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Morningstar, MSCI Launch New SRI Indices

Morningstar’s benchmark is tilted on gender equality data, while MSCI’s is a broad ESG index

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  • Written by  Banking Exchange staff
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  • Comments:   DISQUS_COMMENTS
Morningstar, MSCI Launch New SRI Indices

Index provider Morningstar has launched a socially responsible investing benchmark tilted towards companies with better gender equality policies.

The Morningstar Developed Markets ex-Japan Gender Diversity Index was launched in partnership with Japan’s Government Pension Investment Fund (GPIF), the world’s largest asset owner with more than $1.5 trillion in total assets.

The Morningstar index has been launched in collaboration with gender equality data provider Equileap and is based on 19 gender equality criteria, including gender balance across the workforce, the gender pay gap, paid parental leave, and anti-sexual harassment policies.

It is designed to provide exposure to developed market companies exhibiting strong gender diversity policies and practices that ensure equal opportunities to employees, irrespective of their gender. Stocks are weighted according to their Equileap gender equality score and market cap.

Morningstar and Equileap have also published a report, Investing Inclusively: Building Shareholder Value Through Gender Diversity, highlighting gender disparity in the corporate sphere and looking at how companies that foster gender diversity and create inclusive cultures are able to maximize shareholder value.

Ron Bundy, president of Morningstar Indexes, said: “During a tumultuous year consumed by a global health and economic crisis in which research shows working women pay a disproportional toll, transparent practices and policies that advance gender representation should be top of mind for companies.”

In addition, rival index provider MSCI has launched the MSCI ACWI ESG Universal Index, also in partnership with the GPIF. The Japanese pension fund has allocated ¥1 trillion ($9.6 billion) MSCI benchmark.

The new index is designed to curb ESG risk inherent in the portfolio while limiting tracking error from the parent index, the MSCI ACWI.

Miyazano Masataka, president of GPIF, said: “A significant body of empirical research indicates that strong gender diversity has the potential to boost corporate performance. We consider these two indexes to be firmly in line with our objective of improving long-term returns through enhanced sustainability of individual issuers and the market as a whole.”

Progress on diversity across the whole investment industry has remained disappointingly slow, according to a recent report from global investment consultancy Willis Towers Watson.

It said asset managers needed to take greater action on improving their internal diversity measures in order to retain business in the future. It also identified a number of actions asset managers could take help improve diversity, including better transparency as well as using graduate programs to source a more diverse range of talent.

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