Despite growing demand for clean energy, price parity with fossil fuels and friendly policies, renewable energy companies are facing some tough headwinds. We take a look at why that's happening and what Orsted’s no good, very bad August can tell us about the rest of the industry.

Selling a capital asset at a loss to reduce your tax liability is one side of the coin. The other side is thoughtfully selecting the security that replaces it.   

The launch of the MSCI Sustainability Institute, founded and led by Linda-Eling Lee was attended by some of the most highly respected members of the ESG-investment community. We explore the institute’s aims and how it will work with investors, companies, academics and policymakers to drive action by capital markets.

The cost of hedging downside equity exposure has fallen substantially versus eight months ago, markedly lowering the price of insurance against rising equity volatility.

Although the EU Taxonomy is a pivotal framework for assessing sustainability in economic activities, it remains a source of confusion. Its correct interpretation will be key to ensure that data is properly disclosed and reporting obligations met.

Although corporate disclosures around biodiversity- and nature-related risk vary, with growing stakeholder awareness and initiatives such as the TNFD framework, we may see a move toward more standardized disclosures that could help investors better assess these risks.

We analyze the index-level carbon emissions of the MSCI ACWI, ACWI ESG and Socially Responsible Investing Indexes, in terms of both financed emissions and emissions intensities, to see what the trends are and what’s driving them.

The demands made by the United Auto Workers (UAW) to the big three auto companies in the US are varied and touch on every part of ESG. But what may loom largest is the ongoing transition to electric vehicles that will change how a massive industry operates and employs its millions of workers. We discussed what the strikes mean for the future of the auto industry, and why the UAW is fighting an uphill battle as its industry changes.

Over the last several years, most active growth managers underweighted the “Magnificent Seven.” Nearly two-thirds of growth managers, however, partially or more than offset the resulting performance drag with active bets on other stocks.

Investors do not like to realize losses. We examine the link between this loss aversion — an observed phenomenon in commercial-property markets — and a drop in liquidity in key markets around the globe. 

Biodiversity is the new kid on the block in sustainable investing, and a lack of harmonization makes it a jungle out there. We assessed how biodiversity-labeled and biodiversity-related funds differed in sector and revenue exposure and performance. 

As the urgency of addressing climate change continues to grow, investor engagement could be key to holding companies accountable for their environmental impact and influencing corporate climate strategies and net-zero commitments. 

With a very strong likelihood of an El Niño event forming by the end of 2023, we take a look at the impact such events have had in the past on the debt-to-GDP ratios of global sovereigns and what this could mean for impact investors.  

Office vacancy has reached a record high for properties in central business districts. Forms of compensation to attract people back to offices could include improved mass transit and reduced travel time.  

We have likely entered in to an El Nino season as of June 2023. El Nino forms and then eventually dissipates as trade winds that blow to the south of the equator shift and impact the flow of the ocean below them. This means the world gets hotter, even hotter than the record heat we have already seen (which is tough to hear). In this episode, we discuss what that sort of warming will likely do to global crop yields and the debt levels of the world’s economies.

Multinational corporations’ recent interest in reconfiguring their global supply chains and adopting “China-plus” manufacturing strategies has potential consequences for equity allocators, reaching across countries, sectors and themes.   

A bond portfolio generates cash flows over time that include coupon payments and the face value of matured bonds, assuming no defaults. With controlled and systematic reinvestment of this cash flow, investors can gradually decarbonize their portfolios on a glidepath.

Cities that ride booms and busts in commodity prices have in the past achieved strong outperformance in commercial-property returns during booms. Has the recent surge in commodity prices had a similar impact on returns? 

With fashion brands now producing 52 “micro seasons” a year, more and more clothing is being unsold or discarded. And recycling clothing is more difficult than you may think. As the EU looks to increase accountability for post-consumer waste, we take a look at what it could mean for clothing companies and their investors.

The EU has set up a number of regulations to define what is and is not sustainable. Part of those regulations touch investment funds as most assets under management in Europe (~EUR 7 trillion out of EUR 12 trillion) are invested in ESG funds or strategies with some sustainability-related focus. Is this episode we look at what the effect of these defining regulations has been on the fund investment landscape in Europe, and whether the EU has been successful in its intent. 

We assess the latest trends in labeled bonds, from the overall market to specific bond and issuer characteristics, to identify key developments in the rapidly growing and increasingly diverse labeled-bond market. 

Noting the parallel between today’s technology- and AI-driven concentrated rally and the late 1990s’ technology boom, we examined factor performance and factors’ over- and underweights in the top 10 MSCI USA Index constituents over both periods. 

