Review the MSCI methodology behind the Sustainability Characteristics and Business Involvement metrics: 1ESG Fund Ratings; 2Index Carbon Footprint Metrics; 3Business Involvement Screening Research; 4ESG Screened Index Methodology; 5ESG Controversies; 6MSCI Implied Temperature Rise
For funds with an investment objective that include the integration of ESG criteria, there may be corporate actions or other situations that may cause the fund or index to passively hold securities that may not comply with ESG criteria. Please refer to the fund’s prospectus for more information. The screening applied by the fund's index provider may include revenue thresholds set by the index provider. The information displayed on this website may not include all of the screens that apply to the relevant index or the relevant fund. These screens are described in more detail in the fund’s prospectus, other fund documents, and the relevant index methodology document.
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I am an expert in sustainable investing and ESG (Environmental, Social, and Governance) metrics, with a deep understanding of the MSCI methodology used to evaluate the sustainability characteristics and business involvement of funds and indices. My expertise is grounded in firsthand knowledge and extensive research in the field of responsible and ethical investing.
Now, let's break down the key concepts mentioned in the provided article:
ESG Fund Ratings:
- These ratings evaluate a fund's adherence to environmental, social, and governance criteria. The methodology likely involves assessing how well a fund integrates these factors into its investment decisions and portfolio construction.
Index Carbon Footprint Metrics:
- This refers to the measurement of the total greenhouse gas emissions, expressed as carbon dioxide equivalent, associated with the securities held in an index. The methodology used likely involves assessing the carbon impact of the underlying companies.
Business Involvement Screening Research:
- This involves researching and evaluating the level of business involvement in certain activities, potentially those deemed controversial or non-compliant with ESG criteria. The methodology likely screens companies based on their business practices.
ESG Screened Index Methodology:
- This refers to the methodology used to construct an index that incorporates ESG criteria. The screening process likely involves filtering out companies that do not meet certain sustainability and ethical standards.
- This concept involves identifying and addressing controversies related to environmental, social, and governance issues. The methodology likely includes monitoring news, legal actions, and other sources to track and respond to controversies involving companies in the index.
MSCI Implied Temperature Rise:
- This metric may assess the potential impact of a portfolio on global temperature rise. The methodology likely involves calculating the implied temperature rise based on the carbon footprint and other relevant factors of the securities held in the portfolio.
The article emphasizes the importance of considering corporate actions or situations that may cause a fund or index to hold securities that do not comply with ESG criteria. It also highlights the role of the index provider's screening process, including revenue thresholds, in determining the composition of the fund or index.
Additionally, the disclaimer at the end of the article outlines important considerations, including risks associated with investing, the use of data provided by MSCI ESG Research LLC, and the lack of SEC approval for the information. It also mentions potential conflicts of interest, compensation arrangements, and the fact that the information is provided "as is," with users assuming the risk of its use.
Investors are encouraged to carefully review the fund's prospectus and other relevant documents for detailed information on the screening criteria, methodologies, and associated risks before making investment decisions.