MSCI has launched a tool to help investors assess their exposure and alignment to the United Nations’ Sustainable Development Goals (UN 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.

Remy Briand, head of ESG at MSCI, said: “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.”

He said through this new tool MSCI will aim 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 standardization of that assessment is critical,” he added.

The launch follows MSCI’s collaboration in 2018 with the Organization for Economic Co-operation and Development (OECD) on a joint discussion paper, Institutional Investing for the SDGs, which was intended to spark discussion among stakeholders and market participants.

The tool brings together MSCI’s framework covering more than 8,600 equity and fixed income issuers, with analysis of the full range of a company’s operations, products, services, policies and practices, to evaluate its net contribution to addressing the global challenges the UN SDGs aim to tackle.

The tool allows for flexible use of its model towards specific impact investing goals or focused on specific alignment dimensions, powered by data inputs from MSCI ESG Research’s core research products.

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’. The model also offers assessments on two dimensions – product alignment and operation alignment – for each company and for each of the 17 goals.

2° Investing Initiative launches PACTA for Banks

The non-profit think tank 2° Investing Initiative (2DII) has launched PACTA for Banks, a free, open-source climate scenario analysis toolkit based on the Paris Agreement Capital Transition Assessment (PACTA) methodology.

Developed with the input of leading global banks, universities, and NGOs, PACTA for Banks enables users to measure the alignment of their corporate lending portfolios with climate scenarios across key climate-relevant sectors and technologies.

It represents a major step forward in climate scenario analysis for lending, by providing banks with insights into the alignment of their corporate clients’ capital stock and expenditure plans, 2DII said.

Thanks to the toolkit, banks can get a granular view of the alignment of their corporate loan books by sector and related technologies, at both the corporate client and portfolio level.

Banks can use this information to help steer their lending in line with climate scenarios; to inform their decisions around climate target-setting; and to gain insights into their engagement with clients on their respective climate actions.

2DII also noted that the toolkit can also help banks identify their exposure to transition risks associated with a disruptive shift to a low-carbon economy.

The think tank developed PACTA for Banks as a free-of-charge public good, in partnership with and funding from a range of stakeholders across the banking, academic, and NGO sectors.

Over the course of the last two years, the toolkit has been road-tested by 17 global banks from Europe, North and South America – which include ABN AMRO, Barclays, BBVA, BNP Paribas, Citi, Credit Suisse, KBC, Nordea, Santander, Société Générale, UBS, and many others.

The toolkit has also been reviewed by more than a dozen academic institutions and designed with the input of NGOs and industry experts. Contributing institutions include the Center of Economic Research at ETH Zurich and the research network Institut Louis Bachelier.

The methodology, data, and software are available here.

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