The world is changing rapidly...
creating new risks and opportunities.
Alongside traditional financial analysis, environmental, social and governance (ESG) and climate insights can help you understand how companies are positioned in this changing world - powering better investment decisions.
This interactive page explores the rapid rise in ESG investing, the drivers of growth, how you can integrate ESG and climate into your investment processes and how MSCI1 can help. If you would like more information or have a question, please contact us.
1MSCI ESG Indexes and MSCI Analytics utilize information from, but are not provided by, MSCI ESG Research LLC. MSCI Equity Indexes are products of MSCI Inc. and are administered by MSCI UK Limited
Adoption of ESG investing has grown rapidly as investors increasingly integrate ESG and climate factors alongside financial factors to measure the resiliency of portfolios to long-term ESG risks and opportunities.
There's been incredible momentum for ESG...
2 As of Q4 2020; defined as each share class of an exchange traded fund, as identified by a separate ticker. Only primary listings, and not cross-listings, are counted. Equity ETF values for periods prior to April 26, 2019 were based on data from Bloomberg and MSCI, while the values for periods on or after April 26, 2019 were based on data from Refinitiv and MSCI.
3 Source: PRI data as of June, 2020 Launched in New York in 2006, the Principles for Responsible Investment has grown to more than 3,000 signatories in more than 50 countries, managing over $100 trillion in AUM.
Three main drivers accelerating ESG
The world is changing
Global challenges, such as climate risk, increased regulatory pressures, social and demographic shifts and privacy and data security concerns, represent new or increasing risks for investors. The economic pressure the COVID-19 pandemic has placed on some industries has affected companies' exposure to ESG risks and their ability to manage them. Companies face rising complexities and greater scrutiny if they are not adequately managing their ESG or climate risks.
A new generation of investors
Over the next two to three decades, the millennial generation is expected to direct between $15 trillion and $20 trillion into U.S. domiciled ESG investments, roughly doubling the size of the U.S. equity market.4 A growing body of research suggests that millennials are asking more of their investments.
Better data and technology for more meaningful insights
Advanced technology, including artificial intelligence (AI) and alternative data extraction techniques help minimize our reliance on voluntary disclosure from companies. Machine learning and natural language processing help us increase the timeliness and precision of data collection, analysis and validation to deliver dynamic content and financially relevant ESG insights.
A greater opportunity
With advances in technology and AI, we have access to more data and information than ever before. MSCI ESG Research was the first ESG provider to assess companies based on industry materiality, dating back to 1999. Today, we employ some of the latest AI tech and alternative data collection techniques to provide forward-looking insights on ESG-driven risks and opportunities.
4 Bank of America Corporation (2016) 'Environmental, Social & Governance Report', pg.3
ESG leaders showed resilience during a global crisis...
Our research showed that the MSCI ESG Indexes outperformed the MSCI ACWI Index parent during the peak of the COVID-19 crisis.