EU Intro copy

The EU Sustainable Finance package aims to support the transition to a low-carbon, more resource-efficient and sustainable economy. MSCI is actively involved in, and providing its expertise to, several EU expert committees. To learn more about the package and MSCI’s involvement, download our Sustainable Finance FAQ. To receive details of news and events, sign-up to our sustainable finance newsletter.

  • MSCI has been a member of the EU Commission’s 35 member Technical Expert Group and focused on requirements for the EU climate benchmarks and ESG benchmarks disclosures in the TEG Final Report in September 2019. The TEG expired in September 2020
  • MSCI is supporting the Ad-hoc Working Group for the EU Ecolabel which is helping to define the standards for an EU Ecolabel for financial services
  • MSCI is a member of the EFRAG’s European Lab Project Task Force which is helping to define enhancements to the EU Non-Financial Reporting Directive (NFRD)

EU Intro

EU Sustainable Finance Package Proposals

MSCI and MSCI ESG Research have been actively monitoring, engaging and complying with the legislative proposals outlined in the EU’s sustainable finance action plan.

In February 2021, the European Supervisory Authorities (ESAs) announced their final report on draft regulatory technical standards for sustainability-related disclosures for the financial service industry. MSCI supports the ESAs’ approach in considering industry feedback from the consultation on the draft technical standards. With more certainty, the industry can take significant steps forward in terms of addressing the disclosure requirements. MSCI also supports the aims of the Commission and ESAs’ aim of driving capital towards more sustainable investments, and we are committed to providing solutions that underpin our mission to help the world’s investors meet their ESG and climate disclosure and reporting requirements. MSCI ESG Research introduced its EU Sustainable Finance Module in February 2021 to help our clients align and comply with these requirements. To receive details of our forthcoming announcement, sign up to the MSCI Sustainable Finance newsletter, or to learn more about the module, please contact ESG Client Service.

 

  • Climate Indexes


    With the new voluntary climate benchmark regime in the EU, MSCI launched its first provisional EU Paris-aligned benchmarks (PAB) and EU Climate Transition benchmarks (CTB) in November 2019 based on the TEG Final Report issued in September 2019. In October 2020, MSCI launched a series of Climate Paris Aligned Indexes which are designed to exceed the minimum standards of the Paris Aligned Benchmarks in the EU Benchmark Regulation (BMR). Learn more

    MSCI led a consultation to transition the MSCI Climate Change Index to include the EU requirements to qualify as an EU Climate Transition Benchmark (CTB). The results were announced on March 31, 2021. MSCI implemented the enhancements to the MSCI Climate Change Indexes as part of the May 2021 Semi-Annual Index Review.

  • ESG Benchmarks Disclosures


    In May 2020, MSCI published ESG metrics required only for ESG indexes under the EU benchmark regulation, for all MSCI regulated equity and blended indexes on the Index Profile search tool. Fixed income indexes were included in July 2020. More information (including about the required methodology disclosures) can be found on the index regulation page of our website.

  • Sustainable Finance Disclosure Regulation (SFDR)


    In February 2021, MSCI ESG Research launched the EU Sustainable Finance Module which covers more than 10,000 companies and 175 sovereign issuers and countries. The module incorporates two new datasets: MSCI SFDR Adverse Impact Metrics and MSCI EU Taxonomy Alignment, to support our clients in aligning with upcoming sustainability-related disclosure requirements stemming from the European Union's (EU) sustainable finance action plan.

    In July 2021, MSCI launched its EU Sustainable Finance Index Level Module providing SFDR metrics for 6,000+ standard equity and fixed income indexes (e.g., Market Cap, Issuance-weighted, ESG, Climate and Factor indexes) as well as custom indexes. The module helps our clients compare and report the adverse impact indicators of their financial products with those of their MSCI indexes.

    In Oct 2021, MSCI launched its Principle Adverse Sustainability Impacts Solution which provides a seamless process to help meet the EU regulatory requirement on sustainability risk disclosures using a scalable and robust reporting framework. We have added a Principle Adverse Sustainability Impacts Statement for real estate assets, as well as support for reporting Article 8 & 9 (ESG Impacts) and Articles 3 & 6 (ESG Risks). You can also better understand the application to real estate investments here with a simple breakdown of the indicators.

