Foundations Of ESG Investing - Part 2 - Integrating ESG Into Benchmarks

Document summary

In Part 2 of this series, MSCI examine four key criteria for an index that serves as a benchmark, whether at the total portfolio level or for individual allocations. The paper tests whether ESG indexes can be used for these purposes, using the MSCI ESG Leaders Index — a “best-in-class” approach that selects index constituents with strong ESG ratings — and the MSCI ESG Universal Index — a re-weighting methodology that relies on ESG ratings and changes in ESG ratings.