MSCI has expanded its range of climate indexes to help investors navigate and measure the investment opportunities and risks associated with the transition to a low carbon economy.
The new MSCI Climate Change indexes are part of a holistic toolkit to help investors build more climate resilient portfolios and integrate climate risk considerations in their global equity investment process, through a simple, rules-based reweighting methodology.
The indexes re-weight securities based on MSCI's Low Carbon transition score, which consistently measures a company's exposure to low carbon transition risk, carbon emissions and fossil fuel reserves, and its exposure to opportunities including alternative energy and clean-technology. They can be used as a standalone index or as an overlay to an overall ESG strategy.
Remy Briand, head of ESG at MSCI, commented, "The devastating impacts of climate change will be felt beyond the traditional horizons of most sectors and 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. At MSCI, we continue to develop our climate change solutions using next generation data, analysis and tools to help with the 1.5-degree alignment and as climate research continues to evolve, we will ensure the MSCI Climate Change Indexes reflect the latest developments."
EDF, the French utility company, has adopted the MSCI Climate Change Indexes as part of the company's €28.1bn dedicated assets fund for secure financing of long-term nuclear commitments (nuclear plant decommissioning expenses and long-term storage expenses for radioactive waste).