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Oct 19, 2015

MSCI to report carbon footprint of all global equities indexes

Reporting starts with 19 MSCI ACWI, world and emerging markets indexes

Index provider MSCI will start publicly reporting the carbon footprint of its more than 160,000 global equities indexes to meet growing demand from investors following SRI strategies worldwide, the company says.

Carbon footprint reporting starts with 19 flagship global indexes, including those belonging to the MSCI ACWI, MSCI World and MSCI Emerging Markets index groups, according to an MSCI press release. The company will report in three main areas: carbon emissions, carbon intensity and weighted average carbon intensity.

‘Demand from institutional investors for the ability to analyze the carbon footprint of their portfolios relative to a benchmark will likely grow as they become more concerned about carbon risk,’ says Remy Briand, MSCI managing director and head of global research. ‘Having a standardized carbon footprint measure for our equity indexes can help clients better understand their carbon risk at the portfolio level and define precise targets for reduction.’

The new data, taken from its MSCI ESG CarbonMetrics unit, will cover the normalized carbon footprint per $1 mn in a portfolio tracking the index, as well as the efficiency of a portfolio tracking an index in terms of total carbon emissions per unit of output. The weighted average carbon intensity metric will cover exposure to carbon-intensive companies.

Last month, MSCI said demand for data and indexes related to ESG investing had surged and that equity exchange-traded fund (ETF) assets tracking MSCI ESG Indexes had grown by almost 30 percent to $1.8 bn so far this year. The assets have grown by about 140 percent since December of 2013, with 22 new ESG ETFs tracking MSCI indexes.

Over the previous 12 months, the company said, a series of major pension funds and ETF providers had launched ESG investments or products using MSCI ESG data, including Merrill Lynch, UBS, the Fourth Swedish National Pension Fund and others.