MSCI has launched a tool allowing investors to identify which companies are failing in their net-zero commitments as well as those who are going above and beyond.
The solution, Climate Lab, will arm investors with data and financial modelling capabilities letting them align their portfolios with their climate targets such as the Paris Agreement while tracking trends across multiple asset classes.
Climate Lab will be integrated alongside MSCI’s recently launched Implied Temperature Rise solution which allows investors to track how companies are aligning to global temperature targets.
The solution will mainly target institutional investors who need help managing a large amount of data, including carbon emissions and temperature alignment.
In addition, investors will be able to forecast forward-looking “hypothetical scenarios” of their holdings climate emissions and compare a firm’s carbon budget and its projected carbon emissions.
Remy Briand, global head of ESG and climate at MSCI, said the tool comes at a time when the decisions of the financial industry are influencing the economic transition towards net zero through capital allocation.
“Net-zero strategies and commitments will bring a new set of challenges, not just in the shifting allocation of capital, but in garnering insight on portfolios from the data needed to support the investment process and in the business-wide transition to net-zero,” he said.
“For CEOs and business leaders, the solution brings a new level of transparency and coordination that ensures crucial climate progress is being made across every level of the organisation.”
It is the latest push by the index provider to improve its ESG offering. Last year, MSCI published its Principles of Sustainable Investing framework designed to give investors actionable steps to mitigate the risks and identify the opportunities from incorporating ESG considerations.
Last month, MSCI appointed Melissa McDonald as global head of ESG and climate indices from HSBC Asset Management, responsible for driving the growth of the firm’s ESG and climate index globally, working closely with the head of global product, client coverage, research and technology teams.