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Global Environment indexes - intro

 

Why Global Environment Indexes?

Over the past few years, we have seen growing interest from institutional investors globally in adopting climate indexes. This interest emerged at the time of the COP 21 in Paris coinciding which is when the MSCI ex Fossil Fuel and Low Carbon Indexes were first created. The Task Force on Climate-Related Financial Disclosure (TCFD) and Net Zero investor commitments have amplified the trend.

When developing a climate strategy, investors may have different objectives based on their investment style and time horizon. Investors have become more sophisticated in their thinking about climate and are seek exposure to companies providing environmentally friendly technologies and solutions alongside reducing exposure to carbon stranded assets.Climate indexes are transparent and can support the implementation of climate strategies across portfolios 


How indexes can help address investors’ climate objectives

How indexes can help address investors’ climate objectives

Some investors may wish to gain greater exposure to companies supporting the transition to a low-carbon economy and capture the upside of a transition to a low carbon economy. They may adopt indexes designed to target companies that focus on offering products or services that contribute to a more environmentally sustainable economy (by making a more efficient use of limited global natural resources).


What are Global Environment Indexes?

What are Global Environment Indexes?

The MSCI Global Environment Index identifies companies operating in Alternative (Renewable) Energy, Energy Efficiency, Sustainable Water, Green Building and Pollution Prevention sectors. Our approach is to include companies that derive 50% or more of their revenue cumulatively from these five cleantech themes.

The MSCI Global Environment Index is a free float-adjusted market capitalization weighted index designed to maximize its exposure to environmental impact themes. The Index is comprised of companies that focus on offering products or services that contribute to a more environmentally sustainable economy by making a more efficient use of limited global natural resources. The MSCI Global Environment Index aims to include companies with exposure to one or more of the following categories of the MSCI Sustainable Impact Metrics:

  • Alternative Energy
  • Energy Efficiency
  • Green Building
  • Sustainable Water
  • Pollution Prevention and Control
  • Connectivity – Digital Divide


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GEI available indexes

Available Indexes

The MSCI Global Environment Indexes are comprised of securities of companies that derive at least 50% of their revenues from environmentally beneficial products and services. 
 
The MSCI Global Alternative Energy Index includes developed and emerging market large, mid and small cap companies that derive 50% or more of their revenues from products and services in Alternative energy.
 
The MSCI Global Energy Efficiency Index includes developed and emerging market large, mid and small cap companies that derive 50% or more of their revenues from products and services in Energy Efficiency.
 
The MSCI Global Green Building Index includes developed and emerging market large, mid and small cap companies that derive 50% or more of their revenues from products and services in Green Building.
 
The MSCI Global Pollution Prevention Index includes developed and emerging market large, mid and small cap companies that derive 50% or more of their revenues from products and services in Pollution Prevention.
 
The MSCI Global Sustainable Water Index includes developed and emerging market large, mid and small cap companies that derive 50% or more of their revenues from products and services in Sustainable Water.
 

GEI - applications

Applications

The MSCI Global Environment Indexes can serve as the basis for

  • To facilitate the integration of environmental considerations into the investment process, in combination with emission reduction strategies
  • As an investment universe of companies with robust environmental characteristics
  • As the basis for structured products and other index-linked investment vehicles, such as ETFs and passive funds
  • As performance benchmarks and for risk and performance attribution
  • For back testing of various investment strategies and portfolio creation
  • For internal and external reporting purposes

 

Further Reading

 

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