Fund Solutions

MSCI Launches Tool to Help Investors Assess SDG Alignment

MSCI All-Country World Index constituents rated on their contribution to SDGs

Index, research and data provider MSCI has launched a tool to help investors assess their exposure and alignment to the seventeen United Nations Sustainable Development Goals (SDGs).

The MSCI SDG Alignment Tool is designed to provide investors with a complete view of a company’s net contribution – both positive and negative – towards addressing each of the 17 UN SDGs.

For almost 9,000 equity and fixed income issuers, the tool analyses operations, products, services, policies and practices, to evaluate net contribution to addressing the global challenges the UN SDGs aim to tackle.

The tool’s analytics model can be tilted towards specific impact investing goals or focused on specific alignment dimensions, using data inputs from MSCI ESG Research’s core research products. The tool draws on publicly available information, rather than solely relying on self-declared inputs.

“There is increasing demand from investors to channel capital to help deliver on these goals, but the fragmented data around the extent to which a company’s products and operations are aligned to a particular SDG remains an obstacle. Through this new tool we are seeking to provide an additional layer of transparency for investors to better assess the merits of claims put forth by their portfolio companies. With the target deadline for achieving the SDGs only a decade away, the standardisation of that assessment is critical,” said Remy Briand, Head of ESG at MSCI.

According to MSCI, the tool will help investors to measure and report on the degree of SDG alignment in portfolios, develop SDG-themed investment products and comply with client mandates on the SDGs.

The model provides 17 SDG Net Alignment scores and assessments for each of the UN SDGs on a scale from ‘Strongly Aligned’ to ‘Strongly Misaligned’. It also offers assessments on two dimensions – product alignment and operation alignment – for each company and for each of the 17 goals.

Based on data from the new tool MSCI, found 54% of MSCI All-Country World Index constituents were mostly aligned across all 17 SDGs, indicating no strong misalignment on any of the SDGs and more areas assessed as aligned than misaligned.

SDG 8 (decent work and economic growth) showed the highest degree of alignment, with one third of MSCI ACWI constituents aligned or strongly aligned with the goal either through offering products enabling economic advancements or supporting inclusive and fair employment and support for communities.

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