Relying on ESG ratings has been called into question by commentators in light of the news that MSCI will be downgrading many ESG funds. Last week the Financial Times revealed that, according to a client note from BlackRock's iShares arm, the number of European ETFs with a AAA ESG rating from MSCI is set to fall from 1,120 to just 54, while the number with no rating will surge from 24 to 462. MSCI's methodology changes, which are due to be implemented in Q2 and apply to all global mutual funds and ETFs, include removing the adjusted factor from ESG fund rating calculations and lowering the coverage requirement for fixed income funds from 65% to 50%. It will also exclude swap-based funds.