MSCI has launched climate indexes to help investors navigate and measure the investment opportunities and risks associated with the transition to a low-carbon economy.
“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,” said Remy Briand, head of ESG at MSCI.
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 reweight 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.
EDF, the French utility company, has adopted the MSCI Climate Change Indexes as part of the company’s €28.1billion ($31.7 billion) dedicated assets fund for secure financing of long-term nuclear commitments (nuclear plant decommissioning expenses and long-term storage expenses for radioactive waste).
Bernard Descreux, director of the asset management division at EDF, commented, “As a responsible asset manager, we firmly believe that enabling the transition to a low-carbon economy is crucial to the development of a sustainable financial system. We are confident that MSCI is the right partner for us as we seek to ensure we are investing responsibly for the long-term.”
