# How asset owners see AI: 5 takeaways from the Thinking Ahead Institute-MSCI Institute study URL: https://www.msci-institute.com/themes/risk-return/how-asset-owners-see-ai-5-takeaways-from-the-thinking-ahead-institute-msci-institute-study/ Published: 2026-10-13 AI is poised to vault up the agenda of the world’s largest asset owners if data doesn’t stand in the way. Nearly all of the asset owners in a new study by the Thinking Ahead Institute in collaboration with the MSCI Institute identify AI enablement as a future industry priority, compared with roughly one in five today. But the study also points to significant hurdles to putting that ambition into practice. The peer study brought together 20 global asset owners with a combined USD 5 trillion in assets under management, combining survey questionnaires with interviews with senior organizational leaders. The findings suggest that the question for participating asset owners is shifting from whether to embrace AI to how to reorganize investment processes around it. Nearly two-thirds see AI as integral to their long-term strategy, while the remainder say it is important to future competitiveness. None expect AI to play only a limited role. ##### Participating institutions - Australian Super - Aware Super - The Coca-Cola Company - Future Fund - Healthcare of Ontario Pension Plan - HESTA Superfund - La Caisse de Dépôt et Placement du Québec - Maryland State Retirement System - Nest Corporation - New Zealand Super Fund - Norges Bank Investment Management - OPTrust - PGGM Investment Management/ PFZW - PSP Investments - QIC - Retail Employees Superannuation Trust - UN Joint Staff Pension Fund - USS - WTW Investments ### 1. Data may be AI’s biggest constraint. Ambition to make AI part of the investment process is running into a familiar challenge: data. Data quality and standardization emerged as the most widely cited challenge to keeping up with AI developments, mentioned by three-quarters of asset owners in the study — almost twice the share who pointed to a lack of skills and resources. Data integration and the usability of unstructured data also stand out. More than two-thirds of asset owners in the study cite each as a constraint on investment decision quality. > “The challenge is bringing unstructured and structured data together, and embedding the context needed for people and machines to use it.” — Asset owner The challenge may be difficult for asset owners to solve alone. The study suggests few possess the scale, expertise and transformation capacity needed to overhaul their data architecture and quality independently. The need for better-integrated data and workflows cuts across capital markes. In private markets, for example, investment data often remains fragmented across documents, systems and managers. Addressing that fragmentation points to the importance of putting public and private investments on a common data and analytics foundation — a theme that runs through MSCI’s work on total-portfolio investing and the firm’s development of AI-enabled capabilities for private markets. ### 2. AI is moving rapidly toward the center of investing. Only one asset owner in the study describes AI as foundational to its technology infrastructure for portfolio analysis and management today. Seven in 10 expect it to be within two years. The study’s assessment of AI maturity reinforces how much ground remains to be covered. On a five-level scale derived from participating asset owners’ responses, most fall between levels two and three, suggesting that organizational readiness for AI remains relatively early even as ambitions accelerate. Integration between investment and technology teams is similarly limited. Only one asset owner in the study describes its technology specialists and investment professionals as fully integrated, while roughly half say those teams are only partially integrated. That gap matters because asset owners increasingly see the value of AI coming not simply from adding new tools but from changing how investment work gets done. High-quality data, coordinated workflows and connections between human expertise and technology are emerging as prerequisites for deploying AI more deeply across investment organizations. > “The truly courageous organizations are not layering AI onto existing processes. They are reimagining those processes from the ground up around new tools and capabilities.” — Asset owner ### 3. AI may rebalance investment work rather than replace people. Asset owners in the study say they expect technology and AI to account for 30% of investment outcomes within three to five years, up from 17% today. They expect the contribution from people to fall to 40% from 53%, while process remains steady at 30%. The findings, however, point to a change in what people do in the investment process. As AI, data platforms and analytics take on more information gathering, research, monitoring and decision preparation, human expertise would increasingly concentrate on interpretation, judgment, governance and accountability. That includes asking questions, testing ideas and challenging AI-generated outputs. The model that’s emerging may look less like a transfer of investment decision-making from people to machines than a rebalancing of the relationship between them. More than half of asset owners in the study identify judgment and decision quality as a future priority, while nearly two thirds identify critical thinking as a priority. That emphasis is reflected in what asset owners want from AI next. Asked where they most want AI capabilities to improve over the next one to two years, asset owners put investment decision-making first, followed by priorities that include efficiency and automation, data integration and real-time insight, consistency and transparency, and risk management and governance. The ambition extends beyond automating existing work. The larger opportunity may be to amplify what investment professionals can do, the study suggests. AI could enable teams to process more information, extend their analysis across a broader portfolio and learn more quickly, while leaving judgment and accountability with people. For large asset owners, scale may increasingly be measured not only by assets under management, but by how effectively they can amplify their investment capabilities. ### 4. Adoption is outpacing measurement and oversight. AI is already producing results. Four in five asset owners report at least some benefits from the technology, including one in 10 who report significant benefits. The gains, however, remain relatively modest. About a third estimate that AI has improved organizational effectiveness by 5% to 10%, while a similar share say it is too early to tell. Measuring those gains remains difficult. Only one asset owner in the study reports using agreed-upon metrics to measure AI’s impact. For most of the rest, metrics are either still evolving or AI’s impact is discussed without really being measured. Governance is playing catch-up as well. Only about a quarter of asset owners have made AI a standing board or investment-committee agenda item. Most of the rest review it occasionally at board or committee level, with a smaller group reporting management oversight below the board. > “The primary risks are not technical. They are organizational: governance, oversight and adoption.” — Asset owner The gap between adoption and oversight could become more consequential as AI moves closer to investment decisions. Nearly two-thirds of asset owners in the study cite both AI errors and hallucinations, as well as overreliance on AI as key risks to manage over the next two to three years. Cybersecurity, confidentiality and data leakage are also among the risks cited. ### 5. The gains could be substantial — and uneven. Nearly half of asset owners in the study expect AI to produce large net gains for the asset-owner industry over the next five to 10 years. Four in 10 expect a more uneven outcome, with gains at some asset owners offset by losses at others. What separates those outcomes may depend less on access to increasingly powerful AI than on how effectively asset owners build around it. Across the study, the same ingredients recur: better-integrated data, redesigned workflows, connections between investment and technology teams, effective oversight and human judgment. Realizing AI’s potential may require sustained investment in these capabilities, together with clearer ways to measure the value they create. Read the full report The Thinking Ahead Institute–MSCI Institute Global Asset Owner Technology Peer Study 2026 included 20 global asset owners with a combined USD 5 trillion in assets under management. Participants included five asset owners in the Americas, nine in Asia-Pacific and six in EMEA. The research included survey questionnaires, 18 hours of one-to-one conversations with key fund leaders and 12 hours of senior workshop discussions. The number of respondents to individual questions may vary. --- # Mapping Capital at Risk URL: https://www.msci-institute.com/themes/risk-return/mapping-capital-at-risk/ Published: 2026-08-12 ### Investment risks rarely exist in isolation They intersect in the places where companies operate, where technological, physical, environmental, social and economic forces combine to shape real-world exposure. The rapid growth of geospatial intelligence, together with an expanding universe of datasets, is creating new ways of seeing how these forces interact, giving investors a sharper view of their exposures. The maps in this series combine MSCI GeoSpatial Asset Intelligence with datasets from organizations across a range of disciplines to reveal insights that neither could provide alone. Each map highlights relationships that might otherwise remain hidden, offering new ways to understand the forces shaping companies, investments and the global economy. We’re looking for datasets that can reveal new dimensions of investment risk when combined with location-based intelligence. If your organization has data that could help investors see risk in a new way, we’d welcome the opportunity to explore a collaboration. ### Maps in this series ##### Collaborate with us ### Help investors see risk in new ways We’re looking for datasets that, when combined with MSCI GeoSpatial Asset Intelligence, can reveal new dimensions of investment