Index Methodology

MSCI Global ex
Controversial Weapons
Indexes Methodology
August 2024

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

MSCI Global ex Controversial Weapons Indexes Methodology | August 2024

Contents
1.

Introduction .......................................................................................................... 32.

Constructing the Indexes ...................................................................................... 4

3.

4.

2.1

Underlying Universe ................................................................................................. 4

2.2

Eligibility Criteria....................................................................................................... 4

2.3

Treatment of Unrated Companies .......................................................................... 4

Maintaining the Indexes ........................................................................................ 5
3.1

Index Reviews ........................................................................................................... 5

3.2

Ongoing Event‐Related Maintenance ..................................................................... 5

MSCI ESG Research .............................................................................................. 7
4.1

MSCI ESG Business Involvement Screening Research ......................................... 7

Appendix I: Controversial Weapons Criteria ................................................................. 8
Appendix II: Methodology Set ...................................................................................... 9
Appendix III: Changes to this Document..................................................................... 10© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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MSCI Global ex Controversial Weapons Indexes Methodology | August 2024

1.

Introduction
The MSCI Global ex Controversial Weapons Indexes (the ‘Indexes’) have been developed for use byinvestors, including pension funds, and universal owners who wish to avoid investments in cluster
bombs, landmines, depleted uranium, chemical and biological weapons, blinding laser weapons,
non-detectable fragments and incendiary weapons (white phosphorus).
These indexes are free float - adjusted market capitalization weighted.1

1 The Indexes are governed by a set of methodology and policy documents (“Methodology Set”), including the present index

methodology document. Please refer to Appendix II for more details© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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MSCI Global ex Controversial Weapons Indexes Methodology | August 20242.

Constructing the Indexes
The Indexes use company ratings and research provided by MSCI ESG Research2 for the Index
construction.

2.1

Underlying Universe
The selection universe for the Indexes is defined by the constituents of the MSCI Global Investable
Market Indexes (GIMI).

2.2

Eligibility Criteria
Companies that meet the business involvement criteria are excluded from the Indexes. Please refer
to Appendix I for details on these criteria.

2.3•

Cluster Bombs•

Landmines•

Depleted Uranium Weapons•Chemical and Biological Weapons•

Blinding Laser Weapons•

Non-Detectable Fragments•

Incendiary Weapons (White Phosphorus)

Treatment of Unrated Companies
Companies not assessed by MSCI ESG Research on MSCI ESG Business Involvement Screening
Research data are not eligible for inclusion in the Indexes if they are classified in the following Global
Industry Classification Standard (GICS®)3 Industry Groups: Capital Goods and Materials.

2 See section 4 for further information regarding ESG and climate data used in the Indexes that MSCI Limited and MSCI DeutschlandGmbH source from MSCI ESG Research LLC, a separate subsidiary of MSCI Inc. MSCI ESG Research is solely responsible for thecreation, determination and management of such data as a provider to MSCI Limited and MSCI Deutschland GmbH. MSCI Limited
and MSCI Deutschland GmbH are the benchmark administrators for the MSCI indexes.
3 GICS is the global industry classification standard jointly developed by MSCI and S&P Global Market Intelligence.

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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MSCI Global ex Controversial Weapons Indexes Methodology | August 2024

3.

Maintaining the Indexes

3.1

Index Reviews
The Indexes are reviewed on a quarterly basis to coincide with the Index Reviews of the MSCI Global
Investable Market Indexes. The changes are implemented as of the close of the last business day of
February, May, August and November. At index reviews, all companies in the underlying universe arereviewed and eligible companies are added to the Indexes. Existing constituents may be deleted
from the Indexes if they become involved in controversial weapons and are screened according to
the criteria described in Section 3. Any constituent that is deleted from the Parent index as a resultof an index review is also deleted from the Indexes.
The pro forma Indexes are generally announced nine business days before the effective date.
In general, MSCI uses MSCI ESG Research data3 (MSCI ESG Business Involvement Screening
Research) as of the end of the month preceding the Index Reviews for the rebalancing of the MSCI
Global ex Controversial Weapons Indexes. For some securities, such data may not be published by
MSCI ESG Research by the end of the month preceding the Index Review. For such securities, MSCI
will use ESG data published after the end of month, when available, for the rebalancing of theIndexes.

