Extended-lister
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Looking inside ESG indexes
Aug 30, 2019 Meggin Thwing Eastman , Guido Giese , Meggin Eastman Learn MoreMany investors want to stick to their values or beliefs, as well as meet certain financial objectives. How can ESG indexes help them address these goals?
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The last straw: Will plastic become the next stranded asset?
Aug 22, 2019 Samuel Block Learn MoreOil and gas companies are accelerating investment in plastics, in response to the shift away from fossil fuels. But is this pivot sustainable? Could plastic become the next stranded asset?
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Under the hood: Rating ESG funds
Jul 10, 2019 Michael DisabatoESG Research , Global Investing
Learn MoreNearly $31 trillion in assets under management were invested in funds that consider ESG issues in their investing process as of January 2018, a 34% increase from two years previously. Transparency is key to understanding what this expansion means.
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Is your portfolio ready for the transition to a low-carbon economy? Which companies, industries and sectors are positioned to benefit? Which ones entail greater risks? The answers are a lot more complicated than alternative energy is in and coal is out.
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Two companies, one highly disruptive business model, multiple big challenges looming. Few IPOs in recent memory have attracted more attention – or disappointed more decisively, initially – than the IPOs of ride-sharing groups Uber and Lyft. At the end of June 7, 2019, two months following its IPO, Lyft’s share price traded at 17.7% below its IPO price, while Uber’s ended that same day 1.9% lower. Could ESG considerations have played into investors’ thinking?
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Need a Lyft? Why the IPO Blew a Tire
Apr 10, 2019 Matt Moscardi , Alan BrettEquity Themes , ESG Research , Risk Management
Learn MoreA week into the highly publicized IPO for Lyft Inc., the ride-sharing company, it’s hard to say it went exactly as planned.
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Factors and ESG: The Truth Behind Three Myths
Mar 20, 2019 Guillermo CanoModels/Client Cases , ESG Research , Factor Investing
Learn MoreThere are misconceptions of the relationship between factors and ESG issues. We debunked three common myths about ESG, momentum, quality and smaller-cap stocks.
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What innovative companies and women on boards have in common
Mar 8, 2019 Meggin Thwing Eastman , Meggin EastmanESG Research , Global Investing
Learn MoreWe examined constituents of the MSCI ACWI Index that had been recognized as innovators on one or more annual lists produced by Forbes, Fast Company, MIT Sloan and the Boston Consulting Group between 2015 and 2018.
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ESG investing is here to stay
Feb 12, 2019 Raman Aylur Subramanian , Subramanian Aylur Learn MoreHistorically, environmental, social and governance (ESG) investing was about excluding stocks of undesirable companies from portfolios — often because they violated one’s sense of ethics or values. ESG investing has since expanded to include consideration of ESG criteria alongside financial ones. ESG is growing in importance among institutional, wealth and retail investors. In recent years, institutional and high-net-worth investors’ adoption of ESG, along with the subsequent growth in ESG assets under management, has accelerated.
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2019 Emerging Real Estate Trends
Feb 5, 2019 Will RobsonESG Research , Real Estate Investing , Global Investing
Learn MoreFor real estate investors, 2019 may be a year of adjusting to rapid changes arising from a variety of sources, including environmental, social and governance-related (ESG) risks; geopolitical uncertainty; and disruptive technology.
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ESG投资者的漫漫长途已经开始，有很多人也开始支持这个长征。我们2019年要关注的五个ESG趋势中的每一个，都包含可能被忽视的成本和机遇。
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The long haul many are bracing for has already started for ESG investors. Each of our five ESG trends to watch in 2019 contain potentially overlooked costs – and opportunities.
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Silicon Valley’s Women (On Boards) Problem
Jan 9, 2019 Meggin Thwing Eastman , Meggin Eastman Learn MoreCalifornia companies with no women on their boards are going to have to quickly up their diversity game.
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Aligning Portfolios with UN Sustainable Development Goals
Dec 13, 2018 Meggin Thwing Eastman , Meggin Eastman Learn MoreIs my money helping solve the world’s problems or making them worse? An increasing number of the beneficiaries of public funds, globally, are asking such searching questions about where and how their retirement funds are invested. Understanding how investments have an impact on societal issues can be much more complex and difficult to identify for institutional investors.
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Carbon-intensive industries have been the primary focus of attention for investors looking to reduce carbon-related risks in their portfolios. But these particular industries are only part of the picture. Institutional investors may want to look beyond the usual suspect carbon-intensive industries to better understand the end-to-end risks.