risk. If your organization has data that could offer a new perspective, we’d welcome the opportunity to explore a collaboration. --- # America at 250: A view from capital markets URL: https://www.msci-institute.com/themes/risk-return/america-at-250-a-view-from-capital-markets/ Published: 2026-06-29 At America’s 250th birthday, the MSCI Institute is looking at how the world’s largest financial market has developed and continues to evolve — through the lens of global equity markets. The charts that follow tell part of that story. We trace U.S. stock performance across the past century, show how the U.S. share of global equity has changed over the past 30 years, and track which companies have held the title of most valuable at different points in time. What the data shows is not a static picture. Markets realign. Economies that once seemed peripheral move to the center. The U.S. itself, after all, was once an emerging market. ### Highlights ### What would $100 invested in U.S. equities a century ago be worth today? A century of U.S. markets turned $100 into $1.7 million. That 17,000-fold increase is the power of compounding — and it survived the Great Depression, two world wars, multiple recessions, a global financial crisis and a pandemic. ### How has the U.S. share of global developed-market equities changed over time? The U.S. has gone from representing less than half of developed-market equity value to nearly three quarters. The U.S. accounted for 44% of the MSCI World Index in 1997. By April 2026, that share had reached 73%. An investor who thought they were diversifying globally in 1997 would barely recognize what that means today. ### Which companies have been America’s most valuable — and when? America’s most valuable company has changed hands only four times in 25 years. General Electric dominated the early 2000s, Exxon Mobil held the position through the financial crisis, Apple held it for over a decade, and NVIDIA claimed it most recently. Four companies, a quarter century — corporate dominance at the top is rarer than it looks. Download the report --- # Adaptation and resilience in focus URL: https://www.msci-institute.com/themes/climate/adaptation-and-resilience-in-focus/ Published: 2026-06-17 Flooding from heavy rainfall represents the chief physical hazard to U.K. data centers designed to train large AI models, while storms present the greatest risk to facilities of the country’s listed companies. Those are among the findings from the latest edition of the Institute’s Transition Finance Tracker, which arrives in the run-up to London Climate Action Week and spotlights the market for adaptation and resilience solutions, exposure to physical risk in the U.K. and beyond, a growing gap in homeowners’ insurance in the U.S., and the paradox of air conditioning as a climate solution. Here are five highlights: ### Which physical hazards pose the greatest risk to U.K. AI data centers? Flooding from heavy rainfall represents the chief physical hazard to data centers in the U.K. designed to train large AI models. One — Waltham Cross — is currently operational; the other nine are under construction or planned. Three locations — Hillingdon, Newham and Long Drax — could face significant disruption in a once-in-a-hundred-year weather event. ### Where are U.S. homeowners unable to renew insurance policies? In the U.S., property insurers appear to be retreating from counties where exposure to acute hazards such as wildfire, tropical storms, and rain-induced and coastal flooding is highest. Nonrenewal rates roughly doubled in the highest-risk counties between 2018 and 2023. ### How could demand for cooling impact the electricity grid? The AI data-center boom gets the headlines, but space cooling is projected to drive more new electricity demand by 2030. Global electricity demand is projected to grow by roughly 6,750 TWh between now and 2030, according to the International Energy Agency. Of that growth, electric vehicles account for 838 TWh, space cooling for 651 TWh, and data centers for 530 TWh — suggesting that adapting to a warming world may be at least as important as the energy transition and the AI build-out in shaping the grid. ### How have providers of adaptation and resilience solutions performed? Among listed large- and mid-cap companies, companies with revenue from adaptation and resilience solutions performed only slightly better (+65%), on average, compared with non-providers (+59%), over the 29 months ended May 31, 2026. Note that revenue from adaptation and resilience solutions may constitute either an insignificant share of solutions providers’ overall revenue. The chart shows who is in the market for adaptation and resilience, not who specializes in it. The cohort is overrepresented in the financials, industrials and utilities sectors, which rallied in the second half of the period, and underrepresented in consumer discretionary, consumer staples and energy sectors, which fell over the same time. [Download the report](/download/transition-finance-tracker-lcaw-special-edition/) --- # Enhancing AI governance on corporate boards URL: https://www.msci-institute.com/themes/risk-return/enhancing-ai-governance-on-corporate-boards/ Published: 2026-06-11 The share of boards at listed large- and mid-cap companies globally reporting at least one AI expert reached 25% as of June 30, 2025 — up 10 percentage points from three years earlier. Yet just 14% had integrated that expertise effectively, according to an analysis by Harlan Tufford, Jonathan Ponder and Rumi Mahmood for the MSCI Institute. To map the landscape of AI expertise across 14,500+ corporate directors, the authors detail a framework designed to help companies and investors assess whether a board has integrated its subject-matter experts into the board as a whole. ##### Framework for assessing integrated expertise Though grounded in AI, the framework builds on a growing body of research into governance effectiveness and offers a systematic and scalable way to identify directors whose skills, independence, engagement and influence combine to support robust decision-making on complex topics. Among the findings: - U.S.-listed companies had the highest share of boards with integrated AI expertise at 25%, followed by their counterparts in Canada (19%) and Spain (14%). - Companies in the information technology sector had the highest share (27%) of boards with integrated AI expertise — alongside an additional 26% of boards with AI expertise they hadn’t integrated — followed by the financials and health-care sectors, at 17% and 16%, respectively. - AI experts are rare but well distributed. The analysis, which used an AI large-language model to read the biographies of all directors covered by the study, identified just 2% of individual directors as AI experts, and most serve on only one corporate board. As detailed in the report, the authors reviewed their analysis and findings with senior stewardship and governance professionals representing institutional investors with trillions of dollars in assets under management. “Our findings suggest that while boards are actively recruiting AI experts, many have failed to deploy that expertise for maximum effect,” the authors write. Download the report --- # Introducing our Global Investment Tracker URL: https://www.msci-institute.com/themes/risk-return/introducing-our-global-investment-tracker/ Published: 2026-05-20 Just how big are the world’s largest companies? Which markets have delivered the best long-term returns? How big are private markets compared with public markets? These are among questions answered in the inaugural edition of the Institute’s Global Investment Tracker, which we’ve developed for leaders in business, policy and finance whose decisions depend on and influence the flow and cost of capital. As its title suggests, the tracker offers a global perspective, drawing on 30 years of MSCI data and indexes across public and private markets to show how they have evolved alongside each other and how the geography and sectors of global equity have rewired themselves over three decades. #### Among highlights from the tracker’s 20+ charts and analysis: #### Just how big are the world’s largest companies? NVIDIA alone is worth more than the listed equities of any market outside the U.S. and Japan, based on data as of April 30, 2026. #### How big are public and private markets? Private markets have grown dramatically over the past two decades — private equity expanded nearly elevenvold and private credit expanded even faster. Both are still dwarfed by public debt (USD 130 trillion) and public equity (USD 99 trillion). #### Which markets dominate equity investing globally? The U.S. now represents 71% of developed-market equity, up from roughly 40% in the mid-1990s. Taiwan (home to TSMC) has recently overtaken China as the largest emerging market by value, with South Korea (home to Samsung) also rising fast — reflecting how heavily emerging-market exposure now leans on a handful of Asian technology companies. ##### Exposure based on market capitalization (1994-2026) The tracker invites readers to look beyond the shocks that define global markets daily to consider what the longer arc of how we arrived here might suggest about where capital could flow next. Download the full report --- # Skin in the game: Board equity ownership and long-term performance URL: https://www.msci-institute.com/themes/risk-return/skin-in-the-game-board-equity-ownership-and-long-term-performance/ Published: 2026-04-13 Jonathan Ponder, Vice-President, MSCI Research & Development Companies whose directors – particularly independent directors – hold meaningful and growing equity stakes tend to perform better over time, a new report from the MSCI Institute and [FCLTGlobal](https://www.fcltglobal.org/) finds. A sustained 5% average annual increase in independent director equity ownership over five years is associated with 35 to 40 percentage points higher cumulative total shareholder return. It is also linked to roughly 3% higher aggregate investment in research and development. The effect is consistent across risk-adjusted returns, volatility and long-term investment behavior, according to our analysis, which examines more than 2,100 listed companies globally over the five years ended Nov. 4, 2025.