MSCI broadens ESG coverage in a move to increase transparency

New ratings for 32,000 funds and ETFs

In a move to improve transparency, MSCI has increased the coverage provided by its ESG research team, with new ESG ratings for 32,000 funds and ETFs in the equity and fixed income universe.

The ESG rating is based on a fund's or ETF's exposure to long-term ESG risks and opportunities and is scored on a scale from AAA (leader) to CCC (laggard). The first port of call for the rating team is the weighted average score of the holdings in a given fund or ETF, followed by an assessment of the vehicle's ESG momentum. ESG drives outperformance as 'social' focus begins to see gains This allows the index provider to judge whether each fund is moving in a positive or negative direction in terms of ESG year-on-year. The final step will see MSCI reviewing ESG tail risk so it ca...