MSCI Inc. has launched MSCI Global Low Carbon Leaders Indexes, a new benchmark tracking companies with significantly lower carbon exposure than the broad market.
The series was developed at the request of Fourth Swedish National Pension Fund AP4, Fonds de Réserve pour les Retraites (FRR) and Amundi, which were looking for representative benchmarks in the transition to a low-carbon economy. MSCI then consulted on the proposed methodology with a variety of investors globally.
The MSCI Global Low Carbon Leaders Indexes are based on the MSCI ACWI Index, a global policy benchmark covering developed and emerging markets, and deploys MSCI ESG CarbonMetrics data from MSCI ESG Research Inc.
According to MSCI, the benchmarks are the first in the industry to address two dimensions of carbon exposure – carbon emissions and fossil fuel reserves – providing clients with an effective tool for limiting the exposure of their portfolios to carbon risk. While selecting companies with a lower carbon exposure, the gauges aim to maintain a wide and consistent market exposure by minimising the tracking error compared with the performance of the parent standard benchmarks.
Investment products
Amundi, which has $1.1tr in assets under management (AUM), has licensed the MSCI Global Low Carbon Leaders Indexes for the creation of index-tracking solutions.
“This collaboration with MSCI, AP4 and FRR is also an excellent illustration of our index fund management capabilities and our core focus on providing fully tailored index solutions to our clients,” said Valerie Baudson, global head of ETF and indexing at Amundi.
Baer Pettit, global head of MSCI’s index business, said that the new indices will provide asset managers, asset owners and ETF providers with a “broad and representative” benchmark that will help address clear demand from institutional investors who are increasingly aware of the investment risks associated with the transition to a low-carbon economy.
The launch of the MSCI Global Low Carbon Leaders Indexes has received the support of various internationally renowned organisations, among them the United Nations Environment Programme Finance Initiative (UNEP FI).
Achim Steiner, executive director of UNEP, and UN under-secretary general, said: “From a UN perspective, decarbonizing the portfolios of institutional and retail investors worldwide can be a powerful conduit to realising low-carbon economic growth. Through its Finance Initiative, UNEP encourages, supports and facilitates financial innovation that enables a systemic “greening” of the world’s financial markets.”
MSCI and Amundi will together run a series of roadshows around the world to present their respective expertise and capabilities.
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