(3BL Media/Justmeans) – Investors are placing increasing importance on environmental, social and governance (ESG) policies and practices. Earlier this year, a Morgan Stanley Institute for Sustainable Investing study showed that 71 percent of individual investors are keen on sustainable investing. The number of financial institutions that have signed the UN-supported Principles for Responsible Investment (PRI) has gone up by 29 percent in one year.
Recognizing this positive trend, Morningstar, Inc. has announced plans to launch the first ESG scores for global mutual funds and exchange-traded funds (ETFs) later this year. Morningstar has joined hands with Sustainalytics, a leading provider of ESG and corporate governance ratings and research, to base the scores on its ESG company ratings. The first Morningstar client to license the ESG scores for its fund research team is the Swiss private banking group Julius Baer.
This initiative is one more definitive indication that ESG considerations are part of the investment mainstream, and that it sets a new standard for benchmarking mutual funds and ETFs against ESG factors globally. According to Sustainalytics, this is the first ever initiative that measures funds globally on ESG factors, enabling investors to compare global funds across categories, relative to benchmarks, and over time using ESG factors.
Michael Jantzi, CEO of Sustainalytics, said that ESG considerations, which were once viewed from the sidelines, are increasingly becoming the front and center for fund investors. Jon Hale, Morningstar’s director of manager research, North America, said that the company has a long tradition of innovative research centered on good stewardship, lower costs, and more transparency for investors. Providing fund scores on ESG factors is a natural extension of its efforts.
Sustainalytics has provided ESG research and analysis for more than two decades. The company focuses on relevant ESG issues within industries and across markets, assigning each company under coverage approximately 70 indicator-level scores related to environmental impact, social practices, and governance policies and procedures.
Morningstar will use its comprehensive portfolio holdings data to create asset-weighted composite ESG fund scores based on company-level Sustainalytics ESG ratings.
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This post was originally published on Justmeans.com
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