MSCI has launched a suite of Paris-aligned indices as part of its climate-focused offering.
The eight-strong suite offers investors a holistic approach to align their portfolios with the Paris Agreement of a global warming change of 1.5°C.
The recently launched indices are:
MSCI World Climate Paris Aligned Index
MSCI ACWI Climate Paris Aligned Index
MSCI USA Climate Paris Aligned Index
MSCI Europe Climate Paris Aligned Index
MSCI Japan Climate Paris Aligned Index
MSCI EMU Climate Paris Aligned Index
MSCI EM Climate Paris Aligned Index
MSCI World ex USA Climate Paris Aligned Index
The strategies include companies that are supporting the decarbonisation of the economy and that enable investors to mitigate transition and physical risks.
The rules-based index methodology includes objectives such as underweighting high carbon emitters based on Scope 1,2 and 3 emissions, a decarbonisation rate of 10% year-on-year and maximise exposure to companies providing clean technology solutions.
Using MSCI’s Climate Risk Center, the Paris-aligned indices include climate data from the firm’s Climate Value-at-Risk (Climate VaR) tool, scope 3 emissions data and green revenues.
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Remy Briand, head of ESG at MSCI, commented: “Climate risks, whether physical or related to the transition to a lower-carbon economy, are changing the risk-return profile of companies and industries.”
Diana Tidd, head of index at MSCI, added: “As end-investor awareness and stakeholder pressure rises, institutional investors increasingly want to invest to affect more systemic, global change beyond the company or portfolio level.
“We designed the MSCI Climate Paris Aligned Indexes to provide a solution for institutional investors looking to do just that.”
Several ETF issuers have launched Paris-aligned ETF ranges this year including Franklin Templeton and Lyxor which both brought US and European equity strategies to market.