The risk-on market rally continued in July amid several indicators of frothiness as beta and residual volatility posted the highest factor returns in the U.S. by a wide margin and were also strong globally.

Artificial intelligence is rolling out in a big way across different industries and sectors. With much to lose and much to gain from this new trend, investors will be looking to boards that ask good questions and get good answers – even if that means letting AI into the boardroom.

We sat down with MSCI’s global head of research for a wide-ranging discussion, including why he chose to return to the company now, the challenges and opportunities facing the investment industry and a unique take on risk management, ESG and climate and AI and technology. 

Beyond the symbolic nature of being the first to land on the moon's south pole, this feat underscores India's shift towards technology-driven innovation and could mark an expanding global role and increasing prominence in global equity portfolios. 

Worries about artificial intelligence supplanting knowledge workers have created more pain for the office market but a broader view of the impact on commercial real estate is vital. 

Inflation appears to have peaked at the end of 2022, but it remains influential in capital markets. We analyzed nearly 50 years of data to assess how small caps’ performance has changed with shifts in both the level and trend of inflation.  

Climate stress-testing models like MSCI Climate VaR may be complex, but their main mechanisms can be explained using linear regression. This helps transform input variables into risk outputs, making it easier for investors to understand the primary drivers.  

The relationship between U.S. bonds and equities has seen a number of shifts in recent years, but with inflation pressures easing, could bonds regain their reputation as portfolio diversifiers? 

The rally in the first half of 2023 shared some similarities, and had notable differences, with past concentrated rallies. In addition to AI, structural megatrends, such as the blockchain economy and robotics, helped drive the rally. 

Student housing continues to evolve as a distinct asset type. The sector outperformed the rest of the U.K. residential sector as well as the retail and office sectors over the three, five and 10 years ending December 2022.

In this report we isolate the trends shaping the Australian market in Q2 2023. Australia's commercial property market continued its significant slowdown with transaction volume totaling just $7.0b in the second quarter of the year. This represents the worst second quarter performance since 2011. 

Enthusiasm for artificial intelligence has boosted the stock prices of many U.S. technology behemoths this year. How does the AI rally compare to previous market shifts, and what lessons might investors in today's largest firms learn from history? 

Our previous research discussed a framework for investors to attribute changes in equity portfolios’ emissions to their primary drivers. We now adapt it to identify and analyze two approaches to tracking a multi-asset-class portfolio’s carbon footprint. 

Commodities like palm oil, beef and cocoa are intertwined with deforestation. The EU wants to change this. We talk about the bloc’s latest law and how it’s going to ask food companies to take supply chain due diligence and traceability to a whole new level.

Global equity markets bounced back strongly this year. However, the market returns have been driven by “Magnificent 7” and the rise of artificial intelligence. Mark Carver and Hitendra Varsani discuss the broader market overview, key trends in performance across factors, thematic and regional indexes and some great insights on investors’ thinking regarding equity factors and their evolving role in asset allocation.

Concerns about U.S. banks’ exposure to a slumping commercial-property market have put pressure on bank stocks. We analyze a sample of banks to discern differences in lending patterns by property type and location. 

Certain recession indicators are flashing red. Learn how investors are evaluating bonds versus equities in light of these warning signs.

Investment performance is measured using transaction prices in most asset classes. But real estate is illiquid and heterogeneous, so valuations and sales prices can differ. Our annual report compares valuations and sale prices in global real estate. 

As TCFD reporting grows more sophisticated, investors may be able to use climate data to make meaningful disclosures across their firms. We explore three key topics: choice of metrics, internal consistency and cross-functional applications. 

How did our flagship climate and ESG indexes fare versus the broader market in the second quarter? And how much did constituent companies decarbonize since the quarter before? We delve into the specifics.

Airlines have been offering customers with the option to purchase carbon credits or to support sustainable aviation fuel as they are buying a plane ticket. The airlines claim in doing so, the customer can lower the emissions of their trip and thereby lessen its impact on climate change. Sounds great! But, is that true? Are your emissions really lowered by those carbon credits? And can airlines use the promise of abated emissions, or better yet, sustainable fuels, to claim they are already carbon neutral? On this episode, we discuss aviation’s ambitious climate plans, why some of the advertising around these plans has gotten the industry in to legal trouble, and what the future holds for airlines and passengers that are worried about their carbon emissions.

