Research PaperFlooding in the Yangtze River Basin Threatens Mines and Power Plants
China’s Yangtze River economic belt accounts for nearly half of the country’s total economic output. Since 2020, the Hubei region has experienced record rainfall and historic flooding that has overwhelmed the banks of the river and the massive Three Gorges Dam. We identified 25 facilities in our coverage universe that are located downstream from the Three Gorges Dam and may be exposed to disruption or damage by the floods affecting the Yangtze River Basin.
Research PaperCombining E, S, and G Scores: An Exploration of Alternative Weighting Schemes
How an overall ESG rating is constructed can significantly impact its usefulness. We tested two approaches: equal weighting and backward optimization. Equally weighting E, S, and G pillar scores across sectors showed less financial significance than the stand-alone G pillar score — that is, without E and S scores — over the 13-year study period. Backward optimization showed greater significance than stand-alone G scores but may underestimate the importance of ESG indicators to financial...
MSCI BlogWould Integrating ESG in Chinese Equities Have Worked?
ESG ratings have reflected financial risk and returns in developed-market and emerging-market equities. But was this true in China, where ESG considerations are still in their infancy?
MSCI BlogESG Ratings: How the Weighting Scheme Affected Performance
Our recent research suggests that environmental and social issues were more industry specific and tended to show up in financial measures over a longer time frame compared to governance issues. How can E, S and G issues be combined?
MSCI BlogWhich ESG Issues Mattered Most? Defining Event and Erosion Risks
Very different ESG issues can be material for different industries. Our research suggests that risks can be divided into two main types: “event” risks and “erosion” risks to companies’ long-term competitiveness. Which ones mattered most for E, S and G?
MSCI BlogIs ESG All About the ‘G’? That Depends on Your Time Horizon.
The conventional wisdom has it that governance is the most dominant of the three E, S and G pillars. But our analysis finds different results when looking at contribution to performance over different time horizons.
Research PaperDeconstructing ESG Ratings Performance: Risk and Return for E, S And G by Time Horizon, Sector and Weighting
How are environmental, social and governance (ESG) ratings constructed? Which indicators are the most important in assessing ESG characteristics? Does the answer vary by sector? This foundational paper examines the impact on financial performance of two types of ESG indicators: the individual E, S and G pillars scores and the underlying ESG Key Issue scores. They found that these indicators related differently to companies’ financial performance and challenges the conventional wisdom that “G”...