[[1]](#_ftn1) At the same time, director equity ownership is declining across public markets. Independent directors have held only a fraction of the equity that executives have, with their stake shrinking to just 0.2% over the study period. Among the findings: - At companies where independent directors held more equity than executives over the period analyzed, volatility was on average 51% lower. - Aggregating equity holdings to the company level, the median across all companies was approximately USD 930,000 for independent directors and USD 11.2 million for executives. Roughly 20% of companies had zero director equity ownership over the period analysed. - 94% of companies analyzed lack a formal policy on director equity ownership, even though companies with such policies showed meaningfully higher and more durable ownership levels. - Ownership trajectories appear to matter as much as levels. At companies where independent director holdings declined, total shareholder return fell by an average of 9.7 percent. For boards and investors, the more pressing question may be whether their own structures, such as holding periods, independence requirements and voting guidelines, reinforce or undermine the long-term outcomes they seek. The findings suggest boards and investors may need to monitor director ownership trajectories actively, not just set a threshold and move on. That so few companies have formal ownership policies, despite the evidence, points to a broader misalignment between governance norms, incentive design and long-term intent. Download the report [1] Listed companies represented by the MSCI ACWI, which captures large and mid-cap representation across 23 developed markets and 24 emerging markets countries. With 2,515 constituents, the index covers approximately 85% of the global investable equity opportunity set, as of March 31, 2026. --- # The hidden adaptation economy: A new view of corporate resilience and opportunity URL: https://www.msci-institute.com/themes/climate/the-hidden-adaptation-economy-a-new-view-of-corporate-resilience-and-opportunity/ Published: 2026-03-18 Climate adaptation is already an investable opportunity in public markets. The question is whether investors can see it. A [new report](https://www.msci-institute.com/download/the-hidden-adaptation-economy-a-new-view-of-corporate-resilience-and-opportunity/) from the MSCI Institute applies an improved AI-assisted methodology to listed companies – representing roughly USD 96 trillion in global market capitalization – to answer two questions that matter for investors: - Which companies are investing to build resilience in their own operations against physical climate threats? - Which companies are generating revenues from products that help customers, communities and governments adapt? The findings reveal far broader corporate engagement with adaptation and resilience than conventional disclosures suggest: - Most (89%) companies analyzed show evidence of at least one hazard-specific activity to strengthen operational resilience – spanning asset hardening, supply chain adjustments, workforce protections and emergency-response capabilities. - Roughly half are generating revenues from resilience-enabling products, cutting across every sector and every major physical hazard category. - The opportunity is present across the publicly listed universe today and can be accessed without relying solely on private markets or specialist vehicles. The report builds on the Institute’s 2024 collaboration with the Global Adaptation & Resilience Investment (GARI) working group, “[The Unavoidable Opportunity](https://unavoidableopportunity.com/climate-change-white-paper/),” and substantially extends it with an AI-based methodology that can be generalized to support thematic investing beyond climate adaptation. Our latest analysis uses a large language model to process roughly 900,000 tokens of information per company (compared with roughly 1,000 in our original analysis). Download the report --- # What the market thinks: How global insurers are responding to rising physical risk URL: https://www.msci-institute.com/themes/climate/what-the-market-thinks-how-global-insurers-are-responding-to-rising-physical-risk/ Published: 2026-02-26 Insurers say they’re prepared for rising physical risk but question whether the industry overall is ready, according to a report published by the MSCI Institute that examines the views of insurers and reinsurers on how physical risk is affecting underwriting and where they see opportunity. The report, based on a survey of over 50 property and casualty insurers globally and interviews with both insurers and reinsurers in every region, arrives as the cost of extreme weather events and other hazards continues to climb. Insured losses from natural catastrophes exceeded USD 100 billion in 2025 for the sixth consecutive year, while estimates by MSCI Sustainability & Climate Research suggest that damage to assets and lost-revenue opportunities from physical risk could rise fourfold, to USD 4.6 trillion, by 2050.[[1]](#_ftn1) “These dynamics explain why physical climate risk is gaining prominence, not only in underwriting but also in broader discussions around financial resilience, market stability and the long-term availability of insurance.” Rumi Mahmood, Pam Palena and David Carlin, report co-authors Among the findings: - Individual firms feel better prepared than the industry overall. Across all regions, insurers consistently assessed their own preparedness more favorably than the sector’s collective readiness. 62% of insurers in North America, 50% in APAC and 46% in Europe say that the industry is unprepared overall. - Layered intelligence is gaining traction. As hazards intensify, insurers report that historical catastrophe models are losing reliability. They are responding by augmenting vendor models with geospatial analytics, high-resolution terrain data and localized hazard insights. - Advisory services present the clearest opportunity. Most insurers surveyed (91%) see opportunities in physical risk management and resilience advisory services, while 58% cite parametric products as a key opportunity. - Near-term scenarios matter more for underwriting. Globally, 43% of insurers report that their underwriting strategy is meaningfully informed by analysis of physical-risk scenarios. Nearly all insurers surveyed say scenarios through 2030 would be more actionable for underwriting decisions than those that look out decades. - The maturity of physical-risk integration varies. A majority (68%) of insurers surveyed in Europe, for example, say they have integrated physical risk into overall risk management. That compares with 36% of those surveyed in APAC and a third in North America. - Physical risk is rising on the regulatory agenda. The impact of physical risk on rising insurance costs, claims and availability is spurring supervisors in many regions to focus on insurers’ governance and risk management. The report features a framework that shows how insurers progress from initial steps such as establishing governance structures or identifying key risk exposures to embedding physical risk across underwriting, pricing, capital allocation and resilience planning. Download the full report ##### References [[1]](#_ftnref1) “2025 marks sixth year insured natural catastrophe losses exceed USD 100 billion, finds Swiss Re Institute,” Swiss Re Group, Dec. 16, 2025. --- # Tracking Impact: Reflecting on 18 months of the SSRN Climate Finance eJournal URL: https://www.msci-institute.com/themes/climate/tracking-impact-reflecting-on-18-months-of-the-ssrn-climate-finance-ejournal/ Published: 2026-02-20 Tackling systemic challenges like the transition to a cleaner, more resilient global economy through capital markets demands high-impact research into how capital is allocated, risks are priced and incentives designed. In 2024, the MSCI Institute joined with academic publishing network SSRN to launch the [Climate Finance eJournal](https://papers.ssrn.com/sol3/JELJOUR_Results.cfm?form_name=journalbrowse&journal_id=4910885), which showcases biweekly the latest academic work on the application of financial economics to the energy transition, physical risk and resilience. Under the direction of co-editors [Peter Tufano](https://www.hbs.edu/faculty/Pages/profile.aspx?facId=6567), Baker Foundation Professor at Harvard Business School, and [Laura T. Starks](https://www.mccombs.utexas.edu/faculty-and-research/faculty-directory/profile/?username=lstarks), George Kozmetsky Centennial Distinguished University Chair and Professor of Finance at the University of Texas at Austin McCombs School of Business, the journal bridges academic theory and investment practice on topics spanning financial risk and return as well as the impacts of regulation and policy. Here are a few highlights from the eJournal’s first 18 months of publication. ### 600+ subscribers Readership of the eJournal reflects participants across capital markets who turn to the latest insights from academic research to navigate the field of climate finance. More than a third of the eJournal’s readers come from companies and financial institutions, with a roughly equal share of subscribers from academia. The number of subscribers has doubled, to more than 600, since the eJournal’s debut in September 2024 ### 650+ papers Academic researchers submitted more than 650 papers for inclusion in the eJournal last year, with papers featured in the journal downloaded more than 510,000 times. Since its debut, the eJournal has featured over 5,100 publications. ### A wealth of topics Papers highlighted in the journal have covered investing, insurance, modeling of risk, stress testing, disclosure, and the impacts of regulation and policy on energy-related investment and adaptation and resilience. ##### Top 100 keywords addressed in papers featured in the Climate Finance eJournal (published 2004 – 2026) Source: SSRN Climate Finance eJournal, keywords from academic paper profiles. The focus of research featured in the eJournal has evolved since its debut. The number of papers that focus on risk has doubled since debut, to 116 papers, suggesting researchers are increasingly turning their attention to quantifying the impacts of a warming world. In 2025, transition risk replaced greenwashing among the top 10 keywords, underscoring this shift toward measurable and financially-material