New Morningstar Sustainability Assessments for Companies, Funds, and Asset Managers Now Available Across Morningstar Products and Services

CHICAGO, May 12, 2021 /PRNewswire/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, this week launched two new environmental, social, and governance (ESG) assessments—the Morningstar® ESG Commitment Level for strategies and asset managers, and the Morningstar® ESG Risk Rating Assessment for companies—across its flagship platforms, including investment research platform Morningstar DirectSM and investor website Morningstar.com®.

These new assessments add to Morningstar's toolkit of independent ratings designed to simplify investing and support long-term decision-making. They join Morningstar's existing line up of sustainable investing analytics, including the Morningstar® Sustainability Rating™ for funds, Morningstar® Portfolio Carbon Risk Score™ and Morningstar® Low Carbon Designation™ for funds, Morningstar Sustainable AttributesSM, Morningstar Portfolio Product Involvement metrics, and proxy data.

"Investors of all types want help curating sustainable investment choices and understanding material ESG risks," said Michael Jantzi, chief executive officer for Sustainalytics. "By continuing to integrate ESG fund- and security-level data and insights across Morningstar platforms, we are illuminating risks and opportunities that come from multifaceted ESG issues and varied approaches to help investors make informed decisions."

Morningstar acquired Sustainalytics, a globally recognized leader in ESG research, ratings and data, in July 2020, and the roll out of these assessments demonstrates the combination's powerful ability to make sustainable investing analytics across asset classes readily available to investors of all types. Morningstar reported assets into global sustainable funds neared $2 trillion in the first quarter of 2021, demonstrating steady growth over the past three years.

Morningstar ESG Commitment Level for Strategies and Asset Managers

Morningstar ESG Commitment Level assessments for nearly 900 funds and more than 70 asset managers are available today for Morningstar Direct, Morningstar OfficeSM, and Premium members of Morningstar.com. They will be available in Morningstar® Advisor Workstation™ and Morningstar® Analyst Research Center™ later this month.

The ESG Commitment Level evaluation reflects Morningstar manager research analysts' qualitative analysis of the extent to which strategies and asset managers are incorporating ESG factors into their investment processes. Following a four-point scale of Low, Basic, Advanced, and Leader, the evaluation distills the ESG resources, policies, and expertise at an asset management firm or within managed investment strategy into a simple assessment.

Morningstar's manager research team today published its second set of ESG Commitment Level assignments for 251 funds, representing 140 strategies, and 31 asset managers, adding to the original set of assignments first published in November 2020. Takeaways from this second set of assessments include:

  • Out of the 140 strategies evaluated, only one was awarded an ESG Commitment Level of Leader, and 19 were awarded an ESG Commitment Level of Advanced. Fifty-nine received an ESG Commitment Level of Basic, while 61 earned an ESG Commitment Level of Low. This distribution reflects our sample bias toward non-ESG-focused strategies.
  • Out of the 31 asset managers assessed, only one was awarded our top accolade of Leader, Australia's Affirmative Investment Management. Five firms, including Amundi, BNP Paribas Asset Management, HSBC Global Asset Management, Jupiter, and LGIM, earned the Advanced level.
  • The largest group of asset managers (13) received an ESG Commitment Level of Basic, including Allianz Global Investors, Invesco, JPMorgan, State Street, and T. Rowe Price. Twelve earned an ESG Commitment Level of Low, including Franklin Templeton, Janus Henderson, Mellon Investments, and VanEck.

In the report, Morningstar analysts also outline what they consider best practices for asset managers. As the industry continues to evolve, they highlight the strongest approaches for each pillar: Philosophy & Process, Resources, and Active Ownership.

Analysts will continue to extend the ESG Commitment Level to more strategies and asset managers under analyst coverage and receive the Morningstar Analyst Rating™ for funds in the regular course of their work.

Learn more about the ESG Commitment Level here, and find the methodology here.

Morningstar ESG Risk Rating Assessment for Companies

Morningstar also introduced today the Morningstar ESG Risk Rating Assessment, enabling investors to easily compare and contextualize the overall ESG risk for companies across industries. It is now available for 13,000 companies in Morningstar Direct, Morningstar Office, Morningstar Advisor Workstation, and for Premium members of Morningstar.com. It will also roll out to Morningstar's equity data feeds later this month.

The Morningstar ESG Risk Rating Assessment for companies is a visual expression of Sustainalytics' ESG Risk Ratings, which measure a company's exposure to industry-specific material ESG risks and how well a company manages those risks. This distinct approach combines the concepts of management and exposure to arrive at an absolute assessment of ESG risk. 

This new company-level assessment uses the same easily recognizable and comparable globe iconography used in the Morningstar Sustainability Rating for funds, which Morningstar and Sustainalytics launched in 2016 as the market's first fund-level sustainability rating. It uses a scale of one to five globes: negligible risk (five globes, 0 – 9.99); low risk (four globes, 10 – 19.99); medium risk (three globes, 20 – 29.99); high risk (two globes, 30 – 39.99); and severe risk (one globe, 40 or above).

The ESG Risk Rating Assessment for companies builds on the recent integration of Sustainalytics' ESG risk research as a formal input into the Morningstar Equity Research Methodology. Find more information on the Morningstar ESG Risk Rating Assessment for companies here and frequently asked questions here.

About Morningstar,Inc. 
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $244 billion in assets under advisement and management as of March 31, 2021. The Company has operations in 29 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

©2021 Morningstar, Inc. All Rights Reserved.

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Media Contact
Stephanie Lerdall, newsroom@morningstar.com

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