3.2

Ongoing Event‐Related Maintenance
The following section briefly describes the treatment of common corporate events within the
Indexes.
No new securities will be added (except where noted below) to the Index between Index Reviews.
Parent Index deletions will be reflected simultaneously.
There are no deletions from the Index between Index Reviews on account of a security becoming
involved in controversial weapons.

EVENT TYPE

EVENT DETAILSNew additions to the Parent Index

New securities added to the Parent Index (such as
IPOs, other early inclusions and migrations from adifferent size-segment) will not be added to the Index
at the time of event implementation. Such securities
will be considered for addition in the Index at thesubsequent Index Review.

Spin-Offs

All securities created as a result of the spin-off of an
existing Index constituent will not be added to theIndex at the time of event implementation.
Reevaluation for addition in the Index will occur at thesubsequent Index Review.

3 See section 4 for details of data sourced from MSCI ESG Research used in the Indexes.

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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MSCI Global ex Controversial Weapons Indexes Methodology | August 2024

Merger/Acquisition

If an existing Index constituent is acquired by a nonIndex constituent, the existing constituent will bedeleted from the Index and the acquiring nonconstituent will not be added to the Index.

Changes in Security Characteristics

A security will continue to be an Index constituent if
there are changes in characteristics (country, sector,
size segment, etc.). Reevaluation for continued
inclusion in the Index will occur at the subsequentIndex Review.

Further detail and illustration regarding specific treatment of corporate events relevant to this Index
can be found in the MSCI Corporate Events Methodology book
The MSCI Corporate Events methodology book is available at:https://www.msci.com/index/methodology/latest/CE© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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MSCI Global ex Controversial Weapons Indexes Methodology | August 2024

4.

MSCI ESG Research
The Indexes are products of MSCI Inc. that utilize information such as company ratings andresearch produced and provided by MSCI ESG Research LLC (MSCI ESG Research), a subsidiary of
MSCI Inc. In particular, the Index uses the following MSCI ESG Research product: MSCI ESG
Business Involvement Screening Research. MSCI Indexes are administered by MSCI Limited and
MSCI Deutschland GmbH.

4.1

MSCI ESG Business Involvement Screening Research
MSCI ESG Business Involvement Screening Research (BISR) aims to enable institutional investors tomanage environmental, social and governance (ESG) standards and restrictions reliably andefficiently.
For more details on MSCI ESG Business Involvement Screening Research, please refer tohttps://www.msci.com/legal/disclosures/esg-disclosures.

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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MSCI Global ex Controversial Weapons Indexes Methodology | August 2024

Appendix I: Controversial Weapons Criteria
The Indexes exclude companies involved in:•

Cluster Bombs

MSCI ESG Research’s cluster bomb research identifies public companies that are involved in the
production of cluster bombs and munitions, or the essential components of these products.
•

Landmines

MSCI ESG Research’s landmines research identifies public companies that are involved in the
production of anti‐personnel landmines, anti‐vehicle landmines, or the essential components ofthese products.
•

Depleted Uranium Weapons

MSCI ESG Research’s depleted uranium weapons research identifies public companies involved in
the production of depleted uranium weapons and armor.
•

Chemical and Biological Weapons

MSCI ESG Research’s chemical and biological weapons research identifies public companies thatare involved in the production of chemical and biological weapons, or the essential components ofthese products.
•

Blinding Laser Weapons

MSCI ESG Research’s blinding laser weapons research identifies public companies that are involvedin the production of weapons utilizing laser technology to cause permanent blindness.
•

Non-Detectable Fragments

MSCI ESG Research’s non-detectable fragments research identifies public companies that are
involved in the production of weapons that use non-detectable fragments to inflict injury.
•

Incendiary Weapons (White Phosphorus)

MSCI ESG Research’s incendiary weapons research identifies companies that are involved in the
production of weapons using white phosphorus.
Involvement criteria:•

Producers of the weapons•

Producers of key components of the weapons (only applies to cluster bombs, landmines,
depleted uranium weapons as well as chemical and biological weapons)•

Ownership of 20% or more of a weapons or components producer

The minimum limit is raised to 50% for financial companies having an ownership in a company that
manufactures controversial weapons or key components of controversial weapons•

Owned 50% or more by a company involved in weapons or components production
Revenue limits:
Any identifiable revenues, i.e., zero tolerance.