exposures. Similarly, the number of papers addressing green finance has also more than doubled, with a focus on specific financial instruments and mechanisms. At the same time, the data suggests that researchers are sharpening their focus, from broad environmental concerns to specific, actionable financial risks and opportunities. The number of papers focused on sustainability fell by roughly 22%, suggesting both the maturation of that field and a targeting by academic researchers of such topics as sustainable finance, carbon accounting and climate risk – all of which continue to be represented. ##### The 5 most-downloaded papers from the eJournal in 2025 Paper Date Authors Keywords Downloads A Critique of the Apocalyptic Climate Narrative February 2025 Harry DeAngelo Judith Curry Global warming, climate change, fossil fuels, public energy policy, ESG 4,189 Firm-Level Nature Dependence March 2025 Alexandre Garel Arthur Romec Zacharias Sautner Alexander F. Wagner Nature risk, biodiversity risk, nature dependence, physical risk, shareholder engagement 2,198 The Natural Language of Finance January 2025 Gerard Hoberg Asaf Manela Natural language processing, textual analysis, financial economics, Generative AI, text as data 1,886 Corporate Nature Risk Perceptions April 2025 Snorre Gjerde Zacharias Sautner Alexander F. Wagner Alexis Wegerich Nature risk, biodiversity risk, shareholder engagement, nature capital 1,174 Systemic investing for social change: A starter kit August 2025 Hibah Khan Jason Jay Kirsten Andersen Systemic investing, sustainable finance, systems change, socio-technical systems, impact investing, climate finance, action learning 1,158 ### Subscribe to the Climate Finance eJournal Requires creating a free SSRN account [Find out more](https://hq.ssrn.com/jourInvite.cfm?link=Climate-Finance) As climate finance continues to evolve, the Climate Finance eJournal remains an open platform — for new ideas, critical debate, and evidence-based insights that can help markets navigate the transition ahead. --- # Physical risk and the 2026 World Cup: 5 highlights from our Transition Finance Tracker URL: https://www.msci-institute.com/themes/climate/physical-risk-and-the-2026-world-cup-5-highlights-from-our-latest-transition-finance-tracker/ Published: 2026-01-29 The 2026 World Cup promises six weeks of nonstop soccer and a live case study in physical risk across 16 locations in North America. The latest edition of our Institute’s Transition Finance Tracker examines physical hazards at each pitch, climate fund performance, tech giants’ Scope 2 emissions, and bond investors’ exposure to financing low-carbon energy relative to fossil fuels, alongside our quarterly snapshot of corporate targets, emissions disclosure and more. Here are five highlights from the report. Download the Transition Finance Tracker (PDF) #### How do tech giants’ energy-related emissions compare? Hyperscalers such as Amazon, Alphabet, Microsoft and Meta have been able to match emissions credits obtained via renewable-power purchase agreements against the overwhelming share of their reported emissions from purchased energy (Scope 2). That could change: A pending proposal by the Greenhouse Gas Protocol would tie Scope 2 reporting more tightly to the times and locations where the company’s energy consumption occurs, with significant implications for companies’ carbon footprints. #### How much low-carbon energy relative to fossil-fuel energy are bond investors financing? A hypothetical bond portfolio tracking an index designed to decarbonize in line with the goals of the Paris Agreement can finance an estimated USD 2.57 of low-carbon energy supply for every dollar of fossil-fuel energy supply, while one that tracks an emerging-market bond index finances USD 0.03 for every dollar. #### What percentage of companies have set climate targets? Nearly one-fifth (19%) of listed companies had a climate target validated by the Science Based Targets initiative (SBTi) as of Dec. 31, 2025, up from 14% a year earlier. Nearly a third (32%) of companies have set a net-zero emissions target, though not necessarily one validated by the SBTi, roughly unchanged from a year earlier. Download the Transition Finance Tracker (PDF) --- # Measuring portfolio alignment at the speed of the energy transition URL: https://www.msci-institute.com/themes/climate/measuring-portfolio-alignment-at-the-speed-of-the-energy-transition/ Published: 2025-12-30 The latest United Nations [report](https://www.unep.org/resources/emissions-gap-report-2025) released in the run-up to COP30 warns that the word is on track for warming between 2.3°C and 2.8°C above preindustrial levels, depending on how fully countries implement their carbon commitments. Yet some companies, and the investors who hold their stocks, continue to claim alignment with 1.5°C, the science-based threshold for preventing the costliest warming. This isn’t a contradiction, it’s a measurement challenge. The challenge lies in companies managing what remains of their own share of the world’s remaining 1.5°C carbon budget, which reflects how much carbon dioxide can still be emitted while keeping global warming within that threshold. The destination may be net-zero by 2050, but the journey – managing the emissions that remain before average global temperatures cross that threshold – makes all the difference. This is the main purpose of alignment metrics, as I detailed in an earlier [blog post](https://www.msci-institute.com/themes/climate/why-net-zero-and-paris-alignment-are-not-the-same-when-it-comes-to-corporate-climate-targets/). Alignment metrics recognize that companies have their own emissions trajectories, and that investors may care about the alignment of their investments with global climate goals, whether because they aim to generate an environmental outcome alongside financial return, reduce energy-transition risk or satisfy regulatory demands. Note, however, that there’s no one true way of determining a company’s carbon budget. Hence, varying methods of assessing corporate carbon budgets that we group as either static or dynamic approaches shape our understanding of whether companies and portfolios align with the goals of the Paris Agreement, which aims to limit warming to well-below 2°C while pursuing efforts to stay below 1.5°C. That methodological choice can materially change how investors report Paris alignment and whether they face reputational or regulatory risk from mischaracterizing it, as Jesica Andrews of the UN Environment Programme Finance Initiative, Giorgis Hadzilacos of M&G Investments and I detail in a [new research paper](https://www.sri-connect.com/market-buzz/view-buzz/?view=article&catid=118&id=39764) that I summarize below. ### Static-budget alignment metrics: Simple and practical A static-budget approach assesses alignment with temperature targets using fixed values based on the remaining global 1.5°C budget as of a certain date, such as 2020. A company, for example, must reduce absolute emissions by 5% per year to stay on track for 1.5°C, based on a global pathway over the period 2020 to 2050. The intuitiveness and stability of static-budget benchmarks results in their being widely used, including by the Science-Based Targets initiative (SBTi) to validate corporate decarbonization targets under some of its methodologies. Here’s the catch. Static carbon budgets, as the name suggests, show little change; they don’t update to reflect that countries have used more of the global carbon budget than originally expected (Exhibit 1). Global emissions have continued to rise since 2020, but the global carbon budget hasn’t. Since 2020, the deviation from 1.5°C has only become more distorted. In practice, this can lead to mislabeling. A company that starts to decarbonize in 2025 at 5% a year based on a 1.5°C-aligned budget set in 2020 is already missing the mark. The static approach also prevents the aggregation of companies’ emissions trajectories into one overall temperature alignment (such as a portfolio aligned with a 1.8°C trajectory, for example). At best, investors can point to percentages; for example, 20% of the portfolio aligns with an emissions trajectory of 1.5°C. Nor can investors balance between higher corporate emissions trajectories with lower ones in their portfolio. For portfolios, funds and indexes, this means missing information. Nonetheless, alignment metrics are not scientific tools. And static-budget metrics are practical when it comes to portfolio allocation or company target-setting. The performance benchmark doesn’t move. ### Dynamic-budget alignment metrics: Accurate and aggregable Unlike static-budget metrics, a dynamic-budget metric allocates a share of the global carbon budget to each company or portfolio from a certain baseline year (again, for example, 2020), but continues to monitor how both companies’ realized emissions and their likely trajectories would consume the company’s share of the global budget. Dynamic approaches share with a static approach one key insight: Even in a world warming beyond 2°C above preindustrial levels, an asset or portfolio can still align with 1.5°C, provided it stays within its allocated share of a 1.5°C-aligned carbon budget. That’s not greenwashing, but a recognition that some companies (or countries) can stay within their fair share of a global carbon budget even as others overshoot. Dynamic approaches differ, however, in that the rate at which a company needs to decarbonize to remain aligned with 1.5°C is likely to evolve. A company that burns through its share of the carbon budget year after year would need to reduce emissions more steeply in the future to remain 1.5°C-aligned. Earlier this year, the SBTi, whose standards have rested so far on the static-budget approach, [acknowledged](https://files.sciencebasedtargets.org/production/files/Deep-dive-Evolving-approaches-to-address-scope-1-emissions.pdf?dm=1762394608) the virtue of a dynamic company-specific budget logic for companies that may seek to course-correct and achieve their 1.5°C targets in a nonlinear way. A key advantage of the dynamic approach for investors is in aggregating emissions of multiple companies. A dynamic approach means that a portfolio may comprise companies with a mix of projected emissions, some that align with global climate goals and others that don’t. At the same time, if