MSCI unveiled ratings for 32,000 mutual funds and exchange-traded funds in its equity and fixed-income universe based on their exposures to long-term environmental, social and governance risks and opportunities, the index provider and analytics firm announced in a news release Wednesday.
MSCI has assigned ratings that range from a best-of-class AAA to CCC and are based on the weighted average score of the fund or ETF's holdings, followed by an assessment of the fund's ESG track record and a review of its ESG tail risk. The latter review allows for an understanding of the fund's exposure to holdings with ESG fund ratings of B and CCC.
The ratings are "designed to provide investors with greater transparency to better understand the ESG characteristics of fund and ETF components of their portfolios," said Remy Briand, MSCI's head of ESG, in the news release. "As the number of ESG funds proliferate and ESG-orientated investment options and ESG strategies are being adopted by wealth and fund managers, we strive to provide the tools and solutions to help these investors better understand ESG risks."
There are more than 200 additional metrics that "provide insights across multiple diverse dimensions, such as carbon footprint, water exposure or governance risks," the news release said.
Mr. Briand was not available to provide further comment.