Understanding MSCI ESG Indexes

Jun 24, 2019

This paper explains the different methodologies investors can use to integrate ESG considerations into a benchmark, assess their differences in terms of financial and ESG characteristics and understand potential trade-offs. In the financial industry, benchmarks are used at a strategic level — i.e., as policy benchmarks for defining the eligible investment universe or helping investors determine asset allocations — as well as at an implementation level — i.e., as a performance benchmark for actively or index-based allocations. This paper focuses on ESG integration and the reflection of investors’ values and constraints.