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Carbon emissions

MSCI launches family of low carbon indices

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MSCI has launched the MSCI Global Low Carbon Leaders Indexes, consisting of companies with significantly lower carbon exposure than the broad market.

The indices were developed at the request of and with critical insights from Fourth Swedish National Pension Fund AP4, Fonds de Réserve pour les Retraites (FRR) and Amundi, who were looking for representative benchmarks in the transition to a low carbon economy.
 
MSCI then consulted on the proposed methodology with a variety of investors globally.
 
The MSCI Global Low Carbon Leaders Indexes are based on the MSCI ACWI Index, the global policy benchmark covering developed and emerging markets, and use MSCI ESG CarbonMetrics data from MSCI ESG Research.
 
The indices are the first in the industry to address two dimensions of carbon exposure – carbon emissions and fossil fuel reserves – providing clients with an effective tool for limiting the exposure of their portfolios to carbon risk. While selecting companies with a lower carbon exposure, the indices aim to maintain a wide and consistent market exposure by minimising the tracking error compared to the performance of the parent standard indexes.
 
Valerie Baudson, global head of ETF and indexing at Amundi, says: "This collaboration with MSCI, AP4 and FRR is also an excellent illustration of our index fund management capabilities and our core focus on providing fully tailored index solutions to our clients.”
 
Amundi, which has USD 1.1 trillion in assets under management, has licensed the MSCI Global Low Carbon Leaders Indexes for the creation of index-tracking solutions.
 
Mats Andersson, chief executive of AP4, says: “We are delighted to have contributed, with FRR and Amundi, to the launch of MSCI Global Low Carbon Leaders Indexes, as we see a low carbon investment approach becoming more popular and mainstream. AP4 plans to invest with its partners up to EUR1 billion in these new low carbon investments. Combined with a carbon footprint disclosure, we are confident that this approach can offer an alternative source of return while working for the public good.”

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