OneTrust Cookie Consent

Navigation

  • Skip to Content
  • Client Log In
  • Investor relations  (opens in a new tab)
  • Sustainability Institute  (opens in a new tab)
  • Subscribe
  • Contact us
  • Careers
  • Region
  • Go back to Main Menu
  • Client Log In
  • MSCI ONE  (opens in a new tab)
  • MSCI Client Support Site
  • Barra PortfolioManager
  • BarraOne  (opens in a new tab)
  • MSCI ESG Manager  (opens in a new tab)
  • MSCI ESG Direct  (opens in a new tab)
  • Global Index Lens
  • MSCI Real Assets Analytics Portal  (opens in a new tab)
  • RiskManager 3  (opens in a new tab)
  • CreditManager  (opens in a new tab)
  • RiskManager 4  (opens in a new tab)
  • Index Monitor  (opens in a new tab)
  • MSCI Datscha  (opens in a new tab)
  • MSCI Real Capital Analytics  (opens in a new tab)
  • Private i  (opens in a new tab)
  • Total Plan/Caissa  (opens in a new tab)
  • MSCI Wealth Manager (Fabric)  (opens in a new tab)
  • MSCI Carbon Markets  (opens in a new tab)
  • Go back to Main Menu
  • Region
  • China
  • India
  • Japan
Navigation

Navigation Menu

  • Our Clients
    • Go back to Main Menu
    • Our Clients
    • Asset Managers
    • Asset Owners
    • Banks
    • Corporates
    • Hedge Funds
    • Insurance Companies
    • Wealth Managers
  • Our Solutions
    • Go back to Main Menu
    • Our Solutions
    • Analytics
      • Go back to Our Solutions
      • Analytics
      • Analytics Overview
      • Risk Management
      • AI Portfolio Insights
      • Multi-asset Class Factor Models
      • Quantitative Investment Solutions
      • Fixed Income Analytics
      • Portfolio Management
      • Crowding Solutions
      • Regulatory Solutions
      • Managed Solutions
    • Climate Investing
      • Go back to Our Solutions
      • Climate Investing
      • Climate Investing Overview
      • Biodiversity
      • Carbon Markets
      • GeoSpatial Asset Intelligence
      • Portfolio Sustainability Insights
      • Real Estate Climate Solutions
    • Sustainable Investing
      • Go back to Our Solutions
      • Sustainable Investing
      • Sustainable Investing Overview
      • ESG Fund Ratings and Climate Search Tool
      • ESG Ratings
      • Impact Solutions
      • Sustainability Reporting Services
      • Sustainability and Climate Regulatory Toolkit
    • Factor Investing
      • Go back to Our Solutions
      • Factor Investing
      • Factor Investing Overview
      • Equity Factor Models
      • FactorLab
      • MSCI FaCS
      • Factor Indexes
    • Fixed Income
      • Go back to Our Solutions
      • Fixed Income
      • Fixed Income Overview
      • Fixed Income Analytics
      • Fixed Income Indexes
    • Private Capital
      • Go back to Our Solutions
      • Private Capital
      • Private Capital Overview
      • Private i
      • Total Plan Manager (formerly Caissa)
      • Emissions Footprinting
      • Private Capital Indexes
      • Private Company Data Connect
    • Real Assets
      • Go back to Our Solutions
      • Real Assets
      • Real Assets Overview
      • INCANS
      • Index Intel
      • Portfolio Services
      • Property Intel
      • Private Real Assets Indexes
      • Real Capital Analytics
    • Wealth Management
  • Indexes
    • Go back to Main Menu
    • Indexes
    • Indexes Overview
    • By Category
      • Go back to Indexes
      • By Category
      • By Category Overview
      • Climate
      • Market Cap
      • Fixed Income
      • Client-Designed
      • Sustainability
      • Factor
      • Thematic
      • Private Real Assets
      • Private Capital
    • Tools
      • Go back to Indexes
      • Tools
      • Tools Overview
      • Index Monitor
      • MSCI Index API
      • MSCI IndexMetrics®
      • Index Data Modules
      • Equity Index Constituents
      • Fixed Income Index Constituents
      • Index Profile Tool
      • Direct Indexing
    • Resources
      • Go back to Indexes
      • Resources
      • Resources Overview
      • Communications
      • Education
      • Equity Factsheets
      • Derivatives
      • Methodology
      • Performance
      • Regulation
  • Research & Insights
    • Go back to Main Menu
    • Research & Insights
    • Research & Insights
      • Go back to Research & Insights
      • Research & Insights
      • Research & Insights Overview
      • Carbon Markets
      • Climate
      • Equities
      • Factor Investing
      • Fixed Income
      • Multi-Asset Class
      • Private Capital
      • Real Estate
      • Sustainability
    • Events
      • Go back to Research & Insights
      • Events
      • Events Overview
      • On Demand
  • Discover MSCI
    • Go back to Main Menu
    • Discover MSCI
    • About Us
    • Technology
      • Go back to Discover MSCI
      • Technology
      • Technology Overview
      • Data Explorer
      • Developer Community
      • Technology and Data
    • Corporate Responsibility
      • Go back to Discover MSCI
      • Corporate Responsibility
      • Corporate Responsibility Overview
      • Enabling Sustainable Investing
      • Environmental Sustainability
      • Governance Practices
      • Social Practices
      • Sustainability Reports and Policies
    • Inclusion & Belonging
    • Media Room
    • Our Leadership
    • Recognition
  • Client Log In
  • Investor relations  (opens in a new tab)
  • Sustainability Institute  (opens in a new tab)
  • Subscribe
  • Contact us
  • Careers
  • Region
  • Go back to Main Menu
  • Client Log In
  • MSCI ONE  (opens in a new tab)
  • MSCI Client Support Site
  • Barra PortfolioManager
  • BarraOne  (opens in a new tab)
  • MSCI ESG Manager  (opens in a new tab)
  • MSCI ESG Direct  (opens in a new tab)
  • Global Index Lens
  • MSCI Real Assets Analytics Portal  (opens in a new tab)
  • RiskManager 3  (opens in a new tab)
  • CreditManager  (opens in a new tab)
  • RiskManager 4  (opens in a new tab)
  • Index Monitor  (opens in a new tab)
  • MSCI Datscha  (opens in a new tab)
  • MSCI Real Capital Analytics  (opens in a new tab)
  • Private i  (opens in a new tab)
  • Total Plan/Caissa  (opens in a new tab)
  • MSCI Wealth Manager (Fabric)  (opens in a new tab)
  • MSCI Carbon Markets  (opens in a new tab)
  • Go back to Main Menu
  • Region
  • China
  • India
  • Japan

