MSCI has launched indexes that aim to increase investors’ exposure to those companies that are providing solutions to the problem of climate change, with twice the exposure to clean technology firms, and to limit exposure to companies that are contributing to climate change.
They have 50% less exposure to thermal coal and four times less exposure to companies with carbon-intensive products than traditional indexes.
The indexes re-weight securities based on MSCI’s low carbon transition score, which measures a company’s exposure to low carbon transition risk, carbon emission and fossil fuel reserves as well as exposure to opportunities like clean technology and alternative energy. They can be used as a standalone index or as an overlay to an overall environmental, social and governance strategy.
The indexes can be used as an investment policy benchmark to guide asset allocation or passive products or to measure asset managers’ performance. They can also be used to understand the impact of climate-related risks on the risk and return drivers of portfolios and to engage with companies to improve their ESG performance.
“It is critical that the investment industry collaborates to enable the transition to a low-carbon economy, before climate change becomes a defining issue for financial stability,” said Remy Briand, head of ESG at MSCI, in a statement.
LPL Adds Advisor Sleeve to Model Wealth Portfolios Platform
With LPL Financial’s Advisor Sleeve, advisors can run their own custom models in LPL’s Model Wealth Portfolios (MWP) platform, which is similar to what they can do in LPLs Strategic Asset Management (SAM) and Strategic Wealth Management (SWM) platforms where the advisor is the portfolio manager.
The advisor can can maintain control of managing their portfolios while gaining scale and efficiency by outsourcing operational functions including trading execution and rebalancing.