MSCI 37 Key ESG Indicators

MSCI 37 Key ESG Indicators




Introduction: 1

MSCI ESG Key Issues Overview 2

Environmental (E) 2

Social (S) 2

Governance (G) 2

MSCI evaluates companies using 37 key ESG (Environmental, Social, and Governance) issues: 3

Environmental (E) 3

1. Climate Change 3

2. Natural Resources 4

3. Pollution & Waste 4

4. Environmental Opportunities 4

Social (S) 4

5. Human Capital 5

6. Product Liability 5

7. Stakeholder Opposition 5

8. Social Opportunities 6

Governance (G) 6

9. Corporate Governance 6

10. Business Ethics 6



Introduction:

MSCI (Morgan Stanley Capital International) evaluates companies using 37 key ESG (Environmental, Social, and Governance) issues to assess their resilience to financially relevant, industry-specific sustainability risks and opportunities. These issues are categorized into three pillars: Environmental, Social, and Governance, and further organized into ten themes. The ratings are based on a scale from AAA (highest) to CCC (lowest) .(MSCI, IRIS CARBON®)

MSCI ESG Key Issues Overview

Environmental (E)

  • Climate Change: Greenhouse gas emissions, renewable energy usage

  • Natural Resources: Water and waste management, land use

  • Pollution & Waste: Air and water pollution, hazardous waste

  • Biodiversity & Land Use: Impact on ecosystems and biodiversity(asuene.com, MSCI)

Social (S)

  • Human Capital: Labor management, employee health and safety

  • Product Liability: Product safety and quality

  • Stakeholder Opposition: Community relations and stakeholder engagement

  • Social Opportunities: Access to essential services and products(cadwalader.com)

Governance (G)

  • Corporate Governance: Board structure, ownership, and control

  • Business Ethics: Corruption and anti-competitive practices

  • Tax Transparency: Tax strategy and reporting

  • Executive Pay: Alignment of executive compensation with performance(cadwalader.com, REDAD®, apiday.com)

MSCI collects data from various sources, including company disclosures, government databases, and third-party datasets, to assess these key issues. The ratings are updated regularly to reflect the latest information and trends. Investors use these ratings to assess companies' exposure to ESG risks and opportunities, aiding in investment decision-making and portfolio construction .(IRIS CARBON®, MSCI)


MSCI evaluates companies using 37 key ESG (Environmental, Social, and Governance) issues:

Organized into three pillars and ten themes. Here's a detailed breakdown:

Environmental (E)

  1. Climate Change

    • Greenhouse Gas Emissions

    • Carbon Footprint

    • Climate Change Vulnerability

    • Climate Change Opportunities(ESG Navigator, my.ccb.com)

  2. Natural Resources

  3. Pollution & Waste

  4. Environmental Opportunities

    • Green Building

    • Renewable Energy

    • Energy Efficiency

    • Clean Technology(OECD)

Social (S)

  1. Human Capital

    • Labor Management

    • Employee Health & Safety

    • Employee Engagement

    • Compensation & Benefits(apiday.com, MSCI)

  2. Product Liability

    • Product Safety

    • Product Quality

    • Product Labeling

    • Product Access & Affordability(apiday.com, MSCI)

  3. Stakeholder Opposition

    • Community Relations

    • Human Rights

    • Supply Chain Management

    • Stakeholder Engagement(renouvo, Medium)

  4. Social Opportunities

    • Access to Healthcare

    • Access to Education

    • Affordable Housing

    • Financial Inclusion(BlackRock, MSCI)

Governance (G)

  1. Corporate Governance

    • Board Structure

    • Ownership & Control

    • Executive Compensation

    • Shareholder Rights(MSCI)

  2. Business Ethics

    • Anti-Corruption

    • Anti-Competitive Practices

    • Tax Transparency

    • Whistleblower Protection

Each of these key issues is assessed based on a company's exposure to industry-specific risks and its management of those risks. The ratings are updated regularly to reflect the latest information and trends.(apiday.com)

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