MSCI, an index and ratings provider, has closely followed Morningstar by producing sustainability ratings for investment funds, including their carbon footprints.
MSCI will rank about 21,000 mutual funds and exchange-traded funds based on environmental, social and governance (ESG) criteria.
Morningstar recently launched a similar service.
MSCI ESG Fund Metrics is a newly created unit that will provide the ratings and is an extension of MSCI existing ESG research business.
The firm says the initiative is in response to interest from fund investors including large wealth managers.
Eric Moen, managing director of MSCI ESG Research, said: “The development of Fund Metrics was based on client consultation, which included some of the world’s largest wealth managers who are looking for greater insight into the ESG attributes of their portfolios, reflecting growing attention to ESG among investors.”
The ‘ESG Quality Score’ that MSCI will offer is meant to reflect the ability of the underlying holdings to manage medium- to long-term risks and opportunities.
“Transparency around the ESG Quality of a fund’s holdings may be used by clients to complement their evaluation and due diligence of fund managers but it does not provide an indication of the quality of a fund manager’s ESG strategy, capabilities, process or intentionality,” Moen said.
MSCI ESG Fund Metrics will be available directly from MSCI ESG Research and on third-party platforms through 2016.
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