Our analysis suggests that incorporating ESG and sustainability considerations into Islamic finance not only aligns with the ethical mandates of Sharia law but also has the potential to improve financial outcomes. 

Better governance practices by Japanese companies appear to be linked to stronger fundamental metrics, a possible contributor to the recent rally in Japanese equities.  

Historically, climate investing has focused on portfolio decarbonization, but investors are increasingly turning to a “finance-the-transition” approach, seeking to invest in transition opportunities. The two approaches are not exclusive and best used hand in hand. 

With climate change amplifying, global markets are facing uneven readiness for the low-carbon transition. A capital shift from emission-intensive assets to zero-carbon alternatives could redefine market performance and business winners. 

Abruptly shutting down all the coal-fired power plants may appeal to some, but there would likely be unintended consequences for investors, as well as plant employees and those who live where the plants are located. A managed coal phaseout with specific target dates and actions may create a level of certainty for all involved.

Over the long term, companies with higher MSCI ESG Ratings have outperformed in the Asia Pacific equity markets. Among the three pillars, governance demonstrated the highest outperformance, followed by the social and environmental pillars. 

Indian firms have made notable strides in managing their financially relevant sustainability risks over the last five years. Understanding their progress could offer valuable insights to investors in India’s equity market.    

A managed coal phaseout could help power generators reduce asset-stranding risk and help countries achieve their decarbonization targets. What might this mean for utilities companies and why might active engagement be the way forward for investors? 

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.

For global investors, the idea of individual country or market allocations isn’t new. But in today’s world, with a dynamic geopolitical map, the rewiring of supply chains and a greater focus on sustainable investing, it may be time for a new approach. 

We introduce an integrated framework to investing in individual country and regional markets, analyzing macroeconomic risks and new growth opportunities as well as the role of sustainable investments in a globally diversified portfolio. 

Are parts of the global supply chain more reliant on China than other parts? We explore which industries and themes may be more dependent on China from a manufacturing-ecosystem and raw-resources perspective.  

We explore the methodologies behind the MSCI ESG Indexes to see how they integrate ESG considerations. We also assess the differences of these approaches in terms of the financial and ESG characteristics to understand potential trade-offs. 

We analyze the index-level carbon emissions of the MSCI ACWI, ACWI ESG and Socially Responsible Investing Indexes, in terms of both financed emissions and emissions intensities, to see what the trends are and what’s driving them.

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.

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. 

Climate metrics can often be a daunting field, with misunderstanding and confusion rife. We present a two-step toolkit that can help investors identify the most suitable metrics as they look to gauge progress toward their climate-investing goals.

There have been several dynamics that influenced climate-index performance in 2022. We examine the impact of macroeconomic and financial conditions on risk, return and sectors, as well as the management of low-carbon transition risks.

With no “one fits all” solution, to help investors identify the most suitable climate metrics, we take an in-depth look at MSCI ESG Research’s climate metrics in terms of what they measure, how they are calculated and their potential use cases. 

There have been several dynamics that have influenced climate-index performance in the third quarter and first nine months of 2022. We examine the impact of macroeconomic and financial conditions on risk, return and sectors. 

Public companies and managers of listed assets face growing disclosure requirements. But private companies have not received the same level of scrutiny. How can investors in private assets calculate their exposure to carbon emitters, and what can they do about it?

A transition to a low-carbon economy could reduce demand for carbon-intensive products and services in favor of low-/zero-carbon counterparts. This migration in demand could also alter the risk-return profile — not only of individual companies but of some entire industries. The MSCI Climate Change Index aims to reflect these potential changes, increasing the index weight of companies identified as exposed to a low-carbon transition, while decreasing the weight in companies negatively exposed...

Carbon-intensive industries have been the primary focus of attention for investors looking to reduce carbon-related risks in their portfolios. But these particular industries are only part of the picture. Institutional investors may want to look beyond the usual suspect carbon-intensive industries to better understand the end-to-end risks.

As the world moves toward a low-carbon future, companies of many stripes are adopting renewable and clean-energy technologies. That, of course, has implications for stocks and the portfolios that hold them. How can asset owners understand the carbon-transition risks in their portfolios?

A confluence of regulatory and non-regulatory factors is driving the adoption of renewable energy and other clean energy technologies globally, while headwinds facing fossil fuels continue to mount1. Measuring how one’s investments are positioned relative to this transition towards a low carbon economy can help the end investor understand what long-term bets – intended and otherwise – are embedded in their portfolios. 1 See: Regulatory Easing: Potential Impact on Energy Sector  

How are institutional investors tackling climate-change risk in their portfolios? Thanks partly to global initiatives such as the Montreal Pledge and the Portfolio Decarbonization Coalition, both launched in 2014, many institutional investors have moved quickly to understand the long-term portfolio implications of climate change and to adopt climate-risk management techniques.

Using market returns as a starting point, we focus on the U.S. energy sector to better understand how the possibility of regulatory easing could affect sector, company and investor performance. For the energy sector, we suggest that regulatory changes alone may be unlikely to upend global supply and demand dynamics for fossil fuels, with renewable energy adoption driven by global market-led factors extending beyond regulations in a single market. Falling demand for fossil fuels due to...

In December 2015, we identified 277 companies that were constituents of the MSCI ACWI Investable Market Index (IMI) that had disclosed their 2013 scope 1+2 carbon emissions in 2015 for the first time. This provided a unique opportunity to test out carbon estimation models on which institutional investors have had to rely. We found that the methods that have been around the longest – which rely on Economic Input Output Life Cycle Analysis (EIO-LCA) models – were not very accurate when...

The decision by a majority of U.K. voters to leave the European Union shines a light on fissures between perceived winners and losers from globalized markets and highlights for investors the importance of factoring the consequences of inequality and popular discontent into their views. The latest edition of MSCI’s “Scenarios, Stress Tests and Strategies” examines the potential impacts on institutional portfolios of a tide of populist sentiment across Europe and the U.S.

The climate deal struck in Paris set an ambitious goal of limiting the temperature rise to 2 degrees Celsius, with a stretch goal of 1.5 degrees. While the key elements of legally binding country emission reduction targets appeared to be missing, countries agreed to submit five-year updates to their emissions reduction pledges and to establish a framework for monitoring, measuring and verifying emissions reductions.

Since our analysis in December 2013 on the diversity of tax rates paid by MSCI World companies, the regulatory outlook has shifted substantially. In our updated analysis, we identify 243 companies (out of 1,093 relevant1 companies within the MSCI World Index constituents) as having a large tax gap, paying an average rate of 17.7%, versus 34.0%, if these companies were paying taxes in the jurisdictions where they generate revenues.