ESG Risk Ratings

Purpose

• ESG Risk Ratings are designed to assist investors in identifying and understanding ESG risks at various levels (security, fund, or portfolio).
• Provides a high-level signal of ESG risk faced by a company.

Building Blocks of ESG Risk Ratings

1. Material ESG Issues
2. Corporate Governance
3. Stakeholder Governance
4. Systemic ESG Issues
5. Idiosyncratic Issues

Assessment Approach

• Comprehensive and Multi-dimensional
  • Considers key factors such as:
    • Business model
    • Financial strength
    • Geographical exposure
    • Historical incidents
• Risk Management Evaluation
  • Analyzes company policies, procedures, and ongoing events.

Integration and Utility

• Provides a holistic view of ESG risk.
• Allows for comparisons at industry and sub-industry levels.
• Data can be integrated into investment workflows:
  • From security selection to portfolio construction and reporting.

Morningstar Sustainalytics

• Offers flexible delivery methods to match firm needs.
• Ensures a consistent approach in evaluating financially material ESG issues.
• Trusted by leading investors for reliable ESG research and ratings.

Additional Resources

• Visit Morningstar Sustainalytics online to download their brochure and learn more.