# Why invest in Climate Action with SGX MSCI Climate Action Index Futures?

- Link: https://www.thailand-business-news.com/asean/singapore/154928-why-invest-in-climate-action-with-sgx-msci-climate-action-index-futures
- Published: 2024-08-03T14:34:15+07:00
- Author: Daniel Lorenzzo

ESG investing has gained popularity among institutional investors, with environmental
concerns being the most prominent under the ESG criteria. Yet, despite significant
attention and investment in recent decades, global greenhouse gas emissions are 
still on the rise.

US$9.2 trillion of annual spending on physical assets for energy and land-use systems
by 2050 is required to reach Net Zero according to McKinsey 2022 estimates. This
has led investors to rethink their investment strategy around Climate and to explore
new solutions targeting transition finance which is inclusive and broad based.

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## Key Features of MSCI Climate Action Index Futures

 * Suited for investors focused on Transition Finance & facilitates climate engagement
   with companies
 * Sector Diversified
 * Identifies leading companies in each sector
 * Supports key principles for Net-Zero-Aligned benchmarks NZAOA
 * “Bottom-up” approach company assessment rather than index optimisation
 * Include Energy companies navigating the transition
 * Company assessment includes Forward Looking metrics
 * Potential increased weights of companies with Science Based approved Targets 
   or ‘Credible Track Record’ ([https://sciencebasedtargets.org/](https://sciencebasedtargets.org/))

The **SGX MSCI Climate Action Indexes** contract provides investors with a tool 
to access a free float-adjusted, market capitalization-weighted index published 
by MSCI of companies that have been assessed to lead their sector peers in terms
of four climate indicators – **carbon intensity, emission reduction targets, green
revenues and strength of climate risk management.** The index futures contracts 
are available for **trading ~22 hours a day across Asia, Europe and US hours.**

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**MSCI Climate Action methodology** has been developed to fill a gap within existing
indexation methodologies for investors who aim to **drive climate transition as 
well as decarbonization in the real economy** through re-allocation of capital and
engagement with corporates. The resulting indexes are **sector diversified** and
adopt a **bottom-up approach** accompanied by **forward-looking metrics** while 
assessing companies. SGX Group has taken the lead and launched the first global 
suite of futures tracking **MSCI Climate Action Indexes Net USD** (World, Europe,
USA, Japan and Asia Ex-Japan) to provide investors with efficient tools to access
and manage their decarbonization objectives.

Read more : [SGX MSCI Climate Action Indexes – Singapore Exchange (SGX)](https://www.sgx.com/campaign/msci-cai-futures)