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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MSCI Global ex Controversial Weapons Indexes Methodology | August 2024

Appendix II: Methodology Set
The Indexes are governed by a set of methodology and policy documents (“Methodology Set”),
including the present index methodology document as mentioned below:•

Description of methodology set –https://www.msci.com/index/methodology/latest/ReadMe•

MSCI Corporate Events Methodology –https://www.msci.com/index/methodology/latest/CE•

MSCI Fundamental Data Methodology –https://www.msci.com/index/methodology/latest/FundData•

MSCI Index Calculation Methodology –https://www.msci.com/index/methodology/latest/IndexCalc•

MSCI Index Glossary of Terms –https://www.msci.com/index/methodology/latest/IndexGlossary•

MSCI Index Policies – https://www.msci.com/index/methodology/latest/IndexPolicy•

MSCI Global Industry Classification Standard (GICS) Methodology –https://www.msci.com/index/methodology/latest/GICS•

MSCI Global Investable Market Indexes Methodology –https://www.msci.com/index/methodology/latest/GIMI•

ESG Factors In Methodology*

The Methodology Set for the Indexes can also be accessed from MSCI’s webpage
https://www.msci.com/index-methodology in the section ‘Search Methodology by Index Name orIndex Code’.
* ‘ESG Factors in Methodology’ contains the list of environmental, social, and governance factors
considered, and how they are applied in the methodology (e.g., selection, weighting or exclusion). It
can be accessed in the Methodology Set as described above.

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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MSCI Global ex Controversial Weapons Indexes Methodology | August 2024

Appendix III: Changes to this Document
The following sections have been modified as of November 2014:
Section 4.2: Ongoing Event-Related MaintenanceClarification of treatment of corporate events
The following sections have been modified as of May 2017:
Section 4: Maintaining the MSCI Global ex Controversial Weapons Indexes
Clarification on use of ESG data for securities whose data would be available after the end of themonth preceding Index Review.
The following sections have been modified as of September 2017:
Section 4.1: Index Reviews•

Updated to include the announcement date of the pro forma indexes.

Section 4.2: Ongoing event-related maintenance•

Updated link to the MSCI Corporate Events Methodology

The following sections have been modified as of May 2018:
Section 1: Introduction
Section 2: Screening Criteria
Appendix 1: Controversial Weapons Criteria•

Updated to reflect the addition of new screens for blinding lasers, non-detectable fragments andincendiary weapons (while phosphorus)

The following sections have been modified as of November 2019:
Section 2: MSCI ESG Research•

New section

Section 4.1: Underlying Universe•

Updated to refer to the MSCI Global Investable Market Indexes

Section 4.3: Index Construction•

Removed the section

Section 5.2: Ongoing Event-Related Maintenance•Clarified the treatment of different types of corporate events

The following sections have been modified as of June 2023:
Section 4: Maintaining the MSCI Global ex Controversial Weapons Indexes•

Methodology book was updated to reflect the transition of the MSCI Global Investable Market
Indexes (GIMI) to Quarterly Comprehensive Index Reviews.

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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MSCI Global ex Controversial Weapons Indexes Methodology | August 2024•

All references to “Semi-Annual Index Reviews” and “Quarterly Index Reviews” of the MSCI GIMI
were replaced with “Index Reviews

Section 5: MSCI ESG Research.
•

Moved that section after the Section 4 (Maintaining the MSCI Global ex Controversial Weapons
Indexes).

•

Updated the descriptions of MSCI ESG Research products.

The following sections have been modified as of August 2024
Section 2.3: Treatment of Unrated Companies•

New section detailing the treatment of companies when business involvement screening
research is not available from MSCI ESG Research

Section 4: ESG Research•

Updated with the latest descriptions and links

Appendix II: Methodology Set•

Added details on the Methodology Set for the Indexes© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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MSCI Global ex Controversial Weapons Indexes Methodology | August 2024

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