MSCI ESG scores to change for 37 percent of issuers under new update

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🗞️ Driving the news: Global ESG ratings provider MSCI plans to revise its ESG rating methodology, introducing “buffer zones” between score thresholds
• It is a change expected to affect about 37% of rated issuers

🔭 The context: MSCI’s ESG ratings rank companies from AAA to CCC based on environmental, social and governance risks and management practices
• Previously, small numerical changes in scores could push companies across rating thresholds, causing sudden upgrades or downgrades
• The new buffer zones aim to reduce this volatility and make ratings more stable for investors using ESG metrics in portfolio decisions

🌍 Why it matters for the planet: ESG ratings influence trillions of dollars in investment decisions and shape how capital flows toward companies managing climate and environmental risks
• Methodology changes at a major provider like MSCI can alter how firms are assessed on sustainability performance, potentially affecting incentives for companies to improve environmental practices

⏭️ What’s next: The methodology update will roll out across MSCI’s ESG ratings universe, potentially shifting the scores of thousands of companies
• Investors and companies are expected to monitor how the adjustments impact portfolio screening, sustainability benchmarks and corporate ESG strategies.

💬 One quote: “Adding buffer zones should help ensure that small changes in scores do not automatically trigger rating changes.” - Remy Briand

📈 One stat: Around 37% of companies rated by MSCI could see changes under the revised ESG scoring framework

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