MSCI has published “The Principles of Sustainable Investing,” a framework to improve ESG integration for investors.
The framework includes three core pillars to full ESG integration:
1. Investment Strategy: Asset owners should integrate ESG considerations into their processes for establishing, monitoring and revising their overall investment strategy and asset allocation.
2. Portfolio Management: Portfolio managers should incorporate ESG considerations throughout the entire portfolio management process, including security selection, portfolio construction, risk management, performance attribution and client reporting.
3. Investment Research: Research analysts assessing companies and issuing investment
recommendations to portfolio managers should integrate ESG considerations (including ESG
company ratings) into their fundamental company analysis.
MSCI says, “The need for a set of guidelines that will help all investment institutions around the world manage emerging opportunities and inherent risks associated with ESG considerations in pursuit of long-term, sustainable investment performance has never been greater”.