Sustainability Pathways

A monthly newsletter

Welcome to ISSUE 5 of Sustainability Pathways.

Global average surface temperatures in early June increased 1.5 degrees Celsius above pre-industrial levels for the first time. Crossing that threshold reinforces the urgency of meeting Paris Agreement goals to avoid what scientists warn would mean the worst climate impacts.

How can asset owners take the lead in hitting climate targets? This issue of Sustainability Pathways draws on expert insight to highlight the tools of capital allocation for accelerating net-zero transition.

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Linking portfolio decarbonization with real-world decarbonization

In our latest AO Quarterly Webinar, we spoke with Ilmarinen, Finland's largest private pension company, and Singapore’s SGX Group, the first Asian exchange to set science-based emissions targets aligned with a 1.5°C scenario, about the infrastructure needed to supercharge net-zero journeys.

Lack of data consistency and difficulty in holding companies accountable are among the biggest challenges of decarbonization. To overcome these hurdles, asset owners have turned to indexes.

Index benchmarking helps define the universe for investing to reduce greenhouse gas emissions. It provides an avenue to steer companies to deliver a zero-emission future. And it facilitates the tracking of returns in both climate and financial terms.

These are some of the reasons that Ilmarinen cited for why they moved its listed equity portfolio from broader ESG benchmarks to MSCI’s Climate Action Indexes (the indexes) at the end of 2022.

The indexes were designed to represent the performance of companies that lead industry peers in driving low-carbon transitions. For asset owners looking to take an active and constructive approach – and not simply exclude high-emissions industries from their investments – MSCI’s Climate Action Indexes can provide an effective way to reallocate capital and audit transaction progress along the way.

Asset owners can use climate-focused indexes to:

Listen to the full conversation for the latest trends and best practices in climate investing.

Events

ESG and Climate Indexes in Focus

How can futures spur the transition to net-zero? What is the relationship between active sector weights and the returns of our Climate Indexes? Find answers in this on-demand webinar.

Institutional Investors Conference

Asset owners are gathering in California, United States for the MSCI Institutional Investor Conference. This seminal event, co-hosted with CalSTRS and CalPERS, will explore some of the most challenging issues facing institutional investors today through panels, research and peer networking.

Climate Action Indexes

“Climate change as an investment strategy is not a trend. It is a building block.” Chitra Hepburn, APAC Head of ESG & Climate, highlights how asset owners can manage transition risks and financed emissions through integrating well-calibrated climate indexes in their investment strategy.

MSCI’s Total Portfolio Footprinting

A bird’s eye view of your financed emissions – MSCI’s Total Portfolio Footprinting offers visibility over your entire portfolio with a snapshot of your carbon footprint across all asset classes and subclasses. The baseline measurement is designed to align with key PCAF, NAIC, TCFD, GFANZ and EIOPA requirements.