Extended Viewer
ESG and Climate Reporting with Derivatives
Jan 5, 2024
At present, no clear guidance exists on the treatment of derivatives for ESG and climate reporting. Because investment managers face increasing pressure to disclose their portfolios’ sustainability attributes, should reporting include derivatives? And if so, what represents an appropriate framework for maximizing transparency?
Derivatives encompass a wide array of instruments. Their varying risk exposures can create complexity, and investors’ motives for using them can diverge considerably. A look-through approach can help us understand their nuances, allowing us to more accurately assess the underlying asset’s ESG and climate characteristics, by factoring in direct and indirect financing.
The different aggregation frameworks we propose aim to provide investors with clarity and meaningful insights as they navigate the complexities of derivatives within ESG and climate reporting.
Look-through approach to ESG and climate reporting for derivatives
Download report
Research authors
- Hitendra D Varsani, Managing Director, MSCI Research
- Yuliya Plyakha Ferenc, Vice President, MSCI Research
- Yu Ishihara, Executive Director, MSCI Research
- Dinank Chitkara, Senior Associate, MSCI Research
- Rumi Mahmood, Vice President, MSCI Sustainability Institute
Related content
ESG Reporting in Long-Short Portfolios
MSCI ESG Research draws on our consultation with owners and managers of long-short portfolios to recommend best practices for fund-level ESG and climate reporting.
Learn moreSustainability Reporting Services
ESG and climate reporting requirements have expanded and are evolving globally at an unprecedented rate. Our solutions are designed to help you meet these demands quickly and thoroughly — across the total portfolio.
Explore moreClimate Profiling and Reporting
Corporates and their Advisors are looking for consistent, robust climate data and scenario analysis tools to enable them to measure and manage transition and physical risk, while identifying sustainable investment opportunities.
Read more