Index provider MSCI has launched a series of benchmarks designed as an off-the-shelf solution for institutional investors looking to build a portfolio of ESG-compliant companies.
The benchmarks, called the MSCI ESG Screened Indexes, aim to exclude companies associated with thermal coal, oil sands extraction, and those deriving revenues from controversial and nuclear weapons, civilian firearms, and tobacco. Companies violating the United Nationals Global Compact principles will also be excluded.
These principles include violations related to human rights, labour, environment, and anti-corruption.
MSCI said the indices aimed to represent the performance of a free float adjusted market capitalisation weighted opportunity set with common ESG exclusions.
The index provider noted that the indices were designed to be used as a policy, performance benchmark and serve as the basis of investment products such as exchange traded funds (ETFs).
MSCI global head of ESG indexes, Deborah Yang, said: “We have observed a growing interest among institutional and wealth investors for market capitalisation indexes with ESG exclusions as an off-the-shelf solution, ones that are easy to use and implement”.
The indices included in the initial suite are:
- MSCI EMU ESG Screened Index
- MSCI USA ESG Screened Index
- MSCI Europe ESG Screened Index
- MSCI World ESG Screened Index
- MSCI Japan ESG Screened Index
- MSCI Emerging Markets IMI ESG Screened Index
Since 1990, MSCI has launched over 900 ESG indices.