the portfolio overall – the cumulative projected emissions of all companies – stays under its overall allocated emission budget, it may yet be Paris-aligned. In other words, it reflects a pooling of both the fair share budget and the emissions of the companies. (The Glasgow Financial Alliance for Net-Zero [has recommended](https://assets.bbhub.io/company/sites/63/2022/09/Measuring-Portfolio-Alignment-Enhancement-Convergence-and-Adoption-November-2022.pdf) that investors aggregate portfolio emissions rather than require all companies to decarbonize at the same rate.) Note that this degree of accuracy can present a challenge. As companies’ temperature alignment evolves, so does the portfolio’s. This adds to the complexity that already comes with setting company-specific carbon budgets. ### The map is not the territory, yet we need it As this post implies, there is no such thing as a perfect alignment metric, only varied approaches that each hold advantages and disadvantages (Exhibit 3). Static-budget tools offer simplicity, while dynamic-budget tools provide accuracy. What matters is knowing what you’re measuring and why you’re measuring it. ##### Exhibit 3: Comparing corporate carbon budget approaches Static-budget approach Dynamic-budget approach Advantages - Stable 1.5°C benchmark, e.g., -5% annual emissions-reduction rate - Simple calculations - Reflects actual budget use - Portfolio-level flexibility Disadvantages - Doesn’t reflect global budget depletion - Not aggregable in a science-based way - Moving decarbonization target each year - Requires complex assumptions Methodologies - Science Based Targets initiative (SBTI) corporate target setting methodologies (cross-sector, Sector Decarbonization Approach) - Paris Agreement Capital Transition Assessment (PACTA) - Certain Implied Temperature Rise (ITR) metrics - Cumulative Benchmark Divergence (CBD) metrics - ITR metrics based on dynamic budget, including tracking past emissions Source: MSCI Institute The implications for investors are significant. The choice of method can determine whether funds, for example, meet the threshold for alignment with global climate goals under varying disclosure frameworks. It can also influence capital allocation, risk management and reputational exposure. Alignment metrics may differ in their methodologies, but agree on one thing. The global economy may be misaligned with the goals of the Paris Agreement, but certain companies and portfolios may follow a Paris-aligned path. --- # Microplastics: Macro risks and the cost of inaction URL: https://www.msci-institute.com/themes/nature-and-health/microplastics-macro-risks-and-the-cost-of-inaction/ Published: 2025-11-10 #### Why should investors care about microplastics? Effective packaging management is emerging as a key indicator of companies’ resilience and strategic foresight. Our Institute’s report, produced in collaboration with Planet Tracker, explores the financial and sustainability implications of microplastics exposure. Read the full report Here are some of the findings: - Concerns about the tiny particles created as plastics degrade have moved well beyond environmental debates. Regulators, investors and consumers increasingly see them as legal liabilities, financial exposures and reputational tests. - Companies without clear, organization-wide packaging policies risk being unprepared for tightening regulations and may appear less credible on sustainability to investors and customers. - Companies that lead with clear recycling goals and circular packaging strategies can reduce legal risks, build customer trust, and stay ahead of evolving climate and sustainability standards. --- # When old tech beats new tech: Sustainability reporting with XBRL URL: https://www.msci-institute.com/themes/risk-return/when-old-tech-beats-new-tech-sustainability-reporting-with-xbrl/ Published: 2025-09-30 A widely available technology may be key to solving an emerging problem for corporate sustainability disclosure. John Turner, is Chief Executive Officer of [XBRL International](https://www.xbrl.org/), which is responsible for enhancing the XBRL standard and supporting its adoption globally. Linda-Eling Lee is the Institute’s founding director. Download the report [PDF] XBRL (eXtensible Business Reporting Language) represents a global standard for consistent, comparable reporting of financial information, with the vast majority of companies in leading jurisdictions required to report in this digital format. Yet as countries across the world adopt standards for disclosure of sustainability- and climate-related information, the format for such information remains largely left to companies’ discretion. The result: Sustainability information remains consigned to PDF files, with no consistent format and no way to extract data efficiently, compounding work for companies that have multiple reporting obligations and delaying the availability of financially relevant information for financial markets. Adoption of XBRL for sustainability reporting would mark a critical evolution in global sustainability norms. Adoption would also allow investors to extract material financial information from sustainability disclosures 10 times faster, on average, and at a fraction of the cost of using artificial intelligence to pull unstructured data from PDF files, according to an analysis by the MSCI Institute that examined data from XBRL-based sustainability reporting in India. Though AI shows promise in its ability to read and extract unstructured data from documents, the speed and accuracy with which it can do so lags in comparison with digital formats such as XBRL, which allows users to process and share their data efficiently by describing it in a structured way. To date, however, India, which has mandated use of XBRL for sustainability reporting, and South Africa, which allows companies to file sustainability disclosures in XBRL voluntarily, remain the only two countries that have implemented the use of machine-readable data for sustainability reporting.[[1]](#_ftn1) Below we map the digital disclosure landscape for sustainability reporting and highlight how regulators and other stakeholders can encourage a digital-first approach. ##### Extraction times: PDF vs. XBRL Source: MSCI Institute ### A mainstay of financial reporting The use of structured data for financial reporting has become mainstream across global financial centers since the establishment of XBRL for financial reporting in 2000.[[2]](#_ftn2) The U.S., China, the European Union, the U.K., India, Japan, Singapore and South Korea have all instituted XBRL-based financial reporting systems.[[3]](#_ftn3) Taken together, companies representing 84% of global market value reported their data in XBRL, as of December 2024.[[4]](#_ftn4) Detailed tagging of financial data enables investors to synthesize corporate disclosures rapidly and consistently.[[5]](#_ftn5) Think of XBRL as akin to putting a barcode on each piece of financial data. In a PDF, the information “Revenue: 1,000,000” might appear as simple text and numbers. These are easy for human readers to understand, but there is nothing to flag their meaning for software. In an XBRL report, the 1,000,000 figure is given a machine-readable digital tag that links it with a precise, clearly defined concept (in this example revenue) and enables comparison with equivalent data. Importantly, the tag also carries crucial metadata, such as currency and time period, as well as the information’s relationship with other facts. Once companies tag data in XBRL it can flow automatically into a range of reports, including sustainability disclosures and annual filings, without the need to reenter the same information in different formats. Inline XBRL (or iXBRL) is the preferred XBRL format for financial reporting. It presents data in both machine- and human-readable form in a single document, enabling companies to maintain their unique branding, design and layout, and human readers to view the original report as created by the preparer, while also providing embedded XBRL tags that computers can recognize.[[6]](#_ftn6) Regulators require use of XBRL for a wide range of reports. The U.S. Securities and Exchange Commission, for example, requires the use of XBRL for company financial statements.[[7]](#_ftn7) Companies in the U.K. must file both their tax returns and annual reports in XBRL format.[[8]](#_ftn8) The XBRL-based European Single Electronic Format is the mandatory reporting format for annual financial reports from companies in EU-regulated markets.[[9]](#_ftn9) Listed companies in China, which in 2004 became the first country to require XBRL for securities filings by public companies, are required to file financial statements in the digital format.[[10]](#_ftn10) The use of structured data holds similar advantages for sustainability reporting. Not only does the use of data standards such as XBRL save companies time and money, but disclosure in digital formats enables sustainability-related financial information to reach the market in a fraction of the time it otherwise would, improving the ability of investors to assess what companies are worth, manage material risks and allocate capital accordingly. ### Sustainability data stuck in the past As the costs of a warming world rise, regulators are increasingly requiring companies to disclose comprehensive, timely and forward-looking information about sustainability- and climate-related financial risks, as well as climate-focused targets and transition plans. Yet the use of structured data in sustainability disclosures remains limited. Even as global baselines such as the disclosure standards developed by the International Sustainability Standards Board (ISSB) and frameworks such as the European Union’s Corporate Sustainability Reporting Directive (CSRD) take effect, information that regulators require from companies frequently remains largely confined to PDF files. A digital route exists, with ISSB and European ESRS taxonomies already available, but so far regulators have been slow to take advantage of it. India, which mandates the use of XBRL for reporting under its Business Responsibility and Sustainability Reporting (BRSR) framework, is the only country thus far to have required use of structured data for sustainability reporting. This mandate came into effect in 2024 for data from the 2023 financial year. In Europe, where many listed companies already use software to submit securities filings in XBRL, the European Commission has hitherto refrained from instituting XBRL-formatted disclosure under the CSRD while it considers its so-called Omnibus package of proposals to scale back and simplify the directive.