Name of the benchmark administrator
MSCI Limited
Type of benchmark or family of benchmarks
Equity
Name of the benchmark or family of benchmarks
Does the benchmark methodology for the benchmark or family of benchmarks take into account ESG factors?
Yes
ESG factors that are taken into account in the benchmark methodology, and how those ESG factors are used for the selection, weighting or exclusion of underlying assets (*)
a) List of environmental factors considered:
MSCI ESG Rating
Selection
MSCI ESG Rating
Exclusion
MSCI ESG Rating Trend
Selection
MSCI ESG Score
Selection
MSCI ESG Controversies Score
Exclusion
Business Involvement - Nuclear Power
Exclusion
Business Involvement - Thermal Coal
Exclusion
Potential Carbon Emissions
Exclusion
Carbon Emission Intensity
Exclusion
UN Global Compact Violators
Exclusion
Business Involvement - Oil & Gas
Exclusion
Business Involvement - Fossil Fuels
Exclusion
Business Involvement - Fossil Fuel Extraction
Exclusion
Business Involvement - Thermal Coal Power
Exclusion
Business Involvement - Oil & Gas Power
Exclusion
b) List of social factors considered:
MSCI ESG Rating
Selection
MSCI ESG Rating
Exclusion
MSCI ESG Rating Trend
Selection
MSCI ESG Score
Selection
MSCI ESG Controversies Score
Exclusion
Business Involvement - Alcohol
Exclusion
Business Involvement - Civilian Firearms
Exclusion
Business Involvement - Controversial Weapons
Exclusion
Business Involvement - Conventional Weapons
Exclusion
Business Involvement - Gambling
Exclusion
Business Involvement - Nuclear Power
Exclusion
Business Involvement - Nuclear Weapons
Exclusion
Business Involvement - Tobacco
Exclusion
UN Global Compact Violators
Exclusion
c) List of governance factors considered:
MSCI ESG Rating
Selection
MSCI ESG Rating
Exclusion
MSCI ESG Rating Trend
Selection
MSCI ESG Score
Selection
MSCI ESG Controversies Score
Exclusion
UN Global Compact Violators
Exclusion
Data and standards used
a) Data input
MSCI ESG Research relies on a proprietary methodology informed by a range of data sources.
For top level scores (ESG Ratings, Environmental, Social and Governance pillars), MSCI ESG Research estimates macro-level risk exposure for companies´ based on the type and location of operations, distribution of products. Data sources used in the exposure calculations include, but not limited to:
b) Verification and quality of data
MSCI indexes are a product of MSCI Inc. that utilize information such as company ratings and research produced and provided by MSCI ESG Research LLC (MSCI ESG Research), a subsidiary of MSCI Inc. MSCI ESG Research is solely responsible for the creation, determination, and management of such data. MSCI Limited and MSCI Deutschland GmbH are the benchmark administrators for the MSCI indexes.
MSCI endeavors to ensure the completeness and the quality in terms of accuracy and timeliness of the ESG and climate data used in its index calculations. MSCI has implemented various automated and manual quality control procedures including, but not limited to:
Any potential suspect data is flagged to MSCI ESG Research for verification. Further, MSCI conducts the periodic reviews with MSCI ESG Research with an intention to minimize the risk of data issues on an ongoing basis.
MSCI may under exceptional circumstances elect to not use latest published data, if MSCI determines that the source data is not fit for index usage. In such circumstances, and if deemed material, MSCI will release an announcement to inform clients about the change. All such determinations are made by the MSCI Equity Index Committee (EIC). If appropriate, MSCI may conduct a consultation with the investment community to gather feedback on the usage of appropriate data.
MSCI ESG Research relies on multiple steps to review the quality of the analysis as well as the consistency of the methodology and the ratings signal. Four groups are responsible for quality review: Industry and Team Leads; the ESG Ratings Methodology Committee; the ESG Methodology Committee; and the Quality Review Committee.
MSCI ESG Research is committed to robust and transparent communication with all issuers in our coverage universe. This commitment includes:
Companies are invited to participate in the data review process prior to the annual update of their ESG rating. At that time, companies have the opportunity to review and comment on the facts contained in their existing MSCI ESG Ratings report, as well as to provide MSCI´s ESG Research team any additional ESG information, if they wish. In addition, MSCI ESG Research analysts may follow up directly with a company to clarify questions concerning ESG performance data.
Due to publication schedules and the extent of the MSCI ESG Ratings coverage universe, companies normally receive the newly updated ratings data to review at their convenience at the time of rating publication. All published companies automatically receive the data review reports, as long as MSCI ESG Research has accurate contact information. We are committed to updating a company profile as required in a timely manner and will consider comments and feedback at any time. This process is also in accordance with the objective of frequently updating company reports with the latest available information as provided by companies. Please note that updates to ESG data will not necessarily result in changes to a company´s ESG rating.
Companies are monitored on a systematic and ongoing basis, including daily monitoring of controversies and governance events. New information is reflected in reports on a weekly basis and significant changes to scores trigger analyst review and re-rating.
Companies also receive an in-depth review at least annually. For companies in the MSCI ACWI, annual ratings are updated with their industry peers. All other companies are updated within a 12-month timeframe of their previous rating assessment, typically with their industry peers.
c) Reference standards
MSCI ESG Research does not explicitly mandate reporting along specific disclosure standards. Commonly utilized disclosure frameworks for data collected and used by MSCI ESG Research include GRI, SASB, UN Global Compact; and, for specific performance indicators, GHG Protocol, and applicable ISO standards.
Date on which information has been last updated and reason for the update
The information in this report was updated on August 21, 2024, corresponding to the last change in the benchmark methodology.
(*) Definitions:
- Exclusion: the ESG factor of the security in itself (i.e., not relative to the ESG factor of other securities) is considered for the security inclusion or exclusion in the Index, as noted within the relevant index methodologies.
- Selection: the ESG factor of the security relative to the ESG factor of other securities is considered for the security inclusion or exclusion in the Index, as noted within the relevant index methodologies.
- Weighting: the ESG factor of the security is considered in the security weighting scheme used for the Index, as noted within the relevant index methodologies.
This information is provided as per the European Commission's Delegated Regulation (EU) 2020/1817 of July 17, 2020, supplementing Regulation (EU) 2016/2011 of the European Parliament and of the Council (the "EU Benchmark Regulation") as regards the minimum content of the explanation on how ESG factors are reflected in the benchmark methodology.
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