MSCI climate indices will ‘drive change in the real economy’
MSCI has launched a suite of Climate Action Indexes for investors seeking exposure to companies actively supporting a net-zero economy.
MSCI has launched 12 Climate Action Indexes that are designed for equity investors seeking to finance the net-zero transition.
The new suite of indices will identify companies that have made progress towards emission-reduction targets by selecting commercial businesses from across the economy using the 11 Global Industry Classification Standard (GICS) sectors.
Christine Chardonnens, MSCI’s executive director, global ESG and climate indices, told Net Zero Investor: “Climate Action Indexes are suited for investors who want to finance the transition and drive change in the real economy, by investing in companies making progress towards emission-reduction targets.
“By identifying companies with the willingness to lead their sector’s low-carbon transition based on both current and forward-looking indicators, the MSCI Climate Action Indexes facilitate climate engagement.”
The MSCI Climate Action Indexes include MSCI ACWI Climate Action Index, MSCI World Climate Action Index, MSCI Emerging Markets Climate Action Index, MSCI USA Climate Action Index and MSCI Europe Climate Action Index.
MSCI is a global provider of indices and analysis tools for investors. The Climate Action Indexes are aimed at investors seeking to follow the Glasgow Financial Alliance for Net Zero (GFANZ) recommendations and augment the existing MSCI Climate Paris Aligned Indexes and the MSCI Low Carbon Target Indexes.
By identifying companies with the willingness to lead their sector’s low-carbon transition based on both current and forward-looking indicators, the MSCI Climate Action Indexes facilitate climate engagement.
Shareholder dialogue
According to Chardonnens: “The indexess designed to support investors who believe that shareholder dialogue with targeted companies can improve sustainable value creation and support net-zero business strategies.”
Chardonnens added that in comparison to other indices the MSCI Climate Action Indexes offers investors more choice and can help them “find an index aligned with their preferences and view of the climate transition”.
This comes as Hubert Keller, senior managing partner at Lombard Odier, claimed at the World Forum on Enterprise and the Environment that over 90% of MSCI’s environmental, social and governance indices “are not aligned to the transition” to a sustainable economy.
Chardonnens also highlighted that the MSCI Climate Action Indexes use a new assessment of a company’s net-zero target setting and climate risk management to select the top half of companies in each GICS sector.
“This examines company emission intensity for Scope 1, 2 and 3, and then looks at the steps companies are taking to mitigate climate transition risks and reduce their emissions.
“The methodology considers whether companies have Strategic Based Targets Initiative approved targets or a credible track record. If not available, it assesses how the company is managing climate risks and whether it is active in green products or services.
“The indexes use MSCI ESG Business Involvement Screening Research and MSCI Climate Change Metrics to identify and remove controversial companies and companies engaged in controversial business activities,” she added.
