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MSCI ESG Benchmark Tool Bridges Gap Between Corporates and Institutions

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MSCI has created a novel ESG benchmarking product for corporates that the data and research giant said will help drive engagement with investors.

MSCI Corporate Sustainability Insights (CSI) enables companies to access metrics that will let them track their own ESG- and climate-related performance and compare that with peers. While MSCI’s first dedicated ESG tool for corporates is primarily built for listed companies, it’s built on the same data and metrics that investors and asset owners access to measure the sustainability and climate risks of their own portfolios.

“We’ve developed a lot of climate metrics in scenario analysis to help companies and investors have a common language on how they should be analysing their performance,” MSCI global head of corporate ESG and climate solutions Beth Byington told ESG Insight. “It’s about showing the corporates the data back them, and how that data compares with peers, and then these metrics are used by investors to make decisions.”

Climate Metrics

The CSI tool is being marketed to corporate sustainability officers, investor relations teams and finance departments. It’s backed by MSCI’s data sets on about 10,000 listed companies rated between AAA and CCC and includes thousands of metrics and scores – 2,000 on climate alone.

Subscribers can use the tool to identify where their sustainability strengths and weaknesses lie, while also providing a basis for investor engagement with investee companies that may be failing to meet their portfolio expectations.

“The idea is that an asset manager could be looking at the tool and saying, ‘here’s a company and something looks funny about its data’,” Byington explained from New York. “They can then call that company, get onto the platform with them at the same time and discuss the next steps.”

She said that by promoting and enabling engagement between investors and corporates, the ESG data record can be enriched.

“Investors and companies can know where things stand and, importantly, where there might be gaps in some of the companies’ disclosures on which they can take action or focus,” she said.

ESG Products

MSCI has built a strong ESG product base on the back of its huge data business, offering scores and insights to companies and financial institutions alike. The CSI is available on MSCI’s One Platform, which is the company’s platform hub for all its clients, and which also offers metrics on other ESG factors.

The newly created CSI also provides views into MSCI’s climate data, which is based on the Taskforce for Climate-related Financial Disclosures (TCFD) reporting framework, gives corporate clients visualisation tools to help them in their sustainability journey and provides capabilities for them to challenge and request review of any data and metrics in which they feature.

MSCI complements its own sets of publicly sourced data used for its ESG Ratings with that from third-party alternative sources, on topics such as human capital development, governance, cyberattack risk and water stress.

While MSCI strictly avoids offering advice, it will flag where company climate disclosures are lacking or missing via a Target Explorer tool, which tracks disclosures against individual companies’ own targets.

“We provide the data, the tools and the analysis, but we do not advise and that’s a really important piece of what differentiates MSCI – this is why corporates and investors really appreciate our readiness,” Byington said. “They know that there’s no conflict of interest.”

Private Companies

MSCI said it built the CSI because to meet rising demand for such tools from corporates as their investors, customers and regulators make increasing demands that they operate more sustainably.

Byington said the service is also available to private companies that are interested in benchmarking their performance and progress against public peers.

“We might not provide them a rating assessment, but they subscribe to a product like CSI because they want to benchmark against public peers,” she said. “In the future, all companies will need this, and we seek to provide that.”

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