    Click here to understand how we are supporting our clients to align and comply.

    Proposed Article 6/8/9 Mapping Framework based on MSCI Client Feedback:
    The MSCI Index Research team has put together a proposed Article 6/8/9 Mapping Framework following engagement with clients over the past few months. Our aim is to provide a generic mapping of MSCI ESG indexes to key Article 6, Article 8, and Article 9 SFDR distinctions using assumptions developed from MSCI’s analysis and client feedback. The Mapping Framework has been updated to reflect the Joint ESA’s Final Report on the draft Regulatory Technical Standards (RTS) dated February 2, 2021. Download the proposed framework.

    We believe this framework will help provide transparency for our clients as they work towards classifying funds as part of product level disclosure requirements. An expanded version of the mapping framework that includes all standard MSCI ESG indexes is available to clients through the MSCI Client Support site.

    What does SDFR mean for North American investors?
    While Sustainable Finance initiatives coming out of the EU continue to make waves for European markets, the ripple effects for North American investors seem to be drawing increasing attention as reporting deadlines approach. Download our short summary to learn more about SFDR and how it may impact North American investors

  • MIFID II / IDD Solutions


    Investment firms serving EU clients must inquire about the individual sustainability preferences of their clients under the revised rules of the Markets in Financial Instruments Directive (MiFID II) starting Aug. 2, 2022. Clients that have a sustainability preference can voice it with reference to the EU Taxonomy Regulation (EU Taxonomy) and/or the Sustainable Finance Disclosure Regulation (SFDR).

    Based on feedback from MSCI’s work with investors, wealth managers and banks, we have introduced an all-in-one set of metrics, criteria and tools that equips investors to fulfill various aspects of the regulatory and non-regulatory requirements related to MiFID II and IDD and generate reports that match the European ESG Template (EET).

    For Manufacturers
    • EU Sustainable Investments (SI) metrics available in an initial sample for most constituents in the MSCI ACWI IMI and for over 500 MSCI ESG and Climate indexes
    • Mapping of data from MSCI ESG Research to the European ESG Template for conveying details of products’ sustainability criteria, strategy, metrics and thresholds to help clients choose investments that align with their preferences.
    • Reporting solutions allowing product manufacturers to aggregate and fill the required fields in EET

    For Distributors
    • EU Sustainable Investments (SI) metrics available in an initial sample for most constituents in the MSCI ACWI IMI and for over 500 MSCI ESG and Climate indexes
    • MSCI, in collaboration with FE Fund Info, will deliver EET disclosures from all funds in the FE Fund Universe of approximately 220,000 share classes and 80,000 unique funds
    • MSCI ESG Research’s Fund Ratings as well as a broad range of fund-level ESG and climate data to provide a holistic perspective on the ESG and climate characteristics of funds


    The MiFID II / IDD solutions underscore our commitment to drive further transparency and equip you with the information you need in an evolving regulatory environment. We anticipate that approaches to defining sustainable investments may evolve over time based on the availability of data, guidance from regulators and views of market participants. Download Factsheet (PDF, 144 KB) (opens in a new tab)

    We value your feedback and questions. For details about how to access any of the available resources, please contact us.

EU Sustainable Finance Related cards

EU footnotes

 

As of June 30, 2022; This information is provided “as is” and does not constitute legal or investment advice or any binding interpretation, and presents one potential approach to defining “sustainable investment” under the EU’s SFDR. Any approach to comply with legal, regulatory or policy initiatives should be discussed with your own legal counsel and/or the relevant competent authority, as needed..

MSCI’s Sustainable Investment (SI) metric, MSCI ESG Research’s Fund Ratings, research and data are produced by MSCI ESG Research LLC, a subsidiary of MSCI Inc. MSCI ESG Indexes, Analytics and Real Estate are products of MSCI Inc. that utilize information from MSCI ESG Research LLC. MSCI Indexes are administered by MSCI Limited (UK).