Understanding MSCI ESG Indexes
categories: Americas, Asia Pacific, Australia, EMEAI, GIESE Guido, Investing (Investment Management), Performance Analysis, Responsible Investing, Asset Managers (Quant or Fundamental), Asset Owners, Wealth, Indexes, ESG Products & Services, Equities
This paper explains the different methodologies investors can use to integrate ESG considerations into a benchmark, assess their differences in terms of financial and ESG characteristics and understand potential trade-offs. In the financial industry, benchmarks are used at a strategic level — i.e., as policy benchmarks for defining the eligible investment universe or helping investors determine asset allocations — as well as at an implementation level — i.e., as a performance benchmark for actively or index-based allocations. This paper focuses on ESG integration and the reflection of investors’ values and constraints.