[[11]](#_ftn11) More broadly, a review of requirements across jurisdictions shows a clear global mismatch between the rolling out of sustainable reporting regulations and sustainable digital reporting capabilities. Table: Comparing sustainability disclosure with digital reporting by jurisdiction (as of September 2025) Jurisdiction Sustainable reporting regulation? Sustainable digital reporting capabilities? DEVELOPED MARKETS Australia Yes Planned Canada Yes No European Union Yes Planned via EU CSRD/ESRS (expected 2028) France Yes Planned via EU CSRD/ESRS (expected 2028) Germany Yes Planned via EU CSRD/ESRS (expected 2028) Hong Kong Yes Planned Japan Yes Planned Luxembourg Yes Planned via EU CSRD/ESRS (expected 2028) Netherlands Yes Planned via EU CSRD/ESRS (expected 2028) New Zealand Yes No Singapore Yes Planned Switzerland Yes Planned United Kingdom Forthcoming (expected 2026) No SUBNATIONAL MARKETS California Yes Planned DEVELOPING MARKETS Brazil Forthcoming (expected 2026) No Chile Yes No China Forthcoming (expected 2026) No Hungary Yes Planned via EU CSRD/ESRS (expected 2028) India Yes Yes Indonesia Yes No Malaysia Yes No Mexico Yes No Philippines Forthcoming (expected 2026) No Poland Yes Planned via EU CSRD/ESRS (expected 2028) Qatar Forthcoming (expected 2026) No Saudi Arabia Yes No South Africa Yes Yes (voluntary) South Korea Forthcoming (expected 2026 or later) No Taiwan Yes No Thailand Forthcoming (expected 2027) No Turkey Yes Planned UAE Yes No Source: MSCI Institute ## Learnings from India India stands out for its initiative to make digital sustainability disclosure mainstream. While other countries, including Japan and Turkey, have launched public consultations on proposals for digital disclosure, India is the only country to have mandated XBRL-based sustainability reporting, with companies already reporting. That’s not to suggest the mandate, which covers India’s 1,000 largest listed companies, hasn’t met with challenges. They include technical hurdles, such as inconsistent labeling by filers, and the need for substantial issuer education. The willingness of the Securities and Exchange Board of India to adjust along the way by refining templates, offering clarifications, and building digital literacy, has helped to maintain momentum. A comparison of India’s XBRL-based sustainability disclosures with AI-driven PDF extractions highlights advantages of the digital format. Early findings from our Institute’s analysis of the Indian companies covered by the BRSR mandate suggest that the initial one-time setup for digital onboarding may take twice as long compared with AI-enhanced extraction of the same information from PDF files. Once in place, however, XBRL-based reporting enables entities to extract and process each new datapoint up to 10 times faster, speeding analysis and actionable insight, while ensuring greater accuracy. Properties PDF XBRL Data format Unstructured text, tables, images, scanned data XML-based, structured Parsing approach Extract data using natural-language processing and AI prompt engineering Extract data using tags with help of Python scripts Extraction timelines - One time AI prompting setup = 4 days - Subsequent datapoint onboarding – 5 days - One time set up = 10 days - Subsequent datapoint onboarding = 0.5 days Extraction Cost (1,000 companies pa) USD $500 for AI large language model (LLM) application program interface No cost Accuracy and reliability - Variable (depends on LLM, size, data disclosure, and AI prompt quality) - Probabilistic - Consistent FY attribution - Correct representation of blanks - High (extracts data as is based on tag) - Deterministic - Inconsistent entries due to human error e.g., financial year (FY) attribution of values (example, 2023 value attributed to 2024) - Incorrect representation of blanks due to human error e.g., data fields that should be N/A represented as ‘0’ Source: MSCI Institute These findings highlight the importance of investment by both governments and companies in systems, training and cross-sector collaboration. The dividends include a more transparent, responsive and investor-friendly sustainability reporting ecosystem. Note that here we compare the use of XBRL data with AI-driven extraction of unstructured data. But the two are not mutually exclusive. While XBRL-based reporting alone offers clear advantages in speed and accuracy, the most powerful approach will likely be a combination of the two: using digital tagging of data in XBRL to strengthen AI-driven analysis. Given their larger capital flows and regulatory infrastructures, developed markets might be expected to drive advancement of digital sustainability disclosures. Some are. Japan, for example, has recently consulted on digital sustainability disclosures.[[12]](#_ftn12) Still, emerging markets such as India and Turkey appear to be leading the charge.[[13]](#_ftn13) ### Practical steps The case for digital-first disclosure is gaining traction amid the global push for disclosure of sustainability-related financial information. Experience from countries such as India and South Africa highlight the value of a digital-first mindset, even while disclosure standards themselves are still in development. Experience further suggests that starting with structured data at the outset of sustainability reporting and expanding its scope over time has succeeded in encouraging its adoption. Incorporating feedback from companies and other stakeholders on a regular basis has helped to broaden support. Regulators, companies, securities exchanges and investors each have a role to play. While every country will find its own path based on local circumstances, early examples in emerging markets suggest that investing in digital infrastructure from the outset can help avoid costly retrofits later. ##### Regulators Regulators can help by creating incentives for structured reporting, together with technical guidance, education and feedback. ##### Companies Issuers will benefit from viewing digital disclosure as an investment in long-term efficiency and a tool for creating visibility in the market rather than a compliance obligation. Use of structured data for reporting holds appeal for shareholders and other stakeholders, while improving internal monitoring, trendspotting and benchmarking. ##### Exchanges Securities exchanges play a pivotal role as intermediaries. For example, major Indian exchanges are helping their listed companies with BRSR reporting by providing tools in Excel/XML format, which automatically convert disclosures into SEBI-compliant XBRL reports. ##### Investors Investors benefit from the use of structured data, which can feed directly into systems that inform investment decision-making and stewardship. Easier access to information with fewer language limitations stands to open up a wider opportunity landscape. Investors can catalyze progress by providing clear feedback on their data needs. ### Looking ahead Digital reporting of sustainability-related information via XBRL can accelerate the availability of such information for investors, policymakers and other stakeholders across capital markets, while streamlining reporting for companies. The use of XBRL for global financial reporting has demonstrated the value of digital tagging in enabling users to synthesize disclosures consistently and at a fraction of the speed of pulling unstructured data from PDF files. Its application in combination with AI holds the potential to advance sustainability reporting even further. Early adopters like India show that it is possible to build a new architecture for transparency. By learning from such efforts, stakeholders across the map can use structured data to create a foundation for effective reporting and, by doing so, maximize the value of sustainability disclosure for investment decision-making. The authors thank the following colleagues for their contributions to this post. XBRL International – Eloise Phipps and Revathy Ramanan MSCI – Abhay Tiwari, Satish Shinde, Rumi Mahmood, Lauren Yeung, Brian Browdie, Simone Ruiz-Vergote, Radhika Biwalkar and Daniel Cremin. References [[1]](#_ftnref1) “Full speed ahead as India leads on digital sustainability reporting,” XBRL International, Dec. 8, 2024. See also, “The Future of Sustainability Reporting in South Africa,” This Week in Sustainability, May 30, 2025. [[2]](#_ftnref2) XBRL is based on eXtensible Markup Language (XML) for tagging financial data. See, “Financial Reporting for Commercial and Industrial Companies, US GAAP,” XBRL Steering Committee, July 31, 2000. [[3]](#_ftnref3) Listed companies in South Korea with exceeding KRW 10 trillion must adopt XBRL for their financial disclosures starting this year. See “Korean FSS expands XBRL application and bolsters support for listed companies,” XBRL International, July 7, 2024. See notes that follow for references to mandates in other jurisdictions. [[4]](#_ftnref4) Analysis by XBRL International staff (internal research, unpublished), based on market capitalization data from the World Federation of Exchanges and implementation details from the XBRL International project directory. [[5]](#_ftnref5) See, for example, “Public comment on The Enhancement and Standardization of Climate-Related Disclosures for Investors (RIN 3235-AM87),” MSCI, May 31, 2022. [[6]](#_ftnref6) “XBRL Guide for Business,” HM Revenue & Customs, Gov.UK, April 8, 2020. [[7]](#_ftnref7) “Inline XBRL Filing of Tagged Data,” Release Nos. 33-10514; 34-83551, Securities and Exchange Commission, June 28, 2018. [[8]](#_ftnref8) “Taxonomies accepted by HMRC,” HM Revenue & Customs, Gov.UK, May 2, 2025. [[9]](#_ftnref9) ESEF Hub, XBRL International Consortium, available at [http://esef.xbrleurope.org](http://esef.xbrleurope.org/). [[10]](#_ftnref10) “Filing of Securities Investment Funds in XBRL,” China Securities Regulatory Commission, May 21, 2009. See also, “XBRL Around the World,” Journal of Accountancy, Oct. 1, 2008. [[11]](#_ftnref11) “Omnibus I,” European Commission, Feb. 26, 2025. [[12]](#_ftnref12) “Publication