MSCI has launched the MSCI Global Fossil Fuels Exclusion Indexes, benchmarks for investors who aim to eliminate or reduce fossil fuel reserves exposure from their investments.
The MSCI ACWI ex Fossil Fuels and MSCI ACWI ex Coal Indexes are the first in the series.
The MSCI Global Fossil Fuels Exclusion Indexes were developed in response to investor demand for benchmarks designed to represent the performance of the broad market while excluding companies that own oil, gas and/or coal reserves. Institutional investors are increasingly concerned that these reserves could potentially be stranded in the context of the transition to a low carbon economy.
Remy Briand, managing director and global head of index and ESG research, says: “MSCI developed the MSCI Global Fossil Fuels Exclusion Indexes in response to clear demand from asset owners. These indexes complement the family of MSCI Low Carbon Indexes launched last month as part of a comprehensive suite of tools for investors looking to manage carbon exposure in their portfolios.”
The MSCI Global Fossil Fuels Exclusion Indexes are free-float adjusted market capitalisation weighted benchmarks. The MSCI ACWI ex Fossil Fuels Index reduces carbon reserves exposure by 100 per cent by excluding 127 securities representing 9.3 per cent of the parent index market capitalisation. The MSCI ACWI ex Coal Index reduces carbon reserves exposure by 50 per cent by excluding 26 securities representing 1.3 per cent of the parent index market capitalisation.
The MSCI Global Fossil Fuels Exclusion Indexes are based on the MSCI ACWI Index, the global policy benchmark covering developed and emerging markets. Regional and country versions are available on request. The indexes use MSCI ESG CarbonMetrics data from MSCI ESG Research Inc.