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The MSCI Climate Paris Aligned Indexes are designed to help investors implement net-zero strategies in their portfolios.

How can MSCI Climate Paris Aligned Indexes support a net-zero strategy?

How can MSCI Climate Paris Aligned Indexes support a net-zero strategy?

MSCI has developed a series of indexes to help investors make net-zero part of decision-making at every stage.

The MSCI Climate Paris Aligned Indexes are designed to help investors seeking to implement net-zero strategies in their portfolios. The indexes aim to address climate change in a holistic way to reduce minimize their exposure to physical and transition risks of climate change and increase target exposure to sustainable investment opportunities. The indexes are aligned with a 1.5°C temperature-rise scenario and incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) as well as the minimum requirements for the EU Paris Aligned Benchmark.

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Why MSCI Climate Paris Aligned Indexes?

Why MSCI Climate Paris Aligned Indexes?

  • Use of state-of-the-art MSCI Climate analytics data, models including forward looking metrics
  • Supports a net-zero strategy by aligning with a 1.5°C scenario
  • Designed for customization. Can be combined with MSCI’s ESG, Sustainable Impact, Factor and Thematic data Indexes and data sets
  • Designed towards EU Paris Aligned Benchmarks (PAB) minimum requirements
  • MSCI EU PAB Overlay Index methodology available for market cap, factor or ESG indexes -- for investors who are looking for a strict application of the EU regulatory minimum requirements
  • Aims to be fully aligned with the TCFD recommendations by accounting for the portfolio’s exposure to physical and transition risk, as well as increased exposure to climate opportunities

The MSCI Climate Paris Aligned Indexes aim to meet and exceed- table

The MSCI Climate Paris Aligned Indexes aim to meet and exceed the minimum standards of the EU Paris Aligned Benchmarks (PAB) label:

ESG TRANSITION RISK GREEN OPPORTUNITY 1.5°C ALIGNMENT PHYSICAL RISK
Controversial Weapons Carbon intensity reduction (Scope 1, 2 and 3) Neutral exposure to high impact sector At least double the Green Revenue exposure Self-decarbonization at 10% Physical Risk Climate VaR is at least 50% lower
Societal norms violators Immediate Scope 3 phase-in Higher allocation to companies with credible emission reduction targets Green/fossil fuel-based ratio – 4x higher than parent Neutral Aggregate Climate VaR under 1.5°C Scenario
MSCI ESG Controversy Score Underweight companies facing transition risk Significant improvement in Low Carbon Transition (LCT) Score Overweighting of companies providing solutions
Lower fossil fuel exposure 50% minimum reduction in Potential Emissions Intensity
ESG
Controversial Weapons Societal norms violators MSCI ESG Controversy Score
TRANSITION RISK
Carbon intensity reduction (Scope 1, 2 and 3) Neutral exposure to high impact sector Immediate Scope 3 phase-in Higher allocation to companies with credible emission reduction targets Underweight companies facing transition risk Significant improvement in Low Carbon Transition (LCT) Score Lower fossil fuel exposure 50% minimum reduction in Potential Emissions Intensity
GREEN OPPORTUNITY
At least double the Green Revenue exposure Green/fossil fuel-based ratio – 4x higher than parent Overweighting of companies providing solutions
1.5°C ALIGNMENT
Self-decarbonization at 10% Neutral Aggregate Climate VaR under 1.5°C Scenario
PHYSCAL RISK
Physical Risk Climate VaR is at least 50% lower

To view the full methodology, please click here.


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