As the rush among institutional investors to reduce their carbon exposure intensifies, MSCI, a provider of research-based indexes and analytics, has said it will report the carbon footprint of its flagship global indexes.

Gareth Allison, Executive Director at MSCI, said: “The target is to cover MSCI’s range of over 160,000 standard indexes by the end of 2016 with the target of our MSCI EFM Africa index series by mid-2016.”

Assessing the carbon footprint of a portfolio is the first step in addressing the investment implications of climate change, MSCI said.

According to the initial footprinting results for 19 MSCI Indexes as of August 31, 2015, the highest-emitting index was the MSCI Emerging Market Index, followed by the MSCI Pacific, MSCI Europe, and MSCI North America Indexes.

Following input from an extensive market consultation, MSCI ESG Research developed the following three carbon emissions and intensity metrics: carbon emissions (the normalized carbon footprint per $m invested of a portfolio tracking the index); carbon intensity (efficiency of a portfolio tracking the index in terms of total carbon emissions per unit of output); and weighted average carbon intensity (exposure to carbon-intensive companies).

Baer Pettit, Managing Director and Global Head of Products, said: “We are seeing a growing number of investors demanding greater transparency into carbon emissions within their equities portfolios to help monitor, manage and mitigate their exposure to carbon risk.”

“MSCI is committed to lifting the lid on emissions data to help our clients better understand the environmental and economic impact of their high carbon holdings,” he said.

MSCI recently announced a surge in demand for Environmental, Social and Governance (ESG) data and indexes.

ETFs tracking the MSCI Low Carbon Indexes accounted for nearly 80% of the total equity ETF assets of carbon themed ETFs since their launch in September 2014, bringing low carbon ETF assets to more than $460m as of July 2015.

When asked about trends around ESG investing, Allison said that from an African perspective, local clients have been asking for deeper insight especially around Board Structures and Director Characteristics and Social Impact Investing.

“Similarly the Nigerian Stock Exchange has placed Corporate Governance front and center in its requirements, with the recent launch of the Premium Board on the Exchange,” he said.

For investors looking for further insight into the carbon profile of their portfolios, MSCI ESG Research offers integrated portfolio carbon risk assessments with a detailed analysis of carbon risk management and exposure metrics.