The good news for bond investors is that year-to-date U.S. returns have been positive. But bond returns were not as good compared to inflation, and bonds have continued to lag equities. 

We estimate the size of the professionally managed global real-estate market in 2022, explaining the changes in this investment universe since 2021. We find that while the size of the global market declined, the dominance of the U.S. increased. 

User privacy on internet platforms is sliding higher up the “to do” list of the EU’s regulators. Five years after a trailblazing law was passed – the General Data Protection Regulation (GDPR) – we’re starting to see its enforcement moving up a notch. For big tech companies that rely on personalized advertising, like Meta and Alphabet, their future in the EU is starting to look a little more complicated.

The office market was the largest source of distress in U.S. commercial property in the second quarter, ahead of retail and hotel, which had previously been the biggest contributors of troubled assets. We summarize our latest findings on distress. 

The RCA CPPITM measure the actual price movements for commercial properties based on exclusive transaction data using repeat-sales regression methodology.​ MSCI produces this monthly report for 10 U.S. national indexes, including all-property, major and non-major metros, and for the main property types — office (commercial business district and suburban), industrial, retail and apartment. Contact us for full access to our CPPI data for deeper insight on property price trends for the U.S....

The market for collateralized mortgage obligations backed by agency residential mortgage-backed securities is a major source of financing for U.S. homeownership. But what is this market’s total emissions footprint? We use our model to calculate it. 

Physical risk from climate change has started to affect nearly every region of the world, from the four hottest days on record occurring in a row this month to more frequent, more intense storms. We discuss what this all may mean for companies, insurers and investors.

Corporate issuers across market-capitalization ranges, regions, countries and sectors are increasingly seeking information, offering feedback and sharing updates related to ESG and climate data. What have been the areas of focus? 

We assess the degree of sustainability-related disclosures for European-domiciled funds, their performance on, and disclosure of, select adverse impact indicators, and exposure to sustainable investments. 

Some investors are already evaluating opportunities offered by a post-slowdown world. One of these opportunities is small-cap stocks, which have historically outperformed large caps, especially after recessions.  

We assess the latest issuance trends and the overall market by multiple bond and issuer characteristics to identify key developments in the rapidly growing and increasingly diverse labeled-bond market. 

Our planet’s hottest days on record were recorded July 3 to July 5. Global average temperatures rose to a new high of 62.9 Fahrenheit. And even as the days get less sweltering, we all seem to be collectively looking around wondering what might happen next month. It is a collective fear that doesn’t seem to have rattled the market. Even so, today we discuss what the ever increasing temperatures mean for the companies you invest in and what cities might be most affected in the coming decades if the world continues to warm.

Agency residential mortgage-backed securities (RMBS) finance about 17% of U.S. residential greenhouse-gas emissions annually. We break down that number to help issuers and investors understand emissions sources and drivers behind agency RMBS.  

Climate change is exacerbating extreme weather events. What impact has this had on the insurance market and how can insurers assess the impact of hazards and climate scenarios on their portfolios? 

We explore three reasons why issuers typically issue labeled bonds: financing impact projects, financing their own environmental goals and building rapport with sustainability-oriented stakeholders. Have these issuers also enjoyed lower debt costs? 

The EU is ironing out the final details of its Corporate Sustainability Due Diligence Directive. We look at what it could mean for how companies identify, mitigate and report on their impacts on human rights. It’s a pioneering step that not only stands to affect European companies, but global ones that earn revenue in the EU market.

Valuations proposed for venture-capital (VC) growth companies, frequently used as benchmarks for publicly listed growth stocks, often attract heated debate. Our analysis can offer fresh insight into the valuation of private VC companies. 

Our panel of experts discusses the issues on investors minds and scenarios for what may come next. From inflation “stickiness” to market concentration to central bank actions, how have conditions varied across the globe?

Assertions that there is one “right” measure of pricing for property markets are wide of the mark. We examine an array of data points which shed light on the downturn in prices and liquidity, focusing on the U.K. office market.  

Investors face “sticky” inflation, equity-market concentration and expectations that U.S. interest rates may be higher for longer. We examine recent global-markets trends to help as asset allocators and portfolio managers determine their next move. 

Investor sentiment has improved since the recent banking turmoil, and a soft landing for the U.S. economy seems possible. But there is geographic fragmentation, with China’s post-lockdown recovery potentially stalling. What could it mean for markets? 