of the 2026 EDINET Taxonomy (draft) and the development plan for the 2027 EDINET Taxonomy,” Financial Services Agency, Aug. 8, 2025. [[13]](#_ftnref13) See “Jurisdictional Profile: Turkey,” IFRS Foundation, updated June 12, 2025 (Entities will be required to upload their sustainability-related disclosures in digital format starting this year.) --- # Harnessing AI to make climate adaptation investable URL: https://www.msci-institute.com/themes/climate/harnessing-ai-to-make-climate-adaptation-investable/ Published: 2025-03-19 Climate finance has so far largely focused on putting money into efforts to cut carbon emissions. The MSCI Institute set out to find the businesses needed to respond to the increasingly unavoidable impacts of a hotter world. [Download the article [PDF]](https://www.msci-institute.com/wp-content/uploads/2025/03/Duckbucks-Lee-Ashfaq.pdf) One potential path for sustainability-minded investors is to identify firms engaged in climate adaptation and resilience—an area of analytical work currently undertaken by the Institute. Linda-Eling Lee, the Institute’s founding director, and research director Umar Ashfaq discuss this research in the March 2025 issue of [the magazine Duckbucks](https://duckbucks.com/), which explores sustainable digital finance from multiple perspectives. The authors detail how work by the Institute, in collaboration with researchers from the investor-led [Global Adaptation and Resilience Investor](https://garigroup.com/) (GARI) working group — with support from the Bezos Earth Fund and ClimateWorks Foundation — is using artificial intelligence to identify companies that offer technologies or equipment to help governments, businesses and households prepare for and adapt to the realities of a changing climate. Key points from the article: - Adaptation and resilience as an investment thesis: While adaptation and resilience have long been central themes for policymakers, public finance, and nongovernmental organizations, they are now emerging as an investment opportunity. Investors looking to benefit from the increasing demand for climate resilience-related products and services may find new opportunities in this area. - A first-of-its-kind analysis: This research is among the first to test the viability of investing in publicly traded equities to enhance climate resilience and adaptation. It may also be the first time AI has been used to prototype an investable universe of adaptation and resilience companies among listed firms globally. - Identifying key companies: According to preliminary findings, about 800 publicly listed companies—roughly 11% of listed firms worldwide—contribute to climate adaptation and resilience. These companies span a range of industries, including weather analytics, water-efficient agriculture, supply-chain resilience, and the weatherization of power infrastructure and buildings. “We continue to hone our findings,” write Lee and Ashfaq, who note that the Institute, in collaboration with the Asia Investor Group on Climate Change, is further refining its research to identify companies that provide climate adaptation and resilience solutions in the Asia-Pacific region, which faces high exposure to climate-related physical risks. --- # Transition Finance Tracker Update URL: https://www.msci-institute.com/themes/climate/transition-finance-tracker-update/ Published: 2026-09-20 ### How have climate funds performed? - Listed climate-themed funds posted a median return of 10% year to date through Sept. 30, 2026. - Total assets reached USD 758 billion in the second quarter, up 16.3% since the start of the year. Most of the increase (88%) came from gains in the value of existing investments, while the remainder reflected new money flowing into the funds. Returns were strongest among funds focused on energy-transition technologies, as investors favored companies building clean-energy infrastructure and related technologies. - In addition to the listed universe, there were about 212 climate-themed private-capital funds globally, with combined capitalization of about USD 176 billion as of June 30, 2026. ### What percentage of companies have set climate targets? - Just over one-fifth (21%) of listed companies had a climate target validated by the Science Based Targets initiative (SBTi) as of Sept. 30, 2026, up from 19% a year earlier. SBTi-approved targets are widely regarded as a mark of credibility because the initiative assesses whether targets align with climate science. - Both the ambition and rigor of corporate targets vary widely. More than a third (37%) of companies have set a net-zero emissions target, though not necessarily one validated by the SBTi, roughly unchanged from a year earlier. Overall, 64% of listed companies have published some form of climate commitment, also little changed year over year. ### Are companies on track to meet global climate goals? - The emissions trajectories of the world’s listed companies imply warming of 3°C (5.4°F) above preindustrial levels this century.3 - Thirteen percent of listed companies align with projected warming of 1.5°C (2.7°F) or less, while an additional 24% align with warming between 1.5°C and 2°C (3.6°F). Sixty-three percent of companies are on an emissions trajectory that would breach the 2°C threshold, including 28% whose trajectories would exceed 3.2°C (5.8°F). - Our extrapolation relies on MSCI’s Implied Temperature Rise, a forward-looking climate-impact metric that institutional investors use to assess the alignment of portfolios with global climate goals. ### How much are companies investing in carbon credits? - Companies retired 35 MtCO2e of carbon credits in the third quarter, down 15% from the same period last year. Credit retirement removes credits from circulation once emissions reductions are claimed, indicating demand. - Emissions-reduction projects accounted for 94% of Q3 retirements. Removal credits made up the remainder, the vast majority of which were nature-based. Engineered removals represented less than 1% of total retirements but are now recurring, reflecting delivery of direct-air capture and biochar projects under contract. - Corpay, Inc. led the top 10 companies by carbon-credit retirements in the third quarter, retiring 2.3 MtCO2e of credits. Just over half (54%) came from REDD+ projects, with the remainder split evenly between renewable-energy (23%) and energy-efficiency (23%) projects. The other companies in the top 10, in descending order, were Organización Terpel S.A., Yamato Holdings Co., Ltd., Primax Colombia, Engie SA, Lenovo Group Limited, PricewaterhouseCoopers (PwC), Poste Italiane S.p.A., Traxys S.à r.l. and Salesforce, Inc. ### What do corporate purchasing commitments signal about future demand for carbon credits? - Investment in carbon-credit projects and offtake agreements reached a cumulative USD 47.5 billion by the third quarter of 2026, according to public announcements tracked by MSCI Carbon Markets. Investment — capital flowing to project developers and platforms — accounts for USD 40.3 billion of the total, while offtake agreements — contractual commitments to buy credits from specific projects — account for USD 7.2 billion. - Offtake agreements made up 15% of the cumulative total in the third quarter of 2026, down from a peak of about 24% in the second quarter of 2023. Since the end of 2022, cumulative offtake value has grown about five-fold, from USD 1.5 billion to USD 7.2 billion, while investment has grown similarly, from USD 8.4 billion to USD 40.3 billion. Buyers are contracting future supply ahead of anticipated market growth, particularly for engineered CO2 removals such as direct air capture and biochar. - Although the market remains small relative to the scale needed to support net-zero pathways, the trajectory is significant. Because offtake agreements are forward-looking contractual commitments, the cumulative value announced to date may provide an early indication of physical delivery volumes expected between now and delivery years such as 2030 and 2035. Download the latest report References - Significantly, the model does not consider emissions from the production of imported energy (Scope 2) or emissions from imported goods or services (Scope 3). - “Countries and regions,” International Energy Agency, available at iea.org. - See “Sovereign Bonds and Country Pathways,” Institutional Investors Group on Climate Change, April 2024. For a summary of literature on the topic of fair-share budgets, see “Fair share,” Climate Action Tracker, available atclimateactiontracker.org. - The month marked Western Europe’s hottest June on record. See, “Surface Air Temperature for June 2026,” Copernicus Climate Change Service, July 9, 2026. - See, e.g., “Europe’s heatwave curbs French nuclear plants,” Reuters, June 24, 2026. - See “Europe’s extreme heat is shutting down power plants,” MIT Technology Review, June 24, 2026 and “2025 Universal Registration Document, including the Annual Financial Report,” EDF. - Based on their aggregate emissions, sector-specific carbon budgets and climate targets as of June 30, 2026. --- # Transition Finance Tracker URL: https://www.msci-institute.com/transition-finance-tracker/ Published: 2026-03-20 Page title (overwrites main title): Transition Finance Tracker Title color: #0f477b Page subtitle: Charting progress toward a cleaner, more resilient global economy Title header background colour: bg-iceblue Header background: bg-iceblue Card Snippet: Our regular report tracks companies’ and investors’ progress toward a cleaner, more resilient global economy. Ribbon title: Contents: Ribbon background: bg-iceblue Select format: list Menu title: Section contents Card title (alternative): Transition Finance Tracker Menu row background: bg-iceblue --- # Global Investment Tracker URL: https://www.msci-institute.com/global-investment-tracker/ Published: 2026-09-14 Button text: Get email updates Button URL: /newsletter-sign-up Page subtitle: Tracking the evolution of public and private capital markets Page snippet: Global capital markets have never been easier to follow minute by minute, or harder to see whole. Our Global Investment Tracker draws on MSCI data and indexes to show how markets are evolving, where capital is concentrated and what is driving performance — for leaders whose decisions depend on and influence the flow and cost of capital. Title header