MSCI statement on Caterpillar: Key factor in the downgrade was ‘on-going controversy associated with use of the company’s equipment in the occupied Palestinian territories’

MSCI Logo

MSCI is a leading provider of socially responsible investing indices that funds use to monitor, and determine, their investments. The firm made headlines last week when it dropped Caterpillar from several of its indices. Today, MSCI issued a statement to explain the move, here it is in full:

Caterpillar Inc. (ticker: CAT) was removed from several MSCI ESG indices due to an Environmental, Social and Governance (ESG) rating downgrade. The company was removed from MSCI World ESG Index, MSCI USA ESG Index and MSCI USA IMI ESG Index on March 1, 2012, following the February Index Review.

MSCI ESG Indices are managed using transparent, rules-based methodologies that are publicly available on www.msci.com. To determine the composition of the indices, MSCI utilizes ESG ratings and other information compiled by MSCI ESG Research. The overall ESG rating reflects analysis of multiple environmental, social and governance factors.

Caterpillar’s ESG rating was downgraded in February 2012. The key factors determining the rating include a January 2012 labor dispute and subsequent plant closing in Canada, an on-going controversy associated with use of the company’s equipment in the occupied Palestinian territories, management of environmental issues, and employee safety. As a result of the downgrade, the company’s ESG rating fell below the minimum level required to remain in the MSCI ESG Indices. In accordance with index rules, Caterpillar was removed from the MSCI ESG Indices at the ensuing Index Review.

About Adam Horowitz

Adam Horowitz is Co-Editor of Mondoweiss.net.
Posted in Activism, BDS, Israel/Palestine, Occupation

{ 5 comments... read them below or add one }

  1. thanks adam, let’s hope others will follow suit

  2. ritzl says:

    Does anyone know if MSCI was lobbied by Palestinian activists or did they assess and fold in the use of CAT equipment in the Occupation on their own, base upon news reports? How did they come to this level of awareness? Maybe nobody knows, but there seems to be an instructive “Story within a story” here.

    In any case, this is a major event. It would seem to be a major, loud, crackling expansion of what it means to be socially responsible within a very conservative money/investment perspective.

    Are there other “socially responsible” indices? Is this the most significant one? Will there be (heh) a counter effort to diminish the Occupation as a criterion in this (or any) future evaluation along these lines?

    What confrontation lines were drawn with this MSCI decision from an activism perspective?

    Thanks AH.

    • Does anyone know if MSCI was lobbied by Palestinian activists or did they assess and fold in the use of CAT equipment in the Occupation on their own, base upon news reports?

      ritsel, just assume everyone pertinent is lobbied by palestinian activists, and they probably did assess and fold in the use of CAT equipment in the Occupation on their own:

      MSCI ESG Indices are managed using transparent, rules-based methodologies that are publicly available on http://www.msci.com. To determine the composition of the indices, MSCI utilizes ESG ratings and other information compiled by MSCI ESG Research. The overall ESG rating reflects analysis of multiple environmental, social and governance factors.

      based on news reports? likely they dug deeper.

      • ritzl says:

        Good. Sounds like internal probing/evaluation rather than external influence. That may well make any reversal of this decision more difficult.

        That was the “story within a story” I was trying to get at and should have stated outright.

        Thanks.

  3. Divest says:

    Hello Adam,

    Thanks for posting this detail. Very helpful.

    Apparently the liars at StandWithUs are claiming that this had nothing to do with the Middle East, and had only to do with the labor dispute in Canada:

    link to standwithus.com

    Of course, if they know about the Canada dispute they know about this press release, so clearly they are being selective with their facts.

    It would be great to get a link to the original press release from which you excerpted the above, in order to counter their lies. Is this press release available online?

    Thanks!
    Divest from War campaign
    http://www.divestfromwar.org