The importance of environmental, social and governance criteria (ESG) to investors is increasing rapidly around the world. Unsurprisingly, fund companies have raced to respond to this interest, both by launching rafts of new ESG offerings and trying to spiff up existing funds with an ESG gloss. This leaves investors with a lot of work to do to separate the wheat from the chaff. Quantitative measures such as the Morningstar Sustainability rating are part of the solution, but to provide investors with even more analysis and context, we’ve developed a new measure, the Morningstar ESG Commitment Level for funds.
What is the Morningstar ESG Commitment Level?
This ESG Commitment Level expresses our analysts’ assessments of asset managers’ and individual strategies’ commitment to incorporating ESG into their investment organisation and processes. The scale runs from best to worst as follows: Leader, Advanced, Basic and Low. We are launching the new measure on a group of just over 100 funds and 40 asset managers covered by our teams in North America, EMEA, Hong Kong and Australia. Going forward, we will produce the Morningstar ESG Commitment Level for strategies and asset managers for which we produce analyst ratings (funds will be assigned an ESG Commitment Level whether or not they profess to be an ESG offering).
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