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Quitting tobacco stocks without going through withdrawal
Oct 15, 2018 Zoltán NagyModels/Client Cases , ESG Research
Learn MoreDespite strong headwinds, including renewed divestment pressure,1 the tobacco industry has proved quite resilient financially and outperformed the stock market over the past 18-1/2 years. So much so, that some institutional investors are now thinking of lifting tobacco bans in their investment policies. We found that most of the gains associated with holding tobacco stocks over this period were not specific to the tobacco industry, and could have been obtained in other ways. We also show it would have been possible to divest from tobacco without taking a hit to portfolio performance during our sample period.
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Corporate Disclosure in a TCFD World
Sep 24, 2018 Laura NishikawaESG Research , Global Investing
Learn MoreIn June of 2017, the Task Force on Climate-related Financial Disclosure (TCFD) released climate-related disclosure recommendations to companies and investors that included a framework for better company disclosure and a request for climate scenarios as part of that disclosure. But for investors looking to incorporate environmental risk into their process, there might be a pretty big catch: We mapped over 140 MSCI ESG Research climate-related data points to the TCFD framework and found a significant gap between what investors need to know under these recommendations and what companies are telling them.
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As interest in ESG investing continues to grow, so does the number of actively managed strategies that integrate environmental, social and governance considerations into their investment processes. However, institutional investors and managers have been benchmarking many of these ESG-tilted strategies against standard market-cap-weighted indexes. While these indexes provide a broad basis for evaluating performance, they lack the ability to provide the insights that might be gained from ESG-focused benchmarks.
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“G” is Just One Part of the ESG Story
Jun 26, 2018 Panos Seretis , Meggin Thwing Eastman , Meggin Eastman Learn MoreWhen it comes to ESG (environmental, social and governance) investing, conventional wisdom holds that G is the only part that really matters, as a window into overall management quality and providing insights and value for investors. Our analysis suggests this has not been true; that the E and S aspects of ESG did help sort the truly outstanding firms from a group that already shares an array of robust financial traits.
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Now that China A shares have partially entered some mainstream MSCI indexes, institutional investors and other stakeholders are raising questions about Chinese constituents’ ESG track records and potential risks from these new exposures in their portfolios.
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Our research shows how favorable ESG characteristics have historically had a positive impact on equity valuation, risk and performance. But many active managers may have concerns that using ESG data could disrupt their investment process and introduce unintended biases to the portfolio.
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Previously, we have asked whether the number of women on boards has a relationship to corporate financial performance. Research suggests that it has. But is that the whole story?
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Bigger, faster, more. Whether due to policy, technological or climatic changes, companies face an onslaught of challenges that are happening sooner and more dramatically than many could have anticipated.
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Are ESG characteristics tied to stock performance? Many researchers have studied the relationship between companies with strong environmental, social and governance (ESG) characteristics and corporate financial performance. A major challenge has been to show that positive correlations — when produced — explain the behavior. As the classic phrase used by statisticians says, “correlation does not imply causation.”
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As the world moves toward a low-carbon future, companies of many stripes are adopting renewable and clean-energy technologies. That, of course, has implications for stocks and the portfolios that hold them. How can asset owners understand the carbon-transition risks in their portfolios?
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Integrating ESG criteria into factor index construction
Sep 27, 2017 Stuart DooleFactor Indexes , ESG Research , Factors , Factor Investing
Learn MoreInstitutional investors increasingly are moving toward integrating ESG criteria into their portfolios and their factor allocations, in particular. This shift is driven by their recognition of the financial relevance of ESG issues to their risk management and their focus on long-term sustainable investing.
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How Institutional Investors Are Responding to Climate Change
Sep 14, 2017 Manish ShakdwipeeEquity Themes , ESG Research , Fixed Income
Learn MoreHow are institutional investors tackling climate-change risk in their portfolios? Thanks partly to global initiatives such as the Montreal Pledge and the Portfolio Decarbonization Coalition, both launched in 2014, many institutional investors have moved quickly to understand the long-term portfolio implications of climate change and to adopt climate-risk management techniques.
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We see a growing number of institutional investors seeking to avoid financial risks associated with environmental, social and governance (ESG) factors, or even to enhance returns by investing in companies that have strong ESG track records. As we wrote in an earlier blog post, these investors are typically looking to limit the number of companies excluded from their portfolios, both to avoid sacrificing diversification and to be active owners able to engage with corporate management.
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Many of the world’s largest institutional investors are integrating ESG standards into their investment strategies. But they face a challenge: Excluding every objectionable firm or selecting only ESG (environmental, social and governance) leaders can slash the number of acceptable stocks by half while foreclosing on opportunities for dialogue and engagement. How can institutions implement ESG principles without sacrificing diversification or abandoning efforts to improve corporate conduct?
