCI ESG ‘Best-in-Class’ Indices
MSCI ESG ‘Best-in-Class’ Indices represent the performance of the investment opportunity set (‘ESG beta’) of companies with high ESG ratings relative to their sector peers. They cover both global developed and the US markets. The indices target the highest ESG-rated companies making up 50% of the adjusted market capitalization in each sector of the underlying index, subject to the limitation that only companies with an ESG rating of ‘B’ or above are eligible for inclusion. They are reconstituted annually at the May Quarterly Index Review and rebalanced at the August, November and February Quarterly Index Reviews.
MSCI ESG Socially Responsible Investment Indices
MSCI ESG Socially Responsible Indices represent the performance of the investment opportunity set of socially responsible companies with high ESG ratings. They avoid investments in companies involved in certain industries, such as tobacco, nuclear power or GMOs.
MSCI ESG Ex Controversial Weapons Indices
MSCI ESG Ex Controversial Weapons Indices represent the performance of the investment opportunity set of companies that comply with global norms of corporate behaviour. The indices exclude a limited number of companies that violate these norms, such as producers of controversial weapons or companies involved in serious human rights abuses.
MSCI ESG ‘Environmental’ Indices
The MSCI Global Environment Index is the investment opportunity set of companies that derive substantial revenues from environmentally beneficial products and services in five key environmental themes: Alternative Energy, Sustainable Water, Green Building, Pollution Prevention and Clean Technology. The Global Environment Indices are benchmarks for investors seeking exposure to companies whose primary source of revenues increase the efficient use of scarce natural resources or mitigate the impact of environmental degradation. The MSCI Global Climate Index is an equal weighted basket of 100 companies that are leaders in mitigating the causes of climate change. Index constituents are selected for their involvement in three key environmental themes: Renewable Energy, Clean Technology & Efficiency, and Future Fuels.
Custom MSCI ESG Indices
Custom MSCI ESG Indices are calculated using ESG criteria specified by clients and applied across Developed and/or Emerging Markets countries or regions. Custom MSCI ESG Indices integrate ESG analysis into the index construction process. An example is the Human Rights Custom Index on MSCI ACWI.