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Research Firm: MSCI

  • Methodology Quantitative Model Driven  
  • Approach n/a  
  • Equity Style n/a  
  • Report Types Company Forensic Accounting and ESG

About the Firm

MSCI (NYSE:RISK) provides risk management tools, corporate governance products and services, and financial research and analysis for investors. By bringing transparency, expertise and access to the financial markets, MSCI helps investors better understand and manage the risk and opportunity profiles of their portfolios. MSCI is headquartered in New York, with 20 global offices.

The MSCI ESG Analytics team provides research products that enable investors to integrate environmental, social and governance (ESG) factors into their investment strategies and analysis. Formed from ESG pioneers Innovest, KLD, and ISS, ESG Analytics offers the world's most comprehensive ESG data set, and more than 20 years of experience. As of 1/1/10, more than 30 of the world's 50 largest mutual fund managers, pension funds, foundations, and other institutional investors were clients of MSCI ESG Analytics.

The Scope and Purpose of ESG Analytics Research

ESG Analytics research and ratings encompass a comprehensive range of ESG issues. The MSCI ESG Analytics research database encompasses more than 4,000 global companies, whose ESG performance is tracked across more than 2,000 individual data points.

ESG analysts monitor company involvement in weapons, nuclear power, tobacco and other lines of business for which investors may want to limit exposure.

This information helps investors evaluate corporations' quality of management, possible reputational risk, and off-balance-sheet liabilities. ESG research can also help investors build portfolios that incorporate their own values and beliefs.

Please visit http://blog.riskmetrics.com/esg/ to learn more about ESG investing.

The Five ESG Stakeholder Categories

To measure each company's ESG performance, the ESG Analytics team looks at each firm's impact on five categories of stakeholders. For example, "Environment" stakeholders share resources like water and land with business, or are affected by its emissions.

Environment The ratings criteria for Environment cover a company's management of its environmental challenges, including its efforts to reduce or offset the impact of its products and operations.

Community & Society Community & Society ratings criteria measure how well a company manages its impact on the communities where it operates, including its treatment of local populations, its handling of human rights issues and its commitment to charitable giving.

Employees & Supply Chain Employees & Supply Chain ratings criteria assess a company's record in managing its employees, contractors and suppliers. Issues of particular concern include labor-management relations, anti-discrimination policies and practices, employee safety and the labor rights of workers throughout the company supply chain.

Customers The ratings criteria for Customers measure the quality and safety record of a company's products, its marketing practices, and its involvement in anti-competitive controversies.

Governance & Ethics Governance & Ethics ratings criteria address a company's investor relations and management practices, including company sustainability reporting, board accountability and business ethics programs.

Research Methodology

ESG analysts continuously update company research profiles with data from public documents, government regulators, non-governmental organizations, and more than 14,000 global media sources. Analysts also engage directly with researched companies to ensure fair, accurate reporting. Rigorous internal quality assurance and editing processes ensure consistent coverage across companies and issues.

The ESG Analytics research team comes from academic and professional backgrounds including law, economics, finance, international relations, environmental policy and corporate responsibility. Analysts are organized into sector-specific research teams. Teams are led by senior analysts who average more than 10 years of ESG research experience.

What's Available on Fidelity.com

  • ESG Composite Ratings enable you to identify if individual companies are managing ESG risks and addressing ESG opportunities adequately (yellow), more effectively (green), or not effectively (red).
  • Vice Alerts indicate that a company derives at least 15% of revenue from adult entertainment, alcohol, gambling, and/or tobacco.

The ESG Composite Rating covers the largest 3,000 US companies by market capitalization. Vice Alert covers the entire US publicly traded universe for adult entertainment, alcohol, gambling, and tobacco involvement.

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