MSCI announced it was buying RiskMetrics in March this year, just four months after RiskMetrics itself acquired KLD.

From the start of this month, all of KLD’s 23 indexes have transferred to MSCI, under three broad classes – best in class, value based and environmental.

“Most of the characteristics of the indexes remain the same,” said Thomas Kuh, business manager of the MSCI ESG Indices, who joined the firm as a KLD veteran. “They now adhere to MSCI’s index policies – for example, quarterly index reviews. The underlying research remains the same and the underlying methodologies remain the same.”

The biggest difference is that they are now based on MSCI indexes, whereas before they were based on indexes produced by FTSE. This has meant that a “handful” of constituent companies have changed, Kuh said.

There are a few other minor changes – for example the MSCI USA IMI ESG index used to include the top 65% of market capitalisation for a given sector, but that figure has been wound down to 50% to be consistent with the MSCI World ESG index.

Kuh said MSCI’s backing should broaden the appeal of the indexes. “Whereas KLD’s main client base was in the US, we expect that these will have a much more global client interest because of the visibility of MSCI and its strength in Europe and the UK.”

He noted that MSCI is the only major indexer undertaking its own ESG research.

Christopher Cundy