Environmental, Social, and Governance Performance of EU Companies

MSCI ESG Ratings evaluate a company's exposure to environmental, social, and governance (ESG) risks and opportunities relative to its industry peers. The ratings are designed to help investors understand a company's long-term resilience and management of ESG risks. MSCI gathers data from multiple sources, including, e.g., publicly available information (e.g., company reports, news articles, government databases), direct engagement with companies, and proprietary datasets. The underlying database and detailed sources are not publicly available from the MSCI website.

MSCI's ESG rating is based on three main pillars: (1) Environmental, (2) Social, and (3) Governance (Figure 1). Around 35 key issues are analysed across all industries, with different weightings based on their potential financial impact. The ratings consider both the companies´ exposure to risks and how well they manage these risks in relation to the performance of peers in the same sector. Scores range from 0 (poor) to 10 (excellent). The weighted average of issue scores determines the overall company score.