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Morningstar launches new sustainability rating for sustainable investors



Morningstar has introduced a new sustainable investing initiative, the Morningstar Sustainability Rating for funds. This rating will help investors evaluate mutual and ETF funds that invest in companies incorporating ESG factors in their strategy. Over 20,000 global funds will be rated on Morningstar Direct, a research platform for asset managers and wealth management professionals, and on Morningstar Office, the practice management system for independent financial advisors. ESG metrics—separate Environmental, Social, and Governance scores—will be included along with the ratings.

Steven Smit, CEO of Morningstar Benelux, will be responsible for leading the company’s initiative to bring the new ratings and metrics to investors.

“Given the widespread and growing interest in sustainable investing around the world, investors need better tools to help them determine whether the funds they own or are considering adding to their portfolios reflect best sustainability practices,” said Smit. “Our Sustainability Rating and related metrics will provide investors with an ESG lens they can use to evaluate funds and, eventually, other managed products. Creating more insight into sustainability investing is a passion of mine and of many others at Morningstar. This initiative will help us better serve investors who place particular importance on incorporating ESG factors into their investment decisions.”

Morningstar’s initial analysis of the ratings reveals that funds with explicit sustainable or responsible mandates are generally practicing what they preach. Nearly two out of three such funds received the highest ratings, more than double the percentage of funds with Sustainability Ratings overall.

In the future, Morningstar plans to expand the number and types of investments that receive Sustainability Ratings as well as add additional sustainable investing analytics and research.

For more information about Morningstar’s Sustainability Rating, visit the press kit and website.



Global | Sustainable Investing

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