Low carbon SRI leaders indexes - intro
Addressing corporate ESG considerations and the risks of not transitioning to low-carbon portfolio exposure has become increasingly important for many global investors. At the same time, an increasing number of European regulators are requiring institutional investors to consider ESG and carbon risks that may be financially relevant to their investment processes.
Investors who continue to ignore these factors could find themselves unprepared for the possible resulting changes.
The demand for tools that can help investment institutions manage inherent risks associated with ESG and climate considerations through index adoption has never been greater in their pursuit of long-term, sustainable and inclusive investment performance.
The MSCI Low Carbon SRI Leaders Indexes1 can be used by institutional investors seeking exposure to companies with a strong sustainability profile.
The indexes integrate ESG considerations and are intended to help identify potential risks associated with the transition to a low carbon economy.2
The MSCI Low Carbon SRI Leaders Indexes are based on the MSCI Global Low Carbon Leaders, the MSCI ESG Leaders Indexes and MSCI SRI Indexes methodology.
The MSCI Global Low Carbon Leaders and MSCI ESG Leaders Indexes methodology are applied independently on the parent index, and securities selected by certain rules of both the methodologies are eligible for inclusion in the index. The Indexes use the selection process of the MSCI ESG Leaders Indexes methodology that aims to include securities of companies with the highest ESG ratings representing 50% of the market capitalization in each sector and region of the parent Index. Only those companies from the Parent Index that pass the business involvement criteria of the MSCI SRI Methodology are eligible for the Index.
The MSCI Global Low Carbon Leaders methodology excludes the worst 20% of companies based on carbon emissions intensity, with a maximum of 30% by weight from any sector. It also excludes the largest owners of reserves per dollar of market capitalization, representing 50% of the reserves in the parent index. The index uses customized version of MSCI Global Low Carbon Leaders Indexes Methodology where the optimization is not applied.
Low carbon SRI leaders indexes footnotes
1The MSCI Europe Low Carbon SRI Leaders Index was launched on Feb 27, 2018. Data prior to the launch date is back-tested data (i.e. calculations of how the index might have performed over that time period had the index existed). There are frequently material differences between back-tested performance and actual results. Past performance -- whether actual or back-tested -- is no indication or guarantee of future performance.
2MSCI ESG Ratings and data produced by MSCI ESG Research LLC. MSCI ESG Indexes and Analytics utilize information from, but are not provided by, MSCI ESG Research LLC. MSCI Indexes and Analytics are products of MSCI Inc. MSCI Indexes are administered by MSCI Limited (UK).
3This webpage is only a summary of the MSCI Low Carbon SRI Leaders Indexes Methodology. For more detailed information please refer to the complete methodology at msci.com/index-methodology.
*Controversy score for UK is 1