New Index Family Provides Environmental, Social & Governance Investment Strategies for Institutional Fixed Income Portfolios
MSCI Inc. (NYSE: MSCI), a leading provider of investment decision support tools worldwide, and Barclays, publisher of leading broad market bond benchmarks, announced today an agreement to create a family of co-branded Environmental, Social & Governance (ESG) fixed income indices. The combination of both organizations’ expertise will help institutional investors to apply ESG investment strategies to their bond portfolios.
The ESG fixed income indices will be co-branded and independently marketed by both firms. These indices will be aimed at asset owners and managers with ESG commitments, such as UN PRI (United Nations Principles for Responsible Investing) signatories, who have exposure to fixed income investments that require a benchmark which integrates ESG factors. Institutional clients will be able to use the ESG fixed income indices to create index-linked investment products, such as Exchange Traded Funds (ETFs), separately managed accounts, and structured products.
In the coming weeks, MSCI and Barclays will begin meeting with asset owners, asset managers and investment consultants to understand their plans for integrating ESG factors into their investment policies. The consultation process is intended to ascertain which ESG strategies are most relevant to investors and to define the methodologies of the new indices.
"As a leading provider of indices and analytics, Barclays continues to focus on innovation and so we are excited to work with MSCI, a clear leader in ESG research, to develop and offer a new market standard,” said Waqas Samad, Head of Index, Portfolio and Risk Solutions at Barclays. “This agreement brings our respective expertise in fixed income and ESG together to develop one product family.”
Baer Pettit, Managing Director and Head of the MSCI Index Business, said, “MSCI is very pleased to be working with Barclays to create a family of global ESG fixed income indices. The objective of MSCI’s ESG business is to provide investors with tools to integrate ESG factors across a broad range of asset classes. Working together with Barclays, we expect these new benchmarks to fill a gap in the market and facilitate the growth of ESG investment.”
With over 40 years of expertise in equity index construction and maintenance, MSCI’s equity ESG indices enable clients to benchmark ESG investment performance, issue index-based ESG investment products, and report on their compliance with ESG mandates. MSCI is the only major index provider with in-house ESG research expertise.
The Barclays Indices platform has offered market-leading benchmarks and other index products since 1973, to meet the diverse needs of global investors including investment and market analysis of both alpha and beta sources, portfolio benchmarking and performance measurement, asset allocation, and the creation of index tracking funds and index-based structured products.