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MSCI reports carbon footprint of indexes

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MSCI is to report the carbon footprint of its flagship global indexes for institutional investors looking to understand, measure and manage carbon risk in their portfolios.

MSCI will publicly report he carbon footprint of its more than 160,000 global equity indexes beginning with 19 across its flagship MSCI ACWI, MSCI World and MSCI Emerging Markets Index families.
 
Following input from an extensive market consultation, MSCI ESG Research measures the following three carbon emissions and intensity metrics, drawing on in-house carbon research and expertise via MSCI ESG CarbonMetrics, including:
 
• Carbon Emissions: The normalised carbon footprint per $M invested of a portfolio tracking the index.
• Carbon Intensity: Efficiency of a portfolio tracking the index in terms of total carbon emissions per unit of output.
• Weighted Average Carbon Intensity: Exposure to carbon-intensive companies.
 
Remy Briand, Managing Director and Global Head of Research, says: “Demand from institutional investors for the ability to analyse the carbon footprint of their portfolios relative to a benchmark will likely grow as they become more concerned about carbon risk. Having a standardised carbon footprint measure for our equity indexes can help clients better understand their carbon risk at the portfolio level and define precise targets for reduction.”
 
For investors looking for further insight into the carbon profile of their portfolios, MSCI ESG Research offers integrated portfolio carbon risk assessments with a detailed analysis of carbon risk management and exposure metrics.
 
Baer Pettit (pictured), Managing Director and Global Head of Products, says: “We are seeing a growing number of investors demanding greater transparency into carbon emissions within their equities portfolios to help monitor, manage and mitigate their exposure to carbon risk. As today’s announcement demonstrates, MSCI is committed lifting the lid on emissions data to help our clients better understand the environmental and economic impact of their high carbon holdings.”
 
MSCI recently announced a surge in demand for Environmental, Social and Governance (ESG) data and indexes. ETFs tracking the MSCI Low Carbon Indexes accounted for nearly 80 per cent of the total equity ETF assets of carbon themed ETFs since their launch in September 2014, bringing low carbon ETF assets to more than USD460 million as of July 2015.

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