ESG Industry Materiality Map

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The ESG Industry Materiality Map is a direct reflection of key features of the MSCI ESG Ratings model, which is:

DYNAMIC

ESG Ratings aim to provide an assessment of the long-term resilience of companies to environmental, social, and governance issues. As these issues evolve, we update the ESG Ratings methodology accordingly. We recalibrate the model, including identifying industry Key Issues and setting weights, every year based on the latest data and research as well as input from our regular client consultations. As a result, you should expect to see changes in this ESG Industry Materiality Map over time.

INDUSTRY-SPECIFIC

Key Issue weights are an important part of the MSCI ESG Ratings model. An evaluation of weight-setting schemes found that the industry-specific weight setting methodology used by MSCI ESG Ratings outperformed equal-weighted and optimized weight setting methodologies over a 13-year study period. The weights displayed in the ESG Industry Materiality Map represent the average Key issue Weight for companies in an industry. Key Issue Weights are determined through a combination of two factors: 1) how much each industry contributes to the main externality connected to the issue as compared to other industries (for instance, how carbon-intensive the industry is relative to other industries) and 2) the time horizon within which the externality may materialize.

COMPANY-SPECIFIC

The foundation for the ESG Industry Materiality Map is an industry-specific evaluation of key ESG risks and opportunities. However, the ESG Industry Materiality Map also reflects company-specific nuances that may not be captured by the industry classification. The lines of business, production processes used, and regions where a company operates are among the determinants of ESG risk. Rules-based model variants take these nuances into account, meaning that not all companies in a given industry are necessarily rated on all the same highlighted Key Issues. Because the ESG Industry Materiality Map includes company-specific Key Issues, issues that are only applied to a small proportion of the industry will appear to have a low "average" weight.

Source: MSCI ESG Research LLC. Average Key Issue weights calculated as of January 31, 2022.

1. GICS®, the global industry classification standard jointly developed by MSCI Inc. and S&P Global.

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