Intro - ESG Screened Indexes

Institutional investors turn to exclusionary screens to align portfolios with their social values and global norms, avoid reputational risks and mitigate financial risks, such as stranded assets (fossil fuels) or long-term business risks (tobacco production).

The MSCI ESG Screened Indexes are designed to help institutional investors apply the most common exclusions to the underlying market-cap benchmark. They exclude companies:

  • associated with civilian and nuclear weapons, tobacco, palm oil and arctic oil & gas and other controversial products
  • deriving revenues from thermal coal power and fossil fuel extraction
  • not in compliance with the United Nations Global Compact principles
  • involved in very severe controversies including those related to biodiversity

The Indexes also target at least a 30% reduction in carbon emission intensity relative to the underlying parent indexes. Companies excluded span the three pillars of Environmental, Social and Governance (ESG) investing and reflect investors’ most common concerns.


esg - ESG Screened Indexes

  • E

    • Fossil fuel extraction

      Companies deriving 5% or more revenue from thermal coal mining and unconventional oil and gas extraction.

    • Thermal coal power

      Companies deriving 5% or more revenue from thermal coal-based power generation.

    • Arctic oil and gas

      Companies deriving 5% or more revenue from Arctic oil and Arctic gas production.

    • Palm oil

      Companies deriving 5% or more revenue from the production of palm oil.

  • S

    • Tobacco

      Companies classified as producers or deriving 5% or more revenue from production, distribution, retail, supply and licensing of tobacco-related products.

    • Controversial weapons

      Companies with any tie to cluster munitions, landmines, depleted uranium weapons, biological/chemical weapons, blinding lasers, non-detectable fragments and incendiary weapons.

    • Civilian firearms

      Companies classified as producers of firearms and small arms ammunition for civilian market or deriving 5% or more revenue from distribution of firearms or small arms ammunition.

    • Nuclear weapons

      Companies involved with nuclear weapons: Manufacturers, providers of components or auxiliary services related to nuclear warheads and missiles; Assemblers of delivery platforms for nuclear weapons.

  • G

    • UN global impact

      Companies that are not in compliance with the United Nations Global Compact principles.

    • MSCI ESG controversies

      Companies involved in very severe ESG controversies and severe and very severe biodiversity, land use, and supply chain controversies. Also, companies not assessed by MSCI ESG Research on controversies.1


features benefits - ESG Screened Indexes

  • Key features

    • Mitigates headline risk: incorporates the most common exclusions while aiming for a similar profile as market cap indexes
    • Easy to access: available as part of MSCI’s standard ESG Index Module and Enhanced Module offering
    • Easy to implement: designed to be easy to use and efficient for investors who seek an off-the-shelf ESG exclusion index

  • Key benefits

    • Designed to maintain broad coverage and mimic the profile of market cap indexes
    • Targets zero exposure to controversial weapons or tobacco producers
    • Aims to exclude controversial companies and businesses
    • Limited exclusions designed to yield manageable tracking error relative to the parent index
    • Aims to reduce carbon footprint

Download brochure
(PDF, 478 KB) (opens in a new tab)

Download methodology
(PDF, 268 KB) (opens in a new tab)


Available indexes - ESG Screened Indexes

Available indexes


Applications - ESG Screened Indexes

Applications

The indexes can be used to support:

Consistent, broad indexes that aim to represent the performance of the full spectrum of the global equity opportunity set without home bias.

An industry-leading suite for global mandates, with regional, country, sector and other subsets available for more targeted investment mandates.

A leading source for global equity markets and underlying security-level data for sell-side research.

Contact - ESG Screened Indexes

Interested in learning more from MSCI?

Contact sales

Related content - ESG Screened Indexes

Footnotes - ESG Screened Indexes

1 As of May 2022, MSCI ESG Research assessed over 17,000 companies including those in the MSCI ACWI Investable Market Indexes (IMI) and approximately 95% by market value of the Barclays Global Aggregate – Corporate Index.