MSCI unveils new ESG indices and branding: exclusive

Index giant launches two environmental benchmarks.

MSCI, the US index giant, is to unveil a suite of ESG indices including specialist environmental benchmarks under a newly branded division, MSCI ESG Research, following its acquisition in March of RiskMetrics Group (RMG), can reveal. The benchmark series will be rolled out publicly from September 7 after being shown to clients last week.
It includes two new environmental benchmarks; a pure play Global Environmental Index covering companies with more than 50% of revenues from environmental technologies, and the MSCI Global Climate Index of 100 larger companies considered as leaders on environmental business. MSCI has now also transitioned over the KLD index family it bought via the RMG purchase. It gives it three main lines of sustainability indices: MSCI ESG indices that are calculated on a best-in-class basis from the broader MSCI Global Investable Market Indices, a series of ‘Values-based’ indices including the KLD 400 Social Index, and the new Environmental indices. Speaking to, Remy Briand,managing director, global head of index and applied research at MSCI, said that alongside the indices, the new MSCI ESG Research division would also include the existing RMG work on ESG research and ratings on companies as well as ethical screening and compliance. Briand said its rating experience meant it would “naturally” be looking to provide more research in terms of ESG bond ratings. He said interest from mainstream clients at MSCI for ESG-related research and products was growing, driven in part by corporate crises including BP, Foxconn and Massey Energy, which had prompted a growing understanding of ESG risk: “We have a consistency in the underlying philosophy and construction of these indices that will appeal to existing ESG and values investors but also more mainstream clients. As well as having one of the largest ESG research teams, we also have a diversity of backgrounds and expertise in that team, which means we have a broad view of the world and understanding of important themes.”