MSCI has expanded its roster of climate transition solutions with the introduction of eight new equity indices aligned with the Paris Agreement’s goal of limiting global warming to 1.5°C.

The indices are aligned with the Paris Agreement’s goal of limiting global warming to 1.5°C.

The MSCI Climate Paris Aligned Indices are derived from some of MSCI’s best-known global, regional, and country benchmarks.

The indices reweight securities based on the risks and opportunities associated with the climate transition while also seeking to minimize exclusions from the parent indices.

MSCI harnesses a diverse range of data and analytical tools to aid in index construction. This includes scope 1, 2, and 3 carbon emissions, green revenues, and the index provider’s own proprietary low carbon transition score and climate value-at-risk measures.

Each index offers an immediate 50% reduction in weighted average carbon intensity as well as a further 10% annual decarbonization going forward.

In addition, the indices aim to achieve secondary objectives such as maximizing exposure to sustainable energy providers, increasing the weight of companies with clear carbon reduction targets, minimizing fossil fuel exposure, and reducing climate value-at-risk by 50%.

Remy Briand, Head of ESG at MSCI, commented, “Climate risks, whether physical or related to the transition to a lower carbon economy, are changing the risk-return profile of companies and industries. Extreme weather events pose new risks to companies’ assets, while carbon-intensive industries are being forced to undergo transformational change.

“MSCI has been providing investors with low carbon benchmarks for several years. Now, some of these investors are looking to deploy a climate strategy that goes beyond reducing carbon intensity.”

Diana Tidd, Head of Index at MSCI, added, “We have witnessed tremendous interest in ESG and climate indexes over the past 18 months and continue to see fast adoption. As end-investor awareness and stakeholder pressure rises, institutional investors increasingly want to invest to affect more systemic, global change beyond the company or portfolio level. We designed the MSCI Climate Paris Aligned Indexes to provide a solution for institutional investors looking to do just that.”

The indices, listed below, have multiple applications including as underlying references for passive index-linked products, such as ETFs, and as investment policy benchmarks to guide strategic asset allocation.

MSCI World Climate Paris Aligned Index
MSCI ACWI Climate Paris Aligned Index
MSCI USA Climate Paris Aligned Index
MSCI Europe Climate Paris Aligned Index
MSCI Japan Climate Paris Aligned Index
MSCI EMU Climate Paris Aligned Index
MSCI EM Climate Paris Aligned Index
MSCI World ex USA Climate Paris Aligned Index