Understanding MSCI Climate Corporate Bond Indexes

In this paper, we discuss our research on developed-market climate corporate-bond indexes. We aim to help institutional investors translate their climate objectives — both quantitative and qualitative — to a benchmark-construction concept. We do this by assessing different investors’ objectives and targets, matching these with the goals of our current indexes and proposing possible approaches to customization that are consistent with investors’ requirements.

We explain different climate corporate-bond indexes’ methodologies and variants available to integrate climate considerations into benchmarks. We compare the resulting differences in financial and climate characteristics of these indexes.

This document is designed as a guide for investors to illustrate how a complex set of financial and climate targets and climate investment objectives can be simultaneously integrated into the construction of indexes as well as portfolios.

MSCI’s climate corporate-bond indexes

CTB is Climate Transition Benchmark and PAB is Paris-Aligned Benchmark.