ESG Fund Ratings Profile

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ESG fund rating disclaimer

MSCI ESG Fund Ratings are for informational purposes only and are subject to the Notice & Disclaimer found at: https://www.msci.com/notice-and-disclaimer; and MSCI Inc’s and MSCI ESG Research LLC’s terms of use at: https://www.msci.com/terms-of-use and additional-terms-of-use-msci-esg-research-llc.

Some of these funds may be based on or linked to MSCI Indexes, for which MSCI Inc., or its subsidiaries, may be compensated based on the fund’s assets under management or other measures. MSCI Inc. has established an information barrier between index research and ESG Fund Ratings. This information may not be used as a basis for any financial instruments or products (including, without limitation, passively managed funds and index-linked derivative securities) or other products or services, to manage any funds or portfolios, to verify or correct data in any other compilation of data or index, to create any derivative works, nor to create any other data or index (custom or otherwise), or for corporate financing purposes (including, without limitation, ESG-linked loans, credit facilities, securities or structured products), without MSCI's prior written permission.


How do MSCI ESG Fund Ratings work?

How do MSCI ESG Fund Ratings work?


Remy quotation

MSCI ESG Fund Ratings are designed to provide greater transparency and understanding of ESG characteristics of fund and ETF components in investor portfolios. As the number of ESG funds proliferate, and ESG-oriented investment options and strategies are being adopted by wealth and fund managers, we strive to provide the tools and solutions to help investors better understand ESG risks.
Remy Briand, Managing Director and Global Head of ESG

How do MSCI ESG Fund Ratings work? - part 2

 

Each fund or ETF scores a rating on a scale from CCC (laggard) to AAA (leader). The rating is based first on the weighted average score of the holdings of the fund or ETF. We then assess ESG momentum to gain insight into the fund’s ESG track record, which is designed to indicate a fund’s exposure to holdings with a positive rating trend or worsening trend year over year. Finally, we review the ESG tail risk to understand the fund’s exposure to holdings with worst-of-class ESG Ratings of B and CCC.


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MSCI ESG Fund Ratings

Gain insight into the ESG characteristics of funds with an intuitive rating to better inform fund research, product selection, portfolio reporting across asset classes.

 

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What do the MSCI ESG Fund Ratings measure?

 

What do the MSCI ESG Fund Ratings measure?

MSCI ESG Fund Ratings are designed to measure the Environmental, Social and Governance (ESG) characteristics of a fund’s underlying holdings, making it possible to rank or screen mutual funds and ETFs on a AAA to CCC ratings scale.

We leverage MSCI ESG Ratings for over 8,500 companies (approximately 14,000 total issuers including subsidiaries) and more than 680,000 equity and fixed income securities globally to create ESG scores and metrics for approximately 36,000 multi-asset class Mutual Funds and ETFs globally.

 

Learn more about MSCI ESG Ratings

 

We also license more than 200 additional metrics designed to provide insights across multiple dimensions, including carbon footprint, water exposure or governance risks. These can be used for a variety of purposes, for example if an investor seeks to align a portfolio to organizational values or identify and report on measurable social or environmental impact.


Using MSCI ESG Fund Ratings

Using MSCI ESG Fund Ratings

The MSCI ESG Fund Ratings are designed to offer investors greater insights into the ESG characteristics of funds and ETFs, as well as provide additional information with respect to ESG fund research, product selection, portfolio construction and portfolio reporting processes across asset classes.

Specifically, the MSCI ESG Fund Ratings may be used by wealth and fund managers seeking to:

  • Screen for funds they see as aligning with client values
  • Offer reporting on ESG characteristics of client investments
  • Measure ESG impacts arising from investments
  • Complement manager due diligence

Why is ESG transparency important?

Why is ESG transparency important?

MSCI ESG Research is seeing a growing demand among wealth and asset managers for greater investment transparency driven by a desire to better reflect and report on ESG-related investment views and values.

Highlights from certain studies noted below appear to show the increasing prominence of ESG in investment decisions:

USD 30 trillion

wealth transfer from baby boomers to 75 million millennials to take place over the next few decades.1

88%

of high-net worth millennials are actively reviewing the ESG impact of their investment holdings.2

89%

of millennials expect their financial professional to do a deep dive into a company’s ESG factors and history with ESG issues before recommending an investment opportunity.3

57%

of millennial investors have intentionally stopped investing or declined to invest in a company because of the impact that company’s products or services have on people’s health and well being.4

95%

of millennial investors were interested in sustainable investing as of 2019 up 9 percentage points from 2017.5

85%

of individual investors were interested in sustainable investing as of 2019 up 10 percentage points from 2017.6

 


Contact us

Contact us for more information about your MSCI ESG Fund Rating esgclientservice@msci.com


Related content

Legislation and footnots

MSCI ESG Research LLC. is a Registered Investment Adviser under the Investment Adviser Act of 1940. The most recent SEC Form ADV filing, including Form ADV Part 2A, is available on the U.S. SEC’s website at www.adviserinfo.sec.gov.

MIFID2/MIFIR notice: MSCI ESG Research LLC does not distribute or act as an intermediary for financial instruments or structured deposits, nor does it deal on its own account, provide execution services for others or manage client accounts. No MSCI ESG Research product or service supports, promotes or is intended to support or promote any such activity. MSCI ESG Research is an independent provider of ESG data, reports and ratings based on published methodologies and available to clients on a subscription basis.  We do not provide custom or one-off ratings or recommendations of securities or other financial instruments upon request.

ESG ADV 2A
ESG ADV 2B (brochure supplement)

 

 

Accenture. The “Greater” Wealth Transfer – Capitalizing on the Intergenerational Shift in Wealth, 2012: https://www.accenture.com/us-en/insight-capitalizing-intergenerational-shift-wealth-capital-markets-summary

Bank of America. 2018 Insights on Wealth and Worth

Allianz ESG Investor Sentiment Study 2019

Allianz ESG Investor Sentiment Study 2019

Morgan Stanley Institute for Sustainable Investing: Sustainable Signals -- The Individual Investor Perspective (2019)

Morgan Stanley Institute for Sustainable Investing: Sustainable Signals -- The Individual Investor Perspective (2019)