Large-Growth Funds and Sustainability: A Closer Look
We examine high-rated and low-rated funds through our sustainability lens.
The Morningstar Sustainability Rating for Funds is a category-relative measure of how well companies in a fund’s portfolio are handling the various environmental, social, and governance, or ESG, issues they face within their businesses. It can be used to help incorporate sustainability in the selection and monitoring of client or personal portfolios. The company-level data on ESG performance comes from Sustainalytics, an ESG research firm that evaluates companies based on the most material and impactful ESG issues in their industries. The company-level data are rolled up on an asset-weighted basis to calculate a portfolio score. Ratings are then assigned relative to a fund’s Morningstar Category.
When rolling out the rating in March, we did a preliminary study suggesting that intentionally sustainable funds mostly have high Sustainability Ratings, and surveyed Morningstar Medalists (those with a Morningstar Analyst Rating of Gold, Silver, or Bronze) that also earn the highest Sustainability Rating. We recently took a look at the U.S. Large-Growth Morningstar Category in sustainability terms, surveying the Medalists in the category with the highest Sustainability Rating (5 globes) and those with the lowest rating (1 globe).
Jon Hale does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.