Morningstar to launch ESG scores for funds

August, 2015 Print



Independent investment research provider Morningstar is to give environmental, social and governance (ESG) scores for global mutual and exchange-traded funds from later this year.

It will base the scores on ESG company ratings from Sustainalytics, which provides ESG ratings and research. The Swiss private banking group Julius Baer will be the first client of Morningstar to license the ESG scores for its fund research team. Jon Hale, Morningstar director of manager research, North America, commented: “Providing fund scores on environmental, social, and governance factors is a natural extension of our work. We want to bring even greater transparency and accountability to the investment industry with ESG research, data, and tools, while helping investors to put their money to work in ways that are meaningful to them.”

According to Morningstar, investors are placing increasing importance on ESG policies and practices. It cited research by Morgan Stanley which found that 71% of investors are interested in sustainable investing and that in the past year, there has been a 29% increase in the number of financial institutions signing the United Nations Principles for Responsible Initiative (UNPRI). Sustainalytics chief executive officer, Michael Jantzi, commented: “ESG considerations, once viewed from the sidelines, are increasingly front and centre for fund investors. We applaud Morningstar for its innovation and look forward to working together to create a new standard for fund benchmarking.”


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