MSCI ESG Ratings provides sustainability ratings and data to companies and investors, covering over 14,000 issuers worldwide. MSCI ESG Ratings was developed by MSCI Inc., a leading provider of investment decision support tools and services.
Rating methodology and criteria
MSCI ESG Ratings asses companies based on Environmental, Social, and Governance (ESG) factors. Using a systematic, rules-based approach, the company's ESG rating methodology takes into account over 1,000 data points on 37 ESG key issues.
Among other environmental criteria, MSCI ESG Ratings takes into account a company's carbon emissions and the impact of climate change on its business. Energy consumption, renewable energy consumption, and carbon reduction targets are also taken into account. MSCI also assesses the company's disclosure and transparency regarding climate change risks and opportunities.
Companies' overall ESG performance is rated using a letter grading system (AAA-CCC). This rating system is designed to help investors factor ESG considerations into their investment decisions and identify companies that are effectively managing ESG risks and opportunities.
Other ESG indices
MSCI also offers a range of ESG indices, which help investors integrate ESG considerations into their investment strategies. MSCI World ESG Leaders Index, MSCI ACWI Low Carbon Target Index, and MSCI Global Climate Change Index are among these indices.
As MSCI uses a proprietary methodology to compute its ESG ratings, the exact weighting of each environmental criterion is not publicly disclosed. As part of its ESG rating methodology, MSCI has indicated that Climate Change is one of the most heavily weighted environmental factors. This includes GHG emissions, energy consumption, renewable energy consumption, and carbon reduction targets.
Within the Climate Change criterion, MSCI assesses a company on several specific factors related to carbon emissions and management, such as:
Carbon Emissions: This includes assessing a company's carbon reduction targets, emissions reduction initiatives, and carbon reporting and disclosure practices.
Carbon Intensity: This is a measure of a company's carbon intensity relative to its peers, generally in terms of GHG emissions per unit of revenue or production.