Environmental, Social and Governance (ESG) has become an important theme as investors increasingly incorporate it into their portfolios. MSCI’s newly launched indices re-weight securities based on their MSCI’s Low Carbon transition score. This takes into consideration the company’s carbon emission, fossil fuel reserves and incorporation of ‘clean technology’.
Remy Briand, Head of ESG at MSCI, said in a statement: “It is critical that the investment industry collaborates to enable the transition to a low carbon economy, before climate change becomes a defining issue for financial stability.
“While there are transition risks associated with taking early action, there is a growing body of evidence to show that earlier action will ultimately mean a less costly adjustment.”
French utility company EDF has already adopted MSCI Climate Change Indexes as part of its €28.1billion dedicated assets fund for secure financing of long-term nuclear commitments.