[Exclusive] A-Share Companies Included in MSCI Index Face Removal If They Fail ESG Review

[Exclusive] A-Share Companies Included in MSCI Index Face Removal If They Fail ESG Review

Zhou Ailin

Date: Tue, 05/15/2018 - 22:04 / source:Yicai
[Exclusive] A-Share Companies Included in MSCI Index Face Removal If They Fail ESG Review
[Exclusive] A-Share Companies Included in MSCI Index Face Removal If They Fail ESG Review

(Yicai Global) May 15 -- All China A-share companies that will be included in MSCI Inc.’s flagship emerging markets index and other benchmarks at the start of next month will accept environmental, social, and governance, ESG, evaluations and non-compliant companies will be removed, Yicai Global learned.

MSCI will pay attention to companies’ ESG compliance after their inclusion in its index and other benchmarks, Yicai Global learned.

MSCI China A Index will add 11 A-share companies and remove nine, with a total of 234 A-share companies included, effective from June 1, the New York-based index compiler said in a statement today.

The proportion of the inclusion is 2.5 percent and the market value after the adjustment accounts for 1.26 percent and 0.39 percent of the MSCI China Index and MSCI Emerging Markets Index, respectively. MSCI will raise the proportion to 5 percent in August.

MSCI will continue to collect public information of A-share listed companies and conduct ESG evaluations, Kai Chen, executive director and head of China business at the firm, previously told Yicai Global.

As early as September 2016, MSCI ESG Research lowered China Huishan Dairy Holdings Co’s rating from BB to B due to concerns about its aggressive accounting practices and corporate governance risks. MSCI’s ESG unit, acting on early warnings, lowers a company’s rating or removes it from its ESG Indexes, depending on firms’ compliance with it.

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Keywords: MSCI, A-SHARE, ESG, emerging markets Index