MSCI to launch two series of provisional EU Climate Indexes

(STL.News) – MSCI Inc. (NYSE: MSCI), a leading provider of critical decision support tools and services for the global investment community, today announces that it has launchedtwo seriesof provisional climate indexes which are designedto meetthe minimum standardsforthe “EU Climate Transition benchmark” (CTB) and “EU Paris-aligned benchmark” (PAB) as defined inthe “Final Report on Climate Benchmarks and Benchmarks’ ESG Disclosures” published byEUCommission’sTechnical Expert Group (TEG) on Sustainable Finance on September 30, 2019.  As defined by the TEG, the CTB and PAB werecreated as two typesof benchmarks that would allow investors not only to hedge against climate transition risks but also have the ambition to direct their investments towards opportunities related to the energy transition.  The PABis designed for highly focused climate-related investment strategies characterized by stricter minimum requirements, while the CTBallows for greater diversification.  Whilethe final delegated acts,including therequirementsfor the CTBand PAB,are yet to be published, MSCIhas decided to launchtheMSCI Provisional Climate Change EU ClimateTransition indexes and MSCIProvisional Climate Change EU Paris-Alignedindexesin order to help clients evaluateand testthem.  Assuming thatthe final CTB and PAB requirements do not materially diverge from the recommendation included in the TEG’s Final Report, MSCI intends to transitionthe methodology of the existing MSCI Climate Changes Indexes to the MSCI Provisional Climate Change EU Climate Transition indexes methodology by April 30, 2020.  This transition will be subject to a global public consultation as per MSCI’s policies.  In line with the TEG’s Final Report, both seriesof provisional indexes will pursue, amongstother things,a reduced carbon intensity and exclude Controversial Weapons and companies that breach global norms. Theywill also incorporate a year on year self-decarbonization of at least 7% on average in order to align with the trajectory of the Intergovernmental Panel on Climate Change’s 1.5-degree scenario.  In addition, the MSCI Provisional Climate Change EU Paris-Aligned indexeswill applyexplicit screens to exclude carbon intensive companies.  Stephane Mattatia, Head of Index Products EMEAat MSCI, comments,“MSCI is committed to the continued development of our climate change solutions using next generation data, analysis and tools to reflect industry and regulatory developments.  These two new index series will allow investors to better grasp the characteristics and associated implicationsof the new benchmark types defined by the EU Technical Expert Group for Sustainable Finance.”

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