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Schwab Introduces Third-Party ESG Ratings for Individual Stocks

Schwab Introduces Third-Party ESG Ratings for Individual Stocks

Charles Schwab announced that it has begun providing clients with access to MSCI’s Environmental, Social, and Governance (ESG) Ratings for individual securities. The ratings are now available to clients through the Research tool on Schwab.com or by viewing the stock’s Schwab Equity Ratings® Report.

“A growing number of people want to align their investments with their beliefs and values,” said Malik Sievers, Head of ESG Strategy, Schwab Asset Management™. “Having an easy way to review a company’s ESG rating during the research process is something today’s investors find useful as they seek to integrate ESG in their portfolios and evaluate a company’s resilience to ESG risks.”

An MSCI ESG Rating is designed to measure a company’s resilience to long-term industry material ESG risks. MSCI rates over 8,500 companies (14,000 issuers including subsidiaries). The ratings model uses a rules-based methodology to identify industry leaders and laggards according to their exposure to financially relevant ESG risks and how well they manage those risks relative to peers. Companies are rated on a AAA to CCC scale relative to the standards and performance of their industry peers.

“An ESG rating measures a company’s exposure to long-term environmental, social, and governance risks, but they are often not highlighted in traditional financial reviews. Investors can use ESG ratings to supplement financial analyses and gain a broader view of a company’s long-term potential,” said Sievers.

According to Schwab’s Q1 2022 Retail Client Sentiment Report, nearly a quarter of clients said they make investing decisions today in accordance with their values or areas of interest and another one in five say they would like to invest more closely based on personal values or interests.

See related article: eHi Car Services earned the highest MSCI ESG ratings in Mobility Industry

This new feature is the latest example of Schwab’s overall commitment to help clients personalize their investment portfolios and invest based on their specific objectives. Schwab recently introduced a number of products and services designed to help clients personalize how they invest, whether it’s specific to ESG investments or giving clients the ability to build their portfolio based on their personal preferences:

  • In November 2021, Schwab Asset Management launched the Schwab Ariel ESG ETF, followed shortly by making two positive impact Wasmer Schroeder Strategies available to Schwab clients.
  • In March, Schwab announced the launch of thematic stock lists, a new resource designed for self-directed investors who want to invest in stocks aligned with their personal interests and values.
  • Earlier this month, Schwab introduced Schwab Personalized Indexing™, a new direct indexing solution that offers powerful tax management and portfolio management capabilities to people who want to personalize their investments to fit their circumstances and perspectives.
  • Schwab also provides access to hundreds of third-party ESG products, in addition to education and screening tools, including product lists to help clients explore the ESG universe.

Schwab also created an Environmental, Social, and Governance (ESG) Investing hub to centralize information on ESG strategies, ESG options at Schwab, and timely insights.

Source: Charles Schwab


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