Main Search

Popular searches:
ACWI (opens in a new tab) Research (opens in a new tab) ESG (opens in a new tab) Factor Investment (opens in a new tab) Insights Gallery (opens in a new tab) Asset Owners (opens in a new tab)
Might interest you:
Powering Better Portfolios through Technology and Data
MSCI offers clients mission-critical data and technology capabilities focused on quality, reliability, and scale. To power the next wave of growth,...
ESG Ratings
MSCI ESG Ratings provides insights into ESG risks and opportunities within multi-asset class portfolios.
Research
MSCI has applied pioneering ideas to real-world investment challenges for more than four decades.
Did Low-Carbon-Transition Strategies Differentiate Energy Companies?

Extended Viewer

 

Did Low-Carbon-Transition Strategies Differentiate Energy Companies?

 

Xinxin Wang and Antonios Panagiotopoulos
February 02, 2023

An energy crisis has propelled the energy sector, but this overall performance hides notable underlying differences. Our analysis shows that energy companies with above-average strategies to manage a low-carbon transition (LCT)1 outperformed their peers, while those with below-average LCT strategies recorded much flatter returns in 2022. This underperformance persisted even after accounting for the negative impact of the delisting of Russian companies following the invasion of Ukraine.2

The performance of energy companies classified in different Global Industry Classification Standard (GICS®)3 sub-industries varied. Specifically, companies in coal and consumable fuels recorded the highest average 2022 returns, followed by oil and gas equipment and services, integrated oil and gas, and oil and gas exploration and production. As these four sub-industries own fossil-fuel reserves and production facilities, we would have expected them to benefit the most from strong demand amid the energy crisis. But what was interesting to note was the role of a strong LCT strategy as a key differentiator of performance, particularly in oil and gas equipment and services, and integrated oil and gas.

This data is only a snapshot, but it may echo a potential explanation offered in a previous MSCI study that identified economic transmission channels (opens in a new tab) for the influence of regulatory policies and green technology on the financial markets. Specifically, more carbon-efficient companies experienced stronger performance and companies’ green revenue share was clearly associated with higher earnings growth and a stronger stock performance within a given sector.

 

Performance of energy-sector constituents excluding Russian energy companies

A breakdown of returns by energy-sector sub-industry and LCT-risk-management grouping



1 This is measured by the MSCI Low Carbon Transition Risk Management Score and Quartile. The MSCI Low Carbon Transition Risk Management Score measures how well a company manages risk and opportunities related to the LCT. It is computed relative to a company’s industry peers and combines management assessments for the following key issues: carbon emission for all companies, product carbon footprint, financing environmental impact, opportunities in clean tech and opportunities in renewable energy where available. It captures strategy and risk management efforts along both products and operations dimensions on policies and commitments, programs and initiatives, performance indicators and controversies. Higher scores on management indicate greater capacity to manage risk.

2 All analysis in this quick take excludes the delisted Russian companies and focused on constituents of the MSCI ACWI Energy Index, between Dec. 31, 2021, and Dec. 31, 2022. There were 74 companies in the top-half LCT-risk-management group and 27 in the bottom-half group at the beginning of 2022. Note that some companies had the same LCT-risk-management score; thus the number of companies in each of the two groups was not the same.

3 GICS is the global industry-classification standard jointly developed by MSCI and S&P Global Market Intelligence.


Related content

Climate Indexes' Year in Review: The Journey Toward a Low-Carbon Transition

MSCI Climate Indexes underperformed relative to their parent indexes in developed markets, but they demonstrated greater resilience in emerging markets.

Explore more

Keeping Energy Exposure While Lowering Emissions

Some investors may be focused on reducing portfolio carbon emissions while keeping their exposure to energy stocks.

Learn more

ESG and Climate Trends to Watch for 2023

We take a closer look at how some of the major developments may shape the investment environment and impact the challenges and opportunities for companies.

Read more

msci logo
  • Terms of Use
  • Legal
  • Modern Slavery Statement
  • Privacy notice
  • Index regulation
  • Locations
  • Cookies
  • Use of ISO standards
  • Site map
Subscribe Contact us
© 2025 MSCI Inc. All rights reserved

UtmAnalytics