As the buyside grapples with the lack of standardisation in environmental, social and governance data, MSCI has made public ESG metrics for all of its European Union regulated equity and blended indexes. The move is part of a broader initiative to promote greater transparency, consistency and comparable analysis at the company, fund and index level.
The MSCI Index Profile tool has been launched to comply with a new EU regulatory requirement for benchmark administrators. Overall, data ratings of 36,000 multi-asset class mutual and exchange traded funds as well as comprehensive scoring and metrics have been made available.
Metrics can be accessed for both ESG and non-ESG indexes, enabling institutional investors to better access sustainability information for their investment decisions, and to select benchmarks that best reflect their investment beliefs and policies. Fixed income indexes are set to follow in the coming weeks.
The announcement follows the release last November of over 2,800 issuers via a search tool on MSCI’s website which not only provides the rating of a mutual or exchange traded fund, but also its peer and global rank, the ESG rating distribution of the fund’s holdings. It also includes other ESG metrics, including green versus brown revenue, board independence and diversity and social screens such as tobacco. Previously, the ESG ratings were available only to clients or media.
‘We are proud to provide investors and industry stakeholders with publicly available ESG metrics for tens of thousands of funds, companies and indexes, helping to drive awareness, educate the market and raise ESG disclosure standards,’ said Remy Briand, MSCI’s head of ESG. “We are firm believers that enhanced transparency and comparability is fundamental to ensuring broader adoption of ESG indexes, and in driving capital towards more sustainable investments.”
According to figures from Morningstar, total assets in sustainable funds stood at $841 bn at the end of March. Although that’s down 12% from the all-time high of $960 bn reached in 2019, assets in the wider fund universe took a greater hit, sliding by 18% in the Covid-19 crisis. Europe continues to dominate, accounting for around 76% of sustainable funds and 81% of assets.
ESG funds have proven their performance mettle over the last few months with reports, for example, showing that they have only fallen half as much as the S&P 500 Index during the coronavirus pandemic.