MSCI is urging the asset management industry to integrate environmental, social and governance (ESG) considerations throughout their investment processes.

The index provider has published its Principles of Sustainable Investing framework that is designed to give investors actionable steps to mitigate the risks and identify the opportunities from incorporating ESG considerations.

The framework highlights three core pillars for full ESG integration; investment strategy, portfolio management and investment research.

For investment strategy, the firm said asset owners should integrate ESG considerations into their processes while also establishing, monitoring and revising their overall investment strategy.

The portfolio management pillar calls on managers to incorporate ESG considerations throughout their entire process including security selection, risk management, performance attribution, portfolio construction and client reporting.

For the investment research segment, MSCI wants research analysts to incorporate ESG considerations into their fundamental company analysis.

ESG’s implications for investors

Henry Fernandez (pictured), chairman and CEO of MSCI, commented: "The need for a set of guidelines that will help all investment institutions around the world manage emerging opportunities and inherent risks associated with ESG considerations in pursuit of long-term, sustainable investment performance has never been greater."

Remy Briand, head of ESG at MSCI, added: "Sustainable investing is a critically important part of the long-term investment process and our framework is designed to help investors understand approaches to effectively integrate ESG criteria as a core component of building a resilient portfolio."