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MSCI Opens ESG Ratings to the Public

Stockholm (NordSIP) – MSCI ESG Research, a major player in the sustainable data field, announced its ESG ratings would become freely available to the public. MSCI ESG Research is a subsidiary of MSCI, one of the world’s leading providers of financial market indices.

The move has opened up ESG rating data for the 2,800 companies in MSCI’s All Country World Index (ACWI) to the wider public. The data can already be accessed online on MSCI’s ESG Ratings website. The data provider plans to make ESG ratings available for another 4,700 companies next year.

“ESG is increasingly being viewed by global investors as a critical factor for building better portfolios,” said Remy Briand, Head of ESG at MSCI. “The decision to make the MSCI ESG Ratings publicly available is part of a campaign to drive greater transparency in ESG and follows the launch of the MSCI ESG Fund Ratings in July. We want to encourage open discussion among investors and companies on how to improve sustainability across the board and hope that making the MSCI ESG Ratings available to all will facilitate these discussions.”

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MSCI ESG Research applies a rating scale of ‘AAA’ to ‘CCC’ scale according to their exposure to ESG risks and how well they manage those risks relative to peers. Companies rated ‘AA’ to ‘AAA’ are identified as industry leaders. Businesses with a rating of ‘BB’, ‘BBB’ or ‘A’ are considered as average performers. Finally, companies rated ‘CCC’ to ‘B’ are described as laggards.

The tool allows users to view each company’s ESG rating, ESG rating history, benchmark against peers and key ESG-related issues affecting individual companies. The rating history does not go much further back in time beyond 2015 and in the few cases NordSIP tested seems to stop at 2016. The ratings are not broken down in detail with regards to the different themes that make up each of the “E”, “S” and “G” factors. However, the free tool provides a more general breakdown of whether the company ranks as a laggard, average or as a leader on these themes. However, the coverage of these themes seems to vary across sectors.

The ratings are based on 1000 data points from company disclosures and alternative data sets, across 37 key ESG issues that are reviewed weekly. The data is constructed with the help of artificial intelligence and machine learning by a team of more than 200 analysts who monitor and update companies on an ongoing basis and deliver relevant ESG insights.

When NordSIP reached out to MSCI, the company emphasised that the information that became available on a company-by-company basis is considerably less detailed than the institutional-level MSCI ESG Ratings product licensed to asset managers. The data provider also underlined that this data is for informational purposes only and that a license is necessary to use MSCI ESG research data to manage portfolios and report to clients, among other activities.

A quick search shows that the tool provides substantial coverage for the Nordic region.  Equinor, Telenor, Tele2, Telia, Vestas, Skanska, Handelsbanken, H&M, Swedish Match, Norsk Hydro, Volvo, Nokia, Carlsberg, Maersk, Ericsson, DNB, Swedbank, Nordea, Yara International and Danske Bank are all covered.

Image by CJ from Pixabay

Filipe Wallin Albuquerque
Filipe Wallin Albuquerque
Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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