MSCI Launches Tool to Help Investors Assess Alignment to UN Sustainable Development Goals
September 16 2020 - 04:00AM
Business Wire
MSCI Inc. (NYSE: MSCI), a leading provider of critical decision
support tools and services for the global investment community, has
today launched a tool to help investors assess their exposure and
alignment to the United Nations Sustainable Development Goals (UN
SDGs).
The MSCI SDG Alignment Tool is designed to provide investors
with a complete view of a company’s net contribution – both
positive and negative – towards addressing each of the 17 UN SDGs.
The launch follows MSCI's collaboration in 2018 with the
Organization for Economic Co-operation and Development (OECD) on a
joint discussion paper, "Institutional Investing for the SDGs,"
which was intended to spark discussion among stakeholders and
market participants. The tool brings together MSCI’s framework
covering over 8,600 equity and fixed income issuers, with analysis
of the full range of a company’s operations, products, services,
policies and practices, to evaluate its net contribution to
addressing the global challenges the UN SDGs aim to tackle.
The tool allows for flexible use of its model towards specific
impact investing goals or focused on specific alignment dimensions,
powered by data inputs from MSCI ESG Research’s core research
products.
Remy Briand, Head of ESG at MSCI, commented: “Five years
on from the adoption of the UN SDGs, we are at a critical juncture.
There is increasing demand from investors to channel capital to
help deliver on these goals, but the fragmented data around the
extent to which a company’s products and operations are aligned to
a particular SDG remains an obstacle. Through this new tool we are
seeking to provide an additional layer of transparency for
investors to better assess the merits of claims put forth by their
portfolio companies. With the target deadline for achieving the
SDGs only a decade away, the standardization of that assessment is
critical.”
Assessing company alignment to the UN SDGs
The framework behind the MSCI SDG Alignment tool draws on
publicly available information, rather than solely relying on
companies self-declared alignment with the goals, to provide a
holistic view of alignment.
Based on data from the new tool MSCI found that:
- Across all 17 SDGs, 54 percent of MSCI ACWI constituents were
mostly aligned, meaning that they showed no strong misalignment on
any of the SDGs and had more areas assessed as aligned than
misaligned.
- SDG 8 (decent work and economic growth) showed the highest
degree of alignment: of the MSCI ACWI constituents (as of August
11, 2020), a third were found to be aligned or strongly aligned
with the goal either through offering products enabling economic
advancements (such as SME financing, digital divide solution, or
education materials and services) or supporting inclusive and fair
employment and support for communities.
- Goals 7 (clean energy), 12 (sustainable consumption and
production) and 13 (climate action) had the highest percentage of
companies (8%-9%) misaligned with the goals, driven mostly by
continuing reliance on fossil fuels.
Remy Briand continued, “We have found that companies can
both overstate and understate their commitments to particular SDGs,
which could undermine efforts by institutional investors to advance
sustainable development. Investors pursuing an impact investing
approach could find that portfolio companies claim to support an
SDG while being implicated in conduct that may belie that support.
Conversely, some companies that fail to publicly commit to any SDG
but may align with at least one of the goals may fall below the
radar of impact investors seeking to target positive impact
companies.”
More About the MSCI SDG Alignment tool
Through the MSCI SDG Alignment tool, which is available through
MSCI’s ESG Manager platform, investors will be better able to:
- Measure and report on the degree of SDG alignment in
portfolios
- Develop SDG-themed investment products
- Comply with client mandates on the SDGs
- Identify companies that are better aligned with the SDGs
- Meet the rising demand to channel capital towards addressing
the objectives of the global goals
The model provides 17 SDG Net Alignment scores and assessments
for each of the UN SDGs on a scale from Strongly Aligned to
Strongly Misaligned. The model also offers assessments on two
dimensions – product alignment and operation alignment – for each
company and for each of the 17 goals.
MSCI has a long history of analyzing SDG metrics. In 2016, it
developed a new framework designed to allow investors to measure
their exposure to listed companies providing sustainable impact
solutions, grouping the 17 goals into five actionable impact
themes.
About MSCI ESG Research Products and Services
MSCI ESG Research products and services are provided by MSCI ESG
Research LLC, and are designed to provide in-depth research,
ratings and analysis of environmental, social and
governance-related business practices to companies worldwide. ESG
ratings, data and analysis from MSCI ESG Research LLC. are also
used in the construction of the MSCI ESG Indexes. MSCI ESG Research
LLC is a Registered Investment Adviser under the Investment
Advisers Act of 1940 and a subsidiary of MSCI Inc.
About MSCI
MSCI is a leading provider of critical decision support tools
and services for the global investment community. With over 45
years of expertise in research, data and technology, we power
better investment decisions by enabling clients to understand and
analyze key drivers of risk and return and confidently build more
effective portfolios. We create industry-leading research-enhanced
solutions that clients use to gain insight into and improve
transparency across the investment process. To learn more, please
visit www.msci.com.
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