MSCI ESG: Trends to watch in 2016

By Antti Savilaakso, European head of ESG Research, MSCI ESG

Only few years back the ESG data available for investors was very qualitative and scarce in nature. This was a strong barrier for most investors to work with ESG information, as it essentially required a leap of faith when it comes to using the available data.

This has completely changed during the past few years. The ESG ratings cover almost 6000 companies, and additional almost 200 countries, municipalities and supranationals covering around 350.000 fixed income securities. This covers the needs of most investors.

The history in most cases extends over five years enabling stronger time-series analysis. But beyond that, the quality and granularity of all available ESG information behind these ratings very sophisticated investment analysis.

MSCI ESG research publishes ESG trends to watch report annually. The trends for 2016 are all driven by the data quality and quantity revolution. Some trends from the report are particularly relevant

1. Increase in Income and gender inequality

Income inequality and its economic impact start to be widely accepted phenomenon. The pay gap between CEO and average worker has climbed to more than 300:1, from 30:1, over the past four decades, according to some measures. In 2016, we may be near a tipping point as companies start to release pay-ratio data. As a result, we expect that investor and academic focus could shift to how intra-company pay structures are linked to economic growth from sector- and country-level impacts of income inequality.

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