Part of proxy season is over, so we take a look at the landscape of shareholder proposals. And it is well known for to those who are closely watching shareholder proposals that ESG proposals have pretty much plummeted this year vs. last year and previous years – but why is that? Are ESG shareholder proposals losing steam and momentum? Or is that maybe too simple of a reading of the data? We also discuss the new crop of proposals coming out from a set of contrarian shareholder groups that buck the trend of proposals to date.

An analyst’s equity opinion encompasses how different interrelated forces may impact the future performance of a company. We sought to define the analyst-sentiment factor, while assessing its relationship with other traditional equity style factors. 

Quantifying sovereign bonds’ physical and transition risks may help investors determine the climate resiliency of their portfolios. MSCI Climate Change and Natural Hazards Risk Factor Score may help guide the analysis of these complex risks. 

The past decade's market turbulence, rising inflation and fluctuating rates, has emphasized the importance of high-quality firms. This update to earlier research examines the quality factor’s role in navigating an ever-changing landscape. 

Global equities, as measured by the MSCI ACWI Index, roared back through May of 2023. A closer look, however, revealed that just a handful of stocks accounted for more than 70% of the total return. Which stocks punched above their weight? 

Following up on a recent MSCI survey that revealed uncertainty among investors about the comparative risk-and-return benefits of EM and DM factor investing, we simulated the performance of six common EM factor indexes over the last two decades.  

Regulators around the world are focusing on climate-related scenario analysis to assess banks’ climate-risk exposure and their preparedness for the low-carbon transition. We look at the Fed’s pilot to see how the six biggest U.S. banks stack up. 

We offer a comprehensive guide for investors to illustrate how a complex set of financial and climate targets and climate investment objectives can be simultaneously integrated into the construction of indexes as well as portfolios.

Semiconductors are used in ev-er-y-thing. But semiconductor manufacturers have a high greenhouse gas (GHG) emissions footprint. Since they are so ubiquitous in our economy, will they get a free pass and not be pressured to lower their GHG emissions? Or will the expanding industry be pushed to lower their emissions a la the oil and gas industry? These questions and more are answered on this week's episode of ESG now.

Themes such as robotics and AI, internet innovation, autonomous technologies and the digital economy — all featuring companies in the AI supply chain — have emerged as some of this year's top performers. Following a 2022 that was not kind to such firms, we examine this trend. 

We analyze a framework for wealth managers considering the impact of managing their clients’ investment preferences alongside different tax-management approaches. 

As temperatures rise, so do the risks from extreme heat. Using hazard percentiles compared across climate scenarios, we assess the cities and sectors that could be most impacted and the costs they could face. 

Fannie Mae and Freddie Mac have begun disclosing socially focused borrower data for all pools of U.S.-agency mortgage-backed securities. How can that data inform MBS investors’ models for prepayment risk? 

Small-cap stocks in the China onshore market historically were much riskier than larger stocks, but as of the end of April, they had similar levels of volatility as the mega- and large-cap segments.  

A survey of institutional investors and wealth managers offers insight on the thinking about equity factors, their role in asset allocation and how traditional factor strategies should evolve to serve an increasingly complex investment landscape.  

U.S. mortgages are generally not portable. While there would be legal hurdles to overcome to reverse the situation, such a move could benefit not only homeowners, but potentially investors in mortgage-backed securities. 

Could investors participate in China’s reopening other than by directly investing in China shares? We looked at 14 European equity markets and compared their economic exposure to the Chinese economy.

The MSCI Climate Action Indexes offer an additional approach to climate investing by selecting companies in each sector that have reduced or committed to reduce emissions, seem well-positioned to manage climate risk and have generated green revenues. 

Companies are increasingly setting climate targets, but who’s keeping an eye on them? Using key indicators recommended by SBTi and GFANZ, we present a framework to assess whether firms are taking the necessary steps to achieve their targets.

Under pressure from wildfires and inflation, State Farm has stopped issuing new homeowner policies in California. We get to the bottom of how physical climate hazards may change the future shape of the insurance industry. And then we ask why the Net-Zero Insurance Alliance is a little different from the other alliances that fall under the GFANZ.

In many ways, the EU has led the way on climate regulation in an effort to increase transparency and decision making through disclosure from companies, as well as investors. We discuss what’s expected from the EU sustainable finance package, and its potential impact.

Derivatives linked to climate investing are in the early stages of product innovation and investor adoption. We compared the impact, financial risk and opportunity metrics for futures on the MSCI Climate Action Indexes.  

Extreme heat patterns pose a significant threat to the utilities sector, particularly in tropical and subtropical regions. We analyzed the MSCI AC Asia Index to see where the risks lay and why.