•

Join MSCI on Tuesday, September 19 to celebrate the launch of the MSCI Sustainability Institute, a new initiative designed to drive progress by capital markets to tackle global challenges such as climate change. Learn more and register here.

•

Join us on Wednesday, September 20 for an in-person breakfast where industry leaders will share the latest insights into translating transition risks into opportunities, the greening of private assets, and the need for nature in any climate-aligned strategy. Learn more and register here.

•

And join MSCI and Chief Executives for Corporate Purpose (CECP) on Thursday, September 21 to hear from leaders at the forefront of sustainable business how climate governance can drive decarbonization and create opportunity. Learn more and register here.

•

The MSCI Sustainability Institute is designed to leverage MSCI’s experience and expertise in the investment industry to spur collaboration across capital markets, academia, government and civil society and align data, analysis, policy and action.

•

The Institute aims to equip academic and policy researchers with sustainability data and metrics, help innovators pilot new data and measurements, curate a selection of academic papers useful to investors, and bring together leaders from across the wider capital-markets ecosystem to exchange views.

•

Investors can use metrics such as MSCI Implied Temperature Rise, which shows the alignment of portfolios with global temperature goals, to optimize climate-aligned investment strategies.

•

Data from MSCI Climate Value-at-Risk that supports disclosure of scenario analysis can also be used to bucket portfolio or lending positions by risk category and to help portfolio managers assess climate-related risks and opportunities.

Untangling drivers of emissions in multiasset-class portfolios can sharpen insights into actual changes in the emissions of investments, an analysis by MSCI ESG Research shows.

•

Issuers reducing their emissions (and not the purchase and sale of securities or other financial characteristics) drove the lion’s share of decarbonization of a hypothetical portfolio of listed equities and fixed-income securities over three years that ended Jan. 31, 2023, the analysis finds.

•

At the sub-portfolio level, most of the drop in the equity portion’s carbon footprint came from consistently held positions (not decarbonization by issuers).

•

The increase in the bond sub-portfolio’s footprint mainly reflected the addition of issuers to the portfolio.

Why it matters: “Attribution at the level of an aggregate multiasset-class portfolio can provide insights into the net changes of an investor’s carbon footprint,” MSCI’s Xinxin Wang , Zoltan Nagy and Guido Giese write. “Attribution at a sub-portfolio level can help assess and compare performance in each sub-portfolio individually, and potentially inform actions.”

The intensity of companies’ direct (Scope 1) emissions drives the majority of risk arising from future decarbonization costs for nonfinancial companies, an analysis by MSCI ESG Research finds.

•

Emissions from companies’ value chain (Scope 3) are the second-strongest driver of transition risk, according to the analysis, which used statistical analysis to show how MSCI’s Transition Climate Value-at-Risk (VaR) model isolated primary transition-risk drivers over the 32 months that ended May 30.

•

The significance of both Scope 1 and Scope 3 emissions in quantifying risk underscores the importance of avoiding double counting of those emissions, notes the analysis, which adds that MSCI’s Transition Climate VaR applies a deduplication factor to prevent such double counting.

Why it matters: With the majority of transition climate risk for nonfinancial companies located primarily in Scope 1 emissions, reducing these emissions may be a focus for risk management.

“We’re doing fascinating work on AI,” notes Ashley Lester, MSCI’s global head of research, in a recent conversation with MSCI’s Perspectives podcast.

•

That includes work to help clients build portfolios “that specifically fit their needs and preferences,” adds Lester, who joined MSCI in May after eight years at Schroders in London, most recently as founding head of systematic investments.

On point: MSCI and Google Cloud recently expanded a partnership to harness Google’s cloud and AI technologies to help investors measure and manage portfolio exposure to climate risk and identify low-carbon investment opportunities.

Hiro Mizuno, former chief investment officer at the Government Pension Investment Fund of Japan, has joined MSCI as a special adviser to Chairman and CEO Henry Fernandez.

•

Mizuno, who is known for his work in addressing climate change and gender diversity through investment practices, will provide MSCI with strategic counsel, thought leadership and industry engagement.

Why it matters: “MSCI’s dedication to enabling sustainable investing aligns perfectly with my own values, and [the firm’s] leadership in providing critical risk management tools for climate and ESG risks can help facilitate proper capital allocation,” he said.