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Understanding MSCI ESG Indexes: Methodologies, Facts and Figures

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Understanding MSCI ESG Indexes: Methodologies, Facts and Figures

Oct 11, 2023

The growth of ESG investing has led to a proliferation of ESG strategies, both active and passive. This reflects a more diverse set of investor objectives and improved technical capability to implement more-tailored solutions, as well as the increased breadth and quality of available ESG data. To cater to these needs, MSCI has developed a range of ESG indexes which incorporate values and constraints through exclusionary screens and apply techniques for ESG ratings integration that allow broader market exposure. This paper explains the different methodologies that can be used to integrate ESG considerations into a benchmark. We also assess the differences of these approaches in terms of the financial and ESG characteristics of the indexes to understand potential trade-offs.

MSCI ESG Indexes and their application

This exhibit summarizes MSCI’s series of standard ESG indexes, which are based on the MSCI ACWI Index universe, and defines their ESG-integration methodologies.

All of the above MSCI ESG Index methodologies apply certain exclusion screens (based on controversies and business-involvement screens) marked in red. Light blue indicates companies that are not selected for the index due to low MSCI ESG Ratings. Gradient fills denote indexes that use optimization techniques. Source: MSCI


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Research authors

  • Guido Giese, Managing Director, MSCI Research
  • Ashish Lodh, Executive Director, MSCI Research
  • Manish Shakdwipee, Executive Director, MSCI Research
  • Saurabh Katiyar, Executive Director, MSCI Research

ESG Indexes

Our ESG index story begins in 1990, with the launch of the Domini 400 Social Index — now the MSCI KLD 400 Social Index — as one of the first socially responsible investing indexes.

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Understanding MSCI Climate Indexes: Methodologies, Facts and Figures

Integrating climate considerations into an investor’s set of benchmarks is one way to build a consistent framework for integrating climate risk across an entire portfolio.

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Understanding the MSCI Climate Action Indexes

The MSCI Climate Action Indexes include companies that lead their peers in terms of their positioning and actions to manage transition risks.

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