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「アベノミクス」と言われる経済振興策の一環として、企業及び政府における女性参画を強化するために、日本政府は2020年までにリーダーシップの地位における女性比率を30%にするというゴールを設定した。
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The USD 220 Billion Global Tax Gap: Implications for Institutional Investors
Mar 2, 2017 Linda-Eling Lee Learn MoreBuoyed by populist sentiment, regulators around the world are considering ways to close corporate tax loopholes and narrow the gap between the statutory tax rate and what companies actually pay. The effort could have significant consequences, both for corporations and for institutional investors who engage portfolio companies over the sufficiency of their tax-related disclosures with the goal of avoiding unforeseen risks.
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How to Integrate ESG Without Sacrificing Diversification
Feb 8, 2017 Laura NishikawaESG Research , Global Investing
Learn MoreAs institutional equity investors increasingly think about the long term, they may adjust their portfolios to accommodate environmental, social and governance (ESG) concerns in their investment decision-making processes. That can be particularly challenging for the largest investors, such as pension funds and endowments, whose portfolios span the entire equity market.
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This year may ring the bell on a fundamental rethink for investors. Underlying all the major trends we identified for 2017 is a strategic decision point – do we change the way we think about investing, or is this business as usual in a new order?
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The Tipping Point: Women on Boards and Financial Performance
Dec 13, 2016 Linda-Eling Lee Learn Moremsci women on boards 2016 A growing body of research shows that having three women on a corporate board represents a “tipping point” in terms of influence, which is reflected in financial performance. Our analysis from last year looked at a snapshot of global companies in 2015 with strong female leadership, finding that they enjoyed a Return on Equity of 10.1% per year versus 7.4% for those without such leadership.
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Over the past decade, many long-term institutional investors have incorporated Environmental, Social and Governance (ESG) considerations into their portfolios, by creating segregated ESG mandates or by incorporating ESG criteria across the entire portfolio.
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Your Portfolio’s Carbon Footprint May be Smaller Than You Think
Sep 2, 2016 Linda-Eling Lee Learn MoreIn recent years, many institutional investors have committed to measure and lower exposure to carbon emissions in their portfolios. But that presents a challenge: how to estimate such exposure, given the lack of disclosure by most companies about their carbon emissions?
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Has CEO pay reflected long-term stock performance? In a word, “no.”. Companies that awarded their Chief Executive Officer (CEOs) higher equity incentives had below-median returns based on a sample of 429 large-cap U.S. companies from 2005 to 2015.
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Two-thirds of the world’s population is expected to live in cities by 2050, up from 54% in 2014, according to the United Nations. Yet, as of the end of 2015, we found that housing for people in the middle of the income pyramid is unaffordable for most cities and countries that we studied.
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Incorporating Sustainable Impact in your Investment Process
Apr 12, 2016 Laura Nishikawa Learn MoreInstitutional investors increasingly are looking for ways to steer capital toward companies that help to address major social and environmental challenges.
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A new initiative by MSCI ESG Research is designed to allow asset managers to differentiate funds based on the environmental, social and governance (ESG) characteristics of the underlying investments.
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Environmental, social and governance concerns may play a growing role in investment matters in 2016. These trends reflect a softening economy, a long-term shift to a low carbon economy, a generational changeover and institutional forces.
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Institutional investors concerned with excessive investor and corporate focus on short-term results are seeking to improve minimum corporate governance standards of their portfolio companies.
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Many institutional investors are increasingly focused on the gender composition of company boards, according to our research. Some studies show significant outperformance by companies with women on boards, though no one can show a direct link between the two.
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Just as the MSCI ACWI Index includes companies representative of a diversity of industries and equity markets, it also includes a diversity of ownership forms, ranging from fully controlled companies to those companies that are so widely held that their largest shareholder owns no more than 2% of shares.
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Interest in Environmental, Social and Governance (ESG) mandates has grown considerably over the past few years, but some institutional investors remain concerned that inclusion of ESG factors may come at the cost of weaker risk-adjusted returns. Our research shows that this is not necessarily the case.
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Regulatory authorities are now taking a much tougher approach to corporate tax rates. Since we explored the topic in December 2013 (The ‘Tax Gap’ in the MSCI World), the regulatory outlook has shifted substantially.
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Do entrenched boards help or hurt stock performance of publicly held companies? We found that the involvement of entrenched boards, particularly at family-dominated firms, was a positive attribute over the five-year period ending March 2015, in both the U.S. and emerging markets.
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We head into the new year with the backdrop of swooning oil prices and (re)newed geopolitical fault‐lines, juxtaposed against a return to growth in the US and emergence of the next generation of tech darlings.