Florida State Board of Administration, Tallahassee, contracted with MSCI to incorporate its ESG analytics into the system's corporate governance analysis.
“It will help us to identify engagement targets, companies that have underperformed or have higher ESG risks,” said Jacob Williams, corporate governance manager of the FSBA, which oversees $169.2 billion in assets.
“We'll use it to evaluate holdings for potential engagement” in corporate governance, Mr. Williams said in an interview about the new analytics to assess environmental, social and governance risks.
In addition, with the new analytics “we can measure improvements in ESG targets over time,” Mr. Williams said
The FSBA plans to integrate the MSCI ESG analytics as soon as possible, Mr. Williams said, although he doesn't have a time frame.
The new tool will enable the system to integrate ESG analysis in a more analytical, quantitative and comprehensive way on a portfolio basis than it has been able to do with other means it now uses, Mr. Williams said.
“A large part of our holdings are managed in a passive fashion” — 51.1% of $81.8 billion in global equities — “and selling out of a position isn't always an option,” Mr. Williams said. “So if a governance risk factor can be identified and corrected, (the process) would help mitigate excessive risk and enhance portfolio performance over the long term.”