Morningstar rates 20,000 funds for sustainability

By Staff | March 2, 2016 | Last updated on March 2, 2016
1 min read

To help investors evaluate funds based on environmental, social, and governance (ESG) factors, Morningstar has introduced a sustainability rating for about 20,000 funds.

The new rating will enable investors around the world to evaluate mutual funds and ETFs based on how well the companies held in their funds are managing their ESG risks and opportunities.

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Ratings are now available in the company’s subscription platforms, but stats will soon be published on Morningstar’s website, the company says.

The sustainability rating is meant to help investors gauge how well the companies held in a fund are managing the ESG issues most relevant to their industries and compare funds with one another and to benchmarks. Morningstar calculates the rating based on the underlying fund holdings and company-level ESG research and ratings from Sustainalytics, an independent provider of ESG and corporate governance ratings and research.

Morningstar Direct and Morningstar Office users can screen for the sustainability rating for funds along with other ESG metrics, such as separate environmental, social, and governance scores. 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.

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The staff of have been covering news for financial advisors since 1998.