MSCI, the index provider, has created an environmental, social and governance (ESG) rating system for 32,000 equity and fixed income funds.
The funds are rated according to their ESG exposure and scores range from AAA (leader) to CCC (laggard). The coverage includes exchange-traded funds.
According to MSCI’s head of ESG, Remi Briand, the service – called MSCI ESG Fund Ratings – is designed to give investors greater transparency to better understand the ESG characteristics of a fund in their portfolio.
“As the number of ESG funds proliferate and ESG-orientated investment options and ESG strategies are being adopted by wealth and fund managers, we strive to provide the tools and solutions to help these investors better understand ESG risks,” Briand said.
Using more than 200 additional metrics, the ratings look at funds’ carbon footprint, water exposure, and governance risks, among other factors.
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