The MSCI ESG Focus Indexes are designed to target companies with positive environmental, social and governance (ESG) factors while closely representing the risk and return characteristics of the underlying market. Each index is constructed through an optimization process that aims to maximize its exposure to ESG factors, subject to a target tracking error and other constraints. The indexes are sector-diversified and are designed to over-weight companies with high ESG ratings and under-weight companies with low ratings. Tobacco and Controversial Weapons companies are not eligible for inclusion.
The MSCI ESG Ratings are constructed based on thousands of data points across 37 ESG Key Issues, focusing on the intersection between a company’s core business and the industry issues that can create significant ESG related risks and opportunities. Companies are rated on a AAA-CCC scale relative their industry peers.