MSCI launches tobacco exclusion indexes

The flurry of investors seeking to exclude tobacco from their portfolios has led MSCI to launch a new set of indexes


Joe McGrath

Index provider MSCI has launched a new index for investors who are looking to exclude stocks that are involved in tobacco production.

The MSCI Tobacco Exclusion indexes are market capitalisation weighted indices, designed for investors looking to exclude producers of tobacco and companies deriving 5% or more aggregate revenue from distribution, retail and supply of tobacco related products.

Deborah Yang, global head of ESG Indexes at MSCI, said the launch was in response to growing demand from investors.

She said: “There is growing demand for exclusionary indexes globally, including interest among the world’s largest pension and endowment funds for tobacco exclusion benchmarks.”

The available suite of tobacco exclusion indexes includes versions for the MSCI ACWI, MSCI World, MSCI EAFE (Europe, Australasia and Far East), MSCI Japan and MSCI Emerging Markets.

In Wednesday’s media statement, Yang said that these indexes would make it easier for investors to exclude tobacco companies from their portfolios.

She added: “By making this suite of indexes part of the standard ESG index module offering, it makes a tobacco exclusion investment strategy easier to implement, and keeps the cost of adoption low, reducing hurdles to removing tobacco for both passive and active portfolios.”

ESG Clarity recently reported that several fund managers have moved to exclude tobacco from their funds. In July, Dutch manager Kempen Capital Management outlined its intention to go tobacco-free, then, earlier this month, Candriam said it also planned to divest.

There are more than $125 billion of institutional, retail and exchange traded fund assets benchmarked to MSCI ESG Indexes, according to the statement.


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