BLK BlackRock Inc

By Maitane Sardon

Index and rating provider MSCI Inc. said it had cut Russia's sustainability rating to the lowest level, based on the increasing environmental, social and governance risks faced by the country after its attack on Ukraine.

MSCI's ESG research arm, which measures countries' and companies' performance on financially relevant sustainability issues, said Russia's rating now stands at triple C.

The downgrade, which is effective immediately, came days after MSCI said it was cutting the country from triple B to B. MSCI's ratings range from triple A, the highest, to triple C, the lowest.

The further downgrade was prompted by higher "economic environment" and "financial governance" risks due to Russia's financial isolation amid the growing web of Western restrictions, the company said. Some of the factors behind the decision included the freeze of its central bank's assets, sanctions placed on oligarchs by several countries, and its banks' barring from the Swift payments system.

Several money managers have recently said they are no longer adding Russian government bonds and shares to their funds in light of the events. BlackRock Inc., the world's largest asset manager, said last week that it had stopped trading Russian securities across its actively managed and index funds. In a statement on its website on Monday, Vanguard said it had suspended purchases of Russian securities from its actively managed funds and was working to exit positions across its index funds.

MSCI's move follows its prior decision to remove Russia from its MSCI Emerging Markets index.

Write to Maitane Sardon at maitane.sardon@wsj.com

(END) Dow Jones Newswires

March 09, 2022 08:37 ET (13:37 GMT)

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