background colour: bg-iceblue Card Snippet: Our regular analysis for leaders whose decisions depend on and influence the flow and cost of capital. Read More button text: View the reports Ribbon title: Contents: Ribbon background: bg-white Select format: list Menu title: Section contents Additional classes for button: bg-explore mt-5 text-white border-explore --- # What the market thinks URL: https://www.msci-institute.com/what-the-market-thinks/ Published: 2026-01-11 Button text: Get email updates Button URL: /newsletter-sign-up Page subtitle: How participants across capital markets are tackling systemic challenges Page snippet: Our series examining how participants across the capital-markets ecosystem are navigating systemic challenges. Combining market perspectives and data, the reports help practitioners, academic researchers and policymakers sharpen decision-making and benchmark progress. Title header background colour: bg-iceblue Ribbon title: Contents: Ribbon background: bg-white Select format: list Menu title: Section contents Additional classes for button: bg-explore mt-5 text-white border-explore --- # Mission URL: https://www.msci-institute.com/about-the-institute/mission/ Published: 2024-02-22 We advance knowledge that tackles systemic challenges through global capital markets. The forces reshaping markets – from shifting capital flows to rising physical climate risk and AI – are deeply interconnected. Yet all too often, the conversations around them are not. To gain clarity in a high-stakes world, investors, researchers and policymakers require a broader perspective that reaches across disciplines. The MSCI Institute provides that view by advancing original research, education and insight, connecting viewpoints that don’t usually meet, and bringing the drivers of long-term value into sharper focus. Powered by MSCI’s data, analytics and expertise, our work is designed to challenge assumptions, inform markets and spark action. --- # Our team URL: https://www.msci-institute.com/about-the-institute/our-people/ Published: 2023-07-05 ### Leadership We are an experienced team from diverse disciplines, committed to collaboration that drives progress in creating sustainable value. ### Institute research fellows The Institute is supported by analysts and experts from MSCI. Our current research fellows are: Academic partnerships: [Xinxin Wang](https://www.linkedin.com/in/xinxin-grace-wang-cfa-frm-b2838014/) AI & Climate: [Turbold Baatarchuluu](https://www.linkedin.com/in/turbold-baatarchuluu-194b73a2/) AI & Governance: [Harlan Tufford](https://www.linkedin.com/in/htufford/) APAC Climate Risk and Scholars Program: [Ser Jin Tan](https://www.linkedin.com/in/serjintan/) APAC Climate Risk: [Siyao He](https://www.linkedin.com/in/siyao-he-84a17017a/) Banking Sector: [Guilherme de Melo Silva](https://www.linkedin.com/in/guilhermedemelosilva/) Climate Engagement: [Madeleine Helms](https://www.linkedin.com/in/madeleine-helms-26880b100/) Climate Resilience: [Katie Towey](https://www.linkedin.com/in/kltowey/) Climate Risk and Scenarios: [James T. Edwards](https://www.linkedin.com/in/james-edwards-634960185/) and [Russ Bowdrey](https://www.linkedin.com/in/russ-bowdrey/) Insurance Sector: [Pam Palena](https://www.linkedin.com/in/pam-palena-92aa2a89/) Private Markets: [Patrick Warren](https://www.linkedin.com/in/patrick-warren-55a5b555/) Scholars Program (carbon markets): [Felix Hart](https://www.linkedin.com/in/felix-hart-15350383/) and [Laura Buenaventura](https://www.linkedin.com/in/laura-buenaventura-castillo/) Sustainability Integration: [Liz Houston](https://www.linkedin.com/in/elizabeth-houston-b428b569/) Sustainability Standards: [Kenji Watanabe](https://www.msci.com/www/contributor/kenji-watanabe/02492936806) Transition Finance: [Tanguy Séné](https://www.msci.com/www/contributor/tanguy-sene/03522104010) and [Seokhee Moon](https://www.linkedin.com/in/seokheemoon/) --- # Our collaborations URL: https://www.msci-institute.com/about-the-institute/research-and-data-collaborations/ Published: 2024-11-28 We generate interdisciplinary research that brings academic rigor to practical questions facing investors, policymakers and NGOs. By collaborating across disciplines, domains and data sources, we produce insights into tackling systemic challenges through capital markets. If you are interested in learning more about how the Institute equips organizations with data, insights and resources, please [contact us.](mailto:msci_inquiries_institute@msci.com) We are pleased to have worked with the following organizations: - Access to Medicine Foundation (AMF) - Asia Investor Group on Climate Change (AIGCC) - Bezos Earth Fund - Climate Arc - ClimateWorks Foundation - The Coalition to Grow Carbon Markets - FAIRR Initiative - The Global Adaptation and Resilience Investment Group (GARI) - The Glasgow Financial Alliance for Net Zero (GFANZ) - The Green Finance Institute (GFI) - Institutional Investors Group on Climate Change (IIGCC) - Organisation for Economic Co-operation and Development (OECD) - Program on International Financial Systems (PIFS) - Social Science Research Network (SSRN) - Taskforce on Nature related Financial Disclosures (TNFD) - The United Nations Environment Programme Finance Initiative (UNEP FI) - The United Nations Framework Convention on Climate Change (UNFCCC) - The United Nations-convened Net-Zero Asset Owner Alliance (NZAOA) - The United Nations Sustainable Stock Exchanges Initiative (SSE) - World Wildlife Foundation (WWF) --- # How to work with us URL: https://www.msci-institute.com/about-the-institute/how-to-work-with-us/ Published: 2025-01-13 ### Do you have insights to share? Co-host or attend [one of our forums](https://www.msci-institute.com/event/), which convene key leaders from across the ecosystem of capital markets to share knowledge and examine critical questions in sustainable finance. Or invite us to join your consequential conversation. Submit a paper to our [Research Portal](https://www.msci-institute.com/sustainability-research-portal/), which showcases the latest academic research with practical investment relevance to investors, policymakers and the broader capital markets ecosystem. ### Are you looking for data or education on sustainable finance? Use our climate and sustainability data and metrics, whether through our [Climate Data Knowledge Program](https://www.msci-institute.com/education/climate-data-knowledge-program/) or research-based collaborations. Invite us to brief your policymaking body, regulatory agency or standards-setting organization on the latest research-based insights into sustainability and climate finance. ### Would you like to conduct new research? Leverage our expertise to investigate an emerging challenge in the field of sustainable finance. Recent examples include [the investability of climate adaptation and resilience](https://www.msci-institute.com/insights/in-depth/how-to-make-climate-adaptation-and-resilience-investable/)and [the financial risks of antimicrobial resistance](https://www.msci-institute.com/insights/in-depth/an-investors-guide-to-antimicrobial-resistance/). We connect financial institutions with academic researchers and Institute fellows to examine critical questions in the field that can deepen understanding of drivers of sustainable value in capital markets. --- # FAQ URL: https://www.msci-institute.com/about-the-institute/faq/ Published: 2023-07-05 ### What is the MSCI Institute? The Institute is MSCI’s research, education and convening organization. We connect viewpoints that rarely meet: the academics, think tanks, policymakers and NGOs working to understand the forces reshaping markets, and the investors and institutions moving capital through them. We publish original research and convene these audiences around the questions markets are facing. ### Is the MSCI Institute independent from MSCI? How are they related? The Institute is part of MSCI, which provides the data and expertise behind our research. Our research is editorially independent, noncommercial and published openly, allowing us to collaborate with a wider range of organizations across the capital-markets ecosystem. Our research centers on the role of capital markets in tackling systemic challenges, with analysis based on data that spans practice, academic research and policymaking. MSCI’s research focuses on the application of MSCI’s data and analytical tools to challenges in global investing across asset classes. Our analysis often draws on third-party sources alongside MSCI’s own. ### Who is the Institute’s work for? Whether you’re an investor, a policymaker or an NGO, our research is designed to inform decisions that shape the flow of capital. By working across disciplines, we surface connections that narrower perspectives can miss – opening a broader, clearer view. ### How can I keep up with the Institute’s work? Our [monthly newsletter](https://www.msci-institute.com/newsletter-sign-up) is the best way to stay updated on our latest research, data and events. For sharp stories that spotlight the insights that matter, [follow us on LinkedIn](https://www.linkedin.com/showcase/msci-institute/). ### Can my organization cite or republish the Institute’s research? Yes, our research is public, and you’re welcome to cite it with attribution. Every chart on our website features a ‘download and cite’ button that generates the correct source line. To republish the chart in your own work, please[contact us](https://www.msci-institute.com/get-in-touch/). ### How can I access MSCI data for research or education? We make selected MSCI data and metrics available to academics, think tanks and other non-commercial researchers, through our research programs and collaborations. [Contact us](https://www.msci-institute.com/get-in-touch/) to tell us what you’re working on. ### How can I collaborate with the Institute? We invite proposals from prospective collaborators that bridge domains and data sources. You can learn more about our collaborations [here](https://www.msci-institute.com/about-the-institute/research-and-data-collaborations/), or [contact us](https://www.msci-institute.com/get-in-touch/) with a proposal. ### How do I request an interview or media comment? If you are a journalist seeking information or comment for one of your stories, please contact [MSCI Communications](mailto:pr@msci.com). ---