![]() It defends its methodology as the most financially relevant for the companies it rates. MSCI doesn’t dispute this characterization. In fact, they gauge the opposite: the potential impact of the world on the company and its shareholders. That’s because the ratings don’t measure a company’s impact on the Earth and society. Yet there’s virtually no connection between MSCI’s “better world” marketing and its methodology. ![]() For a significant number of investors, it’s a powerful attraction. BlackRock and other investment salesmen use these ESG ratings, as they’re called, to justify a “sustainable” label on stock and bond funds. No single company is more critical to Wall Street’s new profit engine than MSCI, which dominates a foundational yet unregulated piece of the business: producing ratings on corporate “environmental, social, and governance” practices. The sale of these investments is now the fastest-growing segment of the global financial-services industry, thanks to marketing built on dire warnings about the climate crisis, wide-scale social unrest, and the pandemic. Investment firms have been capturing trillions of dollars from retail investors, pension funds, and others with promises that the stocks and bonds of big companies can yield tidy returns while also helping to save the planet or make life better for its people. Yesterday’s heterodoxy is today’s Wall Street sales cliché. In a presentation in February 2019 for the analysts who rate MSCI’s stock, he said the company’s data products, the source of its profits, were just “a means to an end.” The actual mission of the company, he said, “is to help global investors build better portfolios for a better world.”įernandez was borrowing the language from an idealistic movement that originated with a couple of fringe money managers in the 1980s. Then Henry Fernandez, the only chairman and chief executive officer MSCI has ever had, saw it was time for a change. Sales have historically been good, but no one was ever going to include MSCI itself in an index of sexy stocks. BlackRock Inc., the world’s biggest asset manager, with $10 trillion under management, is MSCI’s biggest customer. MSCI’s clients turn these indexes into portfolios or financial products for investors worldwide. Thinking about the implications of demographic shifts? Try the Ageing Society Opportunities Index. ![]() Looking for ways into Asian tech? MSCI has indexes by country, sector, and market capitalization. was a bland Wall Street company that made its money by arranging stocks into indexes for other companies that sell investments.
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