MSCI ESG manager selects Key Issues for any given GICS Sub-Industry and sets the weights that determine each Key Issue’s contribution to the overall rating. Each Key Issue typically comprises 5-30% of the total ESG Rating. The weightings reflect both the contribution of the industry relative to all other industries related to the negative or positive impact on the environment or society and the timeline within which MSCI expect that risk or opportunity for companies in the industry to materialize. See below for the MSCI ESG Key Issue Hierarchy which includes 3 Pillars, 10 Themes, and 37 ESG Key Issues.
Pillar: Environment
Theme: Climate Change
Key Issues: Carbon Emissions Product Carbon Footprint Financing Environmental Impact Climate Change Vulnerability
Theme: Natural Resources
Key Issues: Water Stress Biodiversity & Land Use Raw Material Sourcing
Theme: Pollution & Waste
Key Issues: Toxic Emissions & Waste Packaging Material & Waste Electronic Waste
Theme: Environmental Opportunities
Key Issues: Opportunities in Clean Tech Opportunities in Green Building Opp’s in Renewable Energy
Pillar: Social
Theme: Human Capital
Key Issues: Labor Management Health & Safety Human Capital Development Supply Chain Labor Standards
Theme: Product Liability
Key Issues: Product Safety & Quality Chemical Safety Financial Product Safety Privacy & Data Security Responsible Investment Health & Demographic Risk
Theme: Stakeholder Opposition
Key Issue: Controversial Sourcing
Theme: Social Opportunities
Key Issues: Access to Communications Access to Finance Access to Health Care Opp’s in Nutrition & Health
Pillar: Governance
Theme: Corporate Governance*
Key Issues: Board* Pay* Ownership* Accounting*
Theme: Corporate Behavior
Key Issues: Business Ethics Anti-Competitive Practices Tax Transparency Corruption & Instability Financial System Instability