Category: ESG fundamentals · Reviewed by Simon Temme, Account Executive · Last reviewed 2026-06-10
MSCI ESG Ratings are a proprietary assessment scheme produced by MSCI Inc. that rates companies on a seven-point AAA-to-CCC scale according to their exposure to, and management of, financially material environmental, social and governance risks and opportunities. They are among the most widely-licensed ESG rating products by UK insurers, pension schemes and asset managers.
Category: ESG fundamentals Also known as: MSCI ESG, MSCI sustainability rating, MSCI ESG score Established / Date: MSCI ESG Research launched 2010 following acquisition of RiskMetrics; current methodology developed thereafter Related concepts: ESG ratings, Sustainalytics ESG ratings, S&P Global ESG
MSCI ESG Ratings are based on a single-materiality framework that focuses on the financial materiality of ESG issues to the rated company. The methodology identifies Key Issues for each sub-industry within MSCI’s Global Industry Classification Standard (GICS) framework. Each Key Issue is scored on a 0–10 scale, weighted by sub-industry, and combined into an industry-adjusted overall score, which is then mapped to one of seven letter grades: AAA, AA, A, BBB, BB, B and CCC. Companies rated AAA or AA are categorised as “Leaders”, BBB to A as “Average” and B and CCC as “Laggards”.
The methodology, formally titled “MSCI ESG Ratings Methodology”, is updated periodically and is publicly available on MSCI’s corporate website [1]. Key data inputs include corporate disclosures (annual reports, sustainability reports, regulatory filings), more than 1,700 media and NGO sources, and government and academic data. As of MSCI’s published universe figures, the rating covers more than 8,500 companies and 680,000 securities globally.
The single-materiality approach distinguishes MSCI from Sustainalytics’ ESG Risk Ratings, which take a similar but distinctly framed approach to risk exposure and management gap.
MSCI Inc. is incorporated in Delaware and its rating business has historically operated outside the perimeter of UK financial services regulation. That position is changing. HM Treasury’s November 2023 consultation response on ESG ratings providers confirmed the intention to bring such activity within Regulated Activities Order scope, with FCA supervision, through legislation expected to take effect in 2026 [2]. MSCI also falls within the scope of EU Regulation 2024/3005 on the transparency and integrity of ESG rating activities, applicable from 2 July 2026.
In the UK, regulated firms using MSCI ESG Ratings remain subject to FCA expectations under the ESG Sourcebook and Policy Statement PS23/16 that they understand the methodology behind third-party data and apply independent judgement [3]. The IOSCO Good Practices of November 2021 also inform supervisory expectations.
UK insurance companies and Lloyd’s managing agents are major institutional licensees of MSCI ESG Ratings. The ratings are used principally for two purposes. First, investment portfolio screening within insurers’ general account assets, where MSCI ratings inform exclusion lists, tilting strategies and engagement priorities. Second, underwriting due diligence, particularly for large corporate D&O liability and financial institutions cover, where MSCI ratings of the proposed insured (or its parent group) form part of the risk file.
Aviva, Legal & General, Phoenix Group and other major UK insurers reference MSCI ESG data in their published sustainability reports. Lloyd’s Market Bulletins do not mandate use of any particular rating provider but expect managing agents to apply consistent, documented ESG criteria.
For listed UK companies, the MSCI ESG Rating can have a material impact on insurance availability and pricing. Insurers underwriting D&O cover for FTSE 100 and FTSE 250 companies routinely reference MSCI ratings as part of the underwriting submission. A downgrade — particularly from “Leader” to “Average” or “Average” to “Laggard” — typically triggers additional underwriting questions and may inform premium pricing.
UK businesses can engage directly with MSCI through its corporate access programme to verify input data, correct factual errors and provide context. MSCI’s published methodology and the Corporate ESG Engagement Process allow companies to receive a draft of their ESG Rating Report prior to publication.
A FTSE 100 UK financial services group is rated MSCI ESG AA. During the underwriting cycle for its £100 million D&O programme, the lead Lloyd’s underwriter receives the broker’s submission together with the MSCI rating report extract. The Key Issues identified — including data governance and human capital management — are addressed in the proposal form. The strong rating supports the broker’s case for a flat renewal despite a small uplift in market base pricing. A subsequent methodology change reweighting board diversity could in future trigger a renewal review.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
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