The MSCI Climate Indexes fall into one of three categories — reduce fossil-fuel exposure, finance the transition and align with net-zero policies — designed to reflect investors’ broad range of climate-related preferences.  

Performance of the MSCI ACWI ESG and Climate Indexes was a mixed bag over the first five months of 2024, but exposures to momentum, information technology and the Magnificent Seven were important contributors to positive returns.  

A bright spot in an often-tumultuous 2023 was the ability of the MSCI ESG and Climate Indexes to meet or exceed their stated objectives, which ranged from maximizing ESG score to reducing carbon emissions.  

We take a deep dive into the financed-emissions intensity of the MSCI Climate Action Indexes by isolating the effect of various decarbonization drivers to offer a comparative perspective against their parent indexes.

How did our flagship climate and ESG indexes fare versus the broader market in the second quarter? And how much did constituent companies decarbonize since the quarter before? We delve into the specifics.

The MSCI Climate Action Indexes offer an additional approach to climate investing by selecting companies in each sector that have reduced or committed to reduce emissions, seem well-positioned to manage climate risk and have generated green revenues. 

We review the drivers of performance for ESG and climate indexes over the first quarter of 2023, and investigate the explanatory power of the carbon-efficiency factor over time. 

Broad market-cap weighted indexes might not fully assess climate-objective alignment. We believe that an appropriate parallel benchmark could help illustrate this alignment, improve transparency and allow investors to make more informed decisions.

The transition to a low-carbon economy may trigger a major transformation of the global economy, generating significant risks and opportunities for companies and investors.

Many investors may be seeking to align their value- or growth-oriented portfolios with the consideration of ESG as well as the transition to a low-carbon economy. We detail several approaches for working toward these investment objectives.

One month after Russia’s invasion of Ukraine, we looked at the impact it has had on the equities of European firms, given their proximity to the theater and reliance on Russian oil, and investigated what role ESG has played.

Post-COP26, the need to reach net-zero is more compelling than ever. How can investors approach a net-zero pathway in their equities portfolio? We explore three portfolio-construction approaches that target reductions in carbon emissions over time.

Many look to market-cap indexes when comparing the performance characteristics of growth and value funds — including manager skill. We found a switch to style indexes reduced industry- and style-factor contributions and made manager skill more apparent.

Growth and value indexes were created in the 1980s as finer tools than market-cap indexes to measure the performance of growth and value funds. Are style-specific indexes still a relevant choice to use as benchmarks for these funds?

How much does ESG contribute to portfolio risk and return? We looked at whether ESG performance was influenced by other factors or helped explain returns as a factor in its own right, using the MSCI Global Equity Factor Model + ESG.

As investors evaluate the possible reallocation of capital around the transition toward a low-carbon future, we analyzed the characteristics and performance of companies engaged in green versus carbon-intensive activities. Was there evidence of a “green-to-fossil-fuel premium”?

One challenge facing investors is how to quantify the impact ESG has had on their investment process. We analyzed top ESG funds to better understand the contribution of the ESG factor to their performance.

Standards can establish a common language and provide clarity among market participants. We examine three to see how they can help evaluate returns, quantify factor exposures and measure the impact of changes in sector and industry trends.

Did tariffs imposed by the U.S. and China in May trigger a shift to defensive from cyclical stocks? How did they affect different U.S. sectors and industry groups?

There are misconceptions of the relationship between factors and ESG issues. We debunked three common myths about ESG, momentum, quality and smaller-cap stocks.

As investors continue to focus on factor investing in periods of heightened volatility, we ask how volatility has affected factor performance.

As interest in ESG investing continues to grow, so does the number of actively managed strategies that integrate environmental, social and governance considerations into their investment processes. However, institutional investors and managers have been benchmarking many of these ESG-tilted strategies against standard market-cap-weighted indexes. While these indexes provide a broad basis for evaluating performance, they lack the ability to provide the insights that might be gained from...