Impact Solutions

MSCI Impact Solutions

The United Nations Sustainable Development Goals (SDGs), one of the most commonly adopted impact assessment frameworks, represents a broad consensus of global stakeholders around 17 ambitious goals. Though responsibility for achieving the SDGs rests primarily with countries that have adopted them, action by governments alone is not expected to achieve the goals by their target date of 2030. With that in mind, policymakers and the development community have looked to institutional investors and the markets to channel capital in ways that may help to advance sustainable development around the world by 2030.

The building blocks for integrating impact in your investment process

MSCI ESG Research has developed a detailed taxonomy of activities, products or and services with positive impact on the society and the environment. The framework, MSCI Sustainable Impact Metrics, is comprised of six Environmental Impact categories and seven Social Impact categories.

MSCI Sustainable Impact Metrics can be used as a stand-alone set of metrics that allow investors to measure their exposure to listed companies providing sustainable impact solutions. The metrics can also be applied towards more complex frameworks, such as exposure to companies potentially aligned with the European Union’s Taxonomy of Sustainable Activities, with options for applying minimum ESG standards to minimize exposure to adverse impacts and risk of breaching global norms.

The taxonomy of environmentally sustainable solutions leveraged for Sustainable Impact Metrics has also been adapted to evaluate use of proceeds for green bonds and serves as a backbone for the Bloomberg Barclays MSCI Green Bond Index.

MSCI Sustainable Impact Metrics is also a core building block of our new and expanded model for evaluating company-level alignment to the SDGs: MSCI SDG Alignment.

Assess alignment with each of the 17 UN sustainable development goals

As the UN SDGs gain broader adoption, investors are seeking to understand which of their portfolio companies are well aligned to support the SDGs and which may be misaligned and potentially face allegations of “rainbow-washing.” Rainbow-washing occurs when a company claims to support an SDG but is implicated in a serious controversy that might belie the declared support, or contributes via philanthropy to a specific SDG, but has a product or service that has an adverse impact on the goal in question.

The MSCI SDG Alignment Tool is built on a model that provides qualitative SDG Net Alignment assessments and scores for each of the 17 global goals by evaluating the businesses and operations of each company, whose products and practices may fall on either side of the balance.

The ability to assess the alignment of portfolio companies based on whether they advance or delay achievement of the SDGs can help investors put company claims into context and better support investment decisions. That ability may matter increasingly as the deadline for achieving the SDGs a decade from now approaches.

Example of the SDG Net Alignment assessment of a food retail company

How a sample food retail company is aligned or misaligned with the 17 UN Sustainable Development Goals. Key words: SDGs, impact assessment, impact alignment, SDG alignment, rainbow-washing, food retail company

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¹Impact Data and Metrics, Sustainable Impact Reporting and SDG Alignment are provided by MSCI ESG Research LLC. MSCI ESG Indexes and Analytics utilize information from, but are not provided by, MSCI ESG Research LLC. MSCI Equity Indexes are products of MSCI Inc. and are administered by MSCI UK Limited.

MSCI ESG Research LLC. is a Registered Investment Adviser under the Investment Adviser Act of 1940. The most recent SEC Form ADV filing, including Form ADV Part 2A, is available on the U.S. SEC’s website at www.adviserinfo.sec.gov (opens in a new tab).

MIFID2/MIFIR notice: MSCI ESG Research LLC does not distribute or act as an intermediary for financial instruments or structured deposits, nor does it deal on its own account, provide execution services for others or manage client accounts. No MSCI ESG Research product or service supports, promotes or is intended to support or promote any such activity. MSCI ESG Research is an independent provider of ESG data, reports and ratings based on published methodologies and available to clients on a subscription basis. 

ESG ADV 2A (PDF, 354 KB) (opens in a new tab)
ESG ADV 2B (brochure supplement) (PDF, 232 KB) (opens in a new tab)