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ESG Rating hero banner
Measuring a company’s resilience to long-term, financially relevant ESG risks
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ESG Rating intro para
What is an MSCI ESG Rating?
MSCI ESG Ratings aim to measure a company’s management of financially relevant ESG risks and opportunities. We use a rules-based methodology to identify industry leaders and laggards according to their exposure to ESG risks and how well they manage those risks relative to peers. Our ESG Ratings range from leader (AAA, AA), average (A, BBB, BB) to laggard (B, CCC). We also rate equity and fixed income securities, loans, mutual funds, ETFs and countries.
ESG Ratings video
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ESG Ratings
How do MSCI ESG Ratings work? What are significant ESG risks? What does a poor rating look like? How can you use them?
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ESG ratings
Download brochure(PDF, 1.08 MB)(opens in a new tab)
How do MSCI ESG Ratings work?
How does MSCI ESG Ratings work?
ESG risks and opportunities can vary by industry and company. Our MSCI ESG Ratings model identifies the ESG risks, (what we call Key Issues), that are most material to a GICS® sub-industry or sector. With over 13 years of live track history we have been able to examine and refine our model to identify the E, S, and G Key Issues which are most material to an industry.
View our Key Issues framework |ESG Methodologies(opens in a new tab)|What MSCI’s ESG Ratings are and are not
ESG Ratings module
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LAGGARD
A company lagging its industry based on its high exposure and failure to manage significant ESG risks
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AVERAGE
A company with a mixed or unexceptional track record of managing the most significant ESG risks and opportunities relative to industry peers
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LEADER
A company leading its industry in managing the most significant ESG risks and opportunities
Explore our ESG transparency tools
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Explore our ESG transparency tools
Explore our ESG Transparency Tools content - part 1
Explore our ESG Transparency Tools content - part 2
ESG ratings Tabs
Integrating ESG Ratings into the investment process: Key Features
A growing body of client, industry and MSCI research has shown the value of integrating MSCI ESG Ratings to manage and mitigate risks and identify opportunities. We are proud to work with over 1,700 clients worldwide that help inform and improve our ESG Research, including our ESG Ratings methodology and coverage. Investor clients use MSCI ESG Ratings as follows.
Fundamental / quant analyses
Fundamental / quant analyses
Portfolio construction / risk management
Benchmarking / index-based product development
Disclosure and reporting for regulators and stakeholders
Engagement & thought leadership
- Stock analysis
- ESG Ratings used for security selection or within systematic strategies
- ESG Factor in quant model- identify long term trends and arbitrage opportunities
- Adjust discounted cashflow models
- Identify leaders and laggards to support construction
- Use ratings and underlying scores to inform asset allocation
- Stress testing, and risk and performance attribution analysis
- ESG as a Factor in Global Equity Models
- MSCI ESG Ratings are used in many of MSCI’s 1,500 equity and fixed indexes
- Select policy or performance benchmark
- Develop Exchange-Traded-Funds and other index-based products
- Make regulatory disclosures
- Report to clients & stakeholders
- Demonstrate ESG transparency and leadership
- Engage companies and external stakeholders
- Provide transparency through client reporting
- Conduct thematic or industry research
ESG rating Key benefits
Key product features:
We rate over 8,500 companies (14,000 issuers including subsidiaries) and more than 680,000 equity and fixed income securities globally (as of October 2020), collecting thousands of data points for each company.
Forward-looking industry materiality:We monitor emerging risks and opportunities and focus on the industry issues that are most relevant to its companies’ core business models |
Alternative data & models:While corporate disclosure is an important input into our model, we also gather alternative data from hundreds of media, academic, NGO, regulatory and government sources to supplement those disclosures and uncover additional insights. Our cutting-edge modelling capabilities transform varied sources of unstructured data into meaningful insights |
Tech-enabled human insights:We use artificial intelligence (AI) and other technologies to increase the timeliness and precision of data collection and analysis, and to check and validate data. Our 200+ strong team of analysts review, validate and transform the data into meaningful insights |
Client consultations and innovations:MSCI ESG Research is constantly evaluating new datasets, monitoring emerging ESG issues and exploring new technologies to improve our research process and the value for clients. We review and recalibrate the ESG Ratings model annually, and seek feedback from our clients on potential changes and enhancements via our annual consultation process. Overthe last seven years, MSCI ESG Research has consulted more than 55 of some of the largest investors globally, to refine our ESG Ratings methodology and expand our coverage |
MSCI ESG Research Experience and Leadership
MSCI ESG research experience and leadership
- We have over 40 years2 of experience measuring and modelling ESG performance of companies. We are recognized as a ‘Gold Standard data provider’3 and voted 'Best Firm for SRI research' and ‘Best Firm for Corporate Governance research' for the last four years3
- We were the first ESG provider to assess companies based on industry materiality, dating back to 1999. Only dataset with live history (13+ years) demonstrating economic relevance
- Objective rules based ESG ratings, with an average 45% of data,5 coming from alternative data sources, utilizing AI tech to extract and verify unstructured data
- First ESG ratings provider to measure and embed companies’ ESG risk exposure4
ESG Ratings Related Content
Related content
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Companies with strong MSCI ESG Ratings profiles may be better positioned for future challenges and experience fewer instances of bribery, corruption and fraud. Learn how our sustainability solutions can provide insights into risks and opportunities.
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Climate and Net-Zero Solutions
To empower investors to analyze and report on their portfolios’ exposures to transition and physical climate risk.1.
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ESG and climate regulation and disclosure resource center for institutional investors, managers and advisors.
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ESG ratings footnotes
MSCI ESG Research LLC. is a Registered Investment Adviser under the Investment Adviser Act of 1940. The most recent SEC Form ADV filing, including Form ADV Part 2A, is available on the U.S. SEC’s website at www.adviserinfo.sec.gov(opens in a new tab).
MIFID2/MIFIR notice: MSCI ESG Research LLC does not distribute or act as an intermediary for financial instruments or structured deposits, nor does it deal on its own account, provide execution services for others or manage client accounts. No MSCI ESG Research product or service supports, promotes or is intended to support or promote any such activity. MSCI ESG Research is an independent provider of ESG data, reports and ratings based on published methodologies and available to clients on a subscription basis.
ESG ADV 2A (PDF, 354 KB)(opens in a new tab)
ESG ADV 2B (brochure supplement) (PDF, 232 KB)(opens in a new tab)
1GICS®, the global industry classification standard jointly developed by MSCI Inc. and S&P Global.
2Through our legacy companies KLD, Innovest, IRRC, and GMI Ratings.
3Deep Data Delivery Standard http://www.deepdata.ai/
4Through our legacy companies KLD, Innovest, IRRC, and GMI Ratings. Origins of MSCI ESG Ratings established in 1999. Produced time series data since 2007.
5Source: MSCI ESG Research 2,434 constituents of the MSCI ACWI Index as of November 30, 2017.
