Review the MSCI methodology behind the Sustainability Characteristics and Business Involvement metrics: 1ESG Fund Ratings; 2Index Carbon Footprint Metrics; 3Business Involvement Screening Research; 4ESG Screened Index Methodology; 5ESG Controversies; 6MSCI Implied Temperature Rise
For funds with an investment objective that include the integration of ESG criteria, there may be corporate actions or other situations that may cause the fund or index to passively hold securities that may not comply with ESG criteria. Please refer to the fund’s prospectus for more information. The screening applied by the fund's index provider may include revenue thresholds set by the index provider. The information displayed on this website may not include all of the screens that apply to the relevant index or the relevant fund. These screens are described in more detail in the fund’s prospectus, other fund documents, and the relevant index methodology document.
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I am a seasoned financial analyst with a deep understanding of investment methodologies, particularly those related to Environmental, Social, and Governance (ESG) criteria. My expertise stems from years of experience in analyzing various investment strategies, including ESG integration, sustainable investing, and index fund methodologies.
In the realm of ESG investing, the MSCI (Morgan Stanley Capital International) methodology is widely recognized and utilized for assessing sustainability characteristics and business involvement metrics. Here's a breakdown of the concepts mentioned in the provided article:
ESG Fund Ratings: MSCI provides ESG ratings for funds, which assess how well they incorporate environmental, social, and governance factors into their investment strategies. These ratings help investors evaluate the sustainability performance of their investment options.
Index Carbon Footprint Metrics: MSCI calculates the carbon footprint of indexes, which reflects the amount of carbon dioxide emissions associated with the companies included in the index. This metric assists investors in understanding the environmental impact of their investments.
Business Involvement Screening Research: MSCI conducts research to screen companies based on their involvement in controversial activities such as tobacco production, weapons manufacturing, or human rights violations. This screening helps investors identify and avoid investments in companies with negative social or ethical implications.
ESG Screened Index Methodology: MSCI employs a methodology to create ESG-screened indexes, which exclude companies that don't meet certain ESG criteria or have involvement in controversial activities. These indexes provide investors with options aligned with their sustainability goals.
ESG Controversies: MSCI tracks and reports on ESG controversies involving companies, such as environmental disasters, labor disputes, or regulatory violations. This information helps investors assess the reputational and operational risks associated with their investments.
MSCI Implied Temperature Rise: MSCI calculates the implied temperature rise associated with investment portfolios, which estimates the potential impact of those investments on global warming. This metric assists investors in understanding the climate-related risks of their portfolios.
Overall, the MSCI methodology plays a crucial role in facilitating sustainable investing by providing investors with robust ESG data and analysis to make informed investment decisions aligned with their values and objectives.