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MSCI ESG Issue Brief: Options for Reducing Fossil Fuel Exposure

The debate around climate change shifted dramatically in tone this past year. No longer is the focus primarily on lobbying policy makers around the world to regulate carbon emissions. Rather, there appears to be a social movement in the making, and its targets are the investment committees of the world's major pension funds and endowments.

With over 75 asset owners as clients, we at MSCI ESG Research have seen an escalation in investor interest in measuring portfolio exposure and in formulating an appropriate policy. In 2014, we expect to see investors explore four major approaches to address this issue that range on a continuum from fully excluding carbon reserve holders to adding positive exposure to clean technology.

Authors: LEE Linda-Eling, NAGY Zoltan, SHAKDWIPEE Manish