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Morningstar Sustainalytics Expands ESG Risk Ratings Coverage to Fixed Income, Private Equity, and China

Morningstar Sustainalytics, a leading global provider of ESG research, ratings, and data, announced an expansion of its ESG Risk Ratings coverage to enable material ESG risk assessment across more asset classes and regions. With a nearly 30 percent increase in comprehensive issuer ratings, the firm’s coverage universe includes more than 16,300 analyst-based ESG Risk Ratings, spanning public equity, fixed-income, and privately held companies. Additionally, the expanded research universe now covers more Chinese companies listed in Shanghai and Shenzhen, which are predominant regional contributors in emerging market indices.

Recent market signals show increasing sustainable fund inflows in fixed income, stronger ESG risk management in emerging markets, and more sustainability opportunities within the global US $6.3 trillion total AUM private equity market. Yet, the availability of consistent ESG data has been challenging for investors looking to assess considerations for asset classes other than public equity. Now, investors can leverage Morningstar Sustainalytics’ expanded ESG Risk Ratings to inform security selection across an even wider array of issuers and gain a more holistic perspective when assessing diversified portfolios.

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“Sustainalytics’ recent coverage expansion provides investors more human insights supporting the consistent data and research needed to effectively measure financially material ESG risk,” said Laura Lutton, director of ESG research and risk products at Morningstar Sustainalytics. “The ESG Risk Ratings harness the power of our global research analysts’ knowledge and capabilities when it comes to the nuances of ESG assessment.”

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This year’s asset owner survey conducted by Morningstar Indexes and Sustainalytics found that 85 percent of respondents believe ESG factors are material to investment policy, demonstrating the growing influence that sustainable investment considerations are having on the global market ecosystem. By providing access to this enhanced analyst-based research coverage, Sustainalytics enables broader investment decision-making, new ESG fund and ETF development, and index construction across multiple asset classes. Sustainalytics’ ESG Risk Ratings also underpin the Morningstar Sustainability Ratings™ for funds, which currently support more than 95,000 managed investment products globally.

The firm’s award-winning ESG Risk Ratings measure a company’s exposure to industry-specific material ESG risks and how well a company is managing those risks. This multi-dimensional approach provides an absolute measurement in which ratings are comparable for companies in different industries and sectors. Sustainalytics’ ESG Risk Ratings continue to address the interconnected importance of supporting investor objectives, monitoring and reporting on portfolio performance, and aligning with region-specific ESG regulations like the EU’s Sustainable Finance Disclosure Regulation (SFDR).

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[To share your insights with us, please write to sghosh@martechseries.com]

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