Financing the Climate Transition
Mentioned in this paper:
How can investors reduce portfolio emissions while capturing opportunities from the transition to a low-carbon economy?
Reducing exposure to high-emitting companies can lower a portfolio's carbon footprint, but it may also limit opportunities to invest in companies transforming their businesses for a low-carbon future.
MSCI research shows that, across three carbon-intensive sectors — utilities, materials and energy — companies with greater exposure to green revenues have experienced stronger earnings growth than their peers with lower exposure. This highlights the potential financial relevance of identifying companies leading the transition.
In this updated paper, we explore two complementary investment approaches: portfolio decarbonization and financing the transition. Drawing on refreshed climate data, we examine how investors can identify potential transition leaders using climate targets, emissions-reduction track records and green-revenue exposure, while balancing climate objectives with portfolio diversification and financial considerations.
Green revenues include MSCI’s estimates of revenues from energy efficiency, alternative energy and green buildings through its Sustainable Impact Methodology from Nov. 30, 2015, till June 30, 2026. Universe: MSCI ACWI IMITM as of June 30, 2026. Source: MSCI Sustainability & Climate. MSCI Sustainability & Climate products and services are provided by MSCI Solutions LLC in the United States, MSCI Solutions (UK) Limited in the United Kingdom, MSCI Solutions (Deutschland) GmbH in the EU and certain other related entities.
Read the full paper
Provide your information for instant access to our research papers.
Managing the Energy Transition in Equities
Does transition readiness still pay off in a fractured policy world? We found that better-prepared companies outperformed and decarbonized faster — even as transition pressures shifted.
Smoke Signals: Finding Leading Indicators of Corporate Decarbonization
Can emissions be forecast? We analyzed transition indicators across regions to find those that aligned with emissions reductions — data to help as investors work to separate leaders from laggards.
Climate Action Indexes
MSCI Climate Action Indexes are built to help investors seeking to finance decarbonization by investing in companies prepared to drive their sector’s low-carbon transition.
The content of this page is for informational purposes only and is intended for institutional professionals with the analytical resources and tools necessary to interpret any performance information. Nothing herein is intended to recommend any product, tool or service. For all references to laws, rules or regulations, please note that the information is provided “as is” and does not constitute legal advice or any binding interpretation. Any approach to comply with regulatory or policy initiatives should be discussed with your own legal counsel and/or the relevant competent authority, as needed.