Institutional investors turn to exclusionary screens to align portfolios with their social values and global norms, avoid reputational risks and mitigate financial risks, such as stranded assets (fossil fuels) or long-term business risks (tobacco production).
The MSCI ESG Screened Indexes are designed to help institutional investors apply the most common exclusions to the underlying market-cap benchmark. They exclude companies:
- associated with civilian and nuclear weapons, tobacco, palm oil and arctic oil & gas and other controversial products
- deriving revenues from thermal coal power and fossil fuel extraction
- not in compliance with the United Nations Global Compact principles
- involved in very severe controversies including those related to biodiversity
The Indexes also target at least a 30% reduction in carbon emission intensity relative to the underlying parent indexes. Companies excluded span the three pillars of Environmental, Social and Governance (ESG) investing and reflect investors’ most common concerns.