MSCI widens ESG ratings

MSCI has widened its ESG research offering to include ratings for 32,000 funds and ETFs. Covering both equity and fixed income, the ratings measure exposure to long-term ESG risks and opportunities with each fund or ETF rated on a scale from AAA (leader) to CCC (laggard). The rating is based first on the weighted average score of the holdings of the fund or ETF. MSCI then assess the ESG momentum to gain insight into the fund’s ESG track record. This is designed to indicate a fund’s exposure to holdings with a positive rating trend or worsening trend year on year. Finally, MSCI reviews the ESG tail risk to understand the fund’s exposure to holdings with worst-of-class ESG Ratings of B and CCC.

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