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Sustainability Matters

How Do You Grade a Company's Sustainability?

Morningstar's Jon Hale explores how Sustainalytics does the firm-level research that underpins our sustainability rating for funds.

This week, I’m answering a question from a Sustainability Matters reader: “How can I learn more about the actual measures that Sustainalytics uses for its company assessments? ESG, yes, but what specifically does it measure and how?” 

Company-level environmental, social, and governance research forms the basis of the Morningstar Sustainability Rating for funds. We get that research from Sustainalytics, a top global provider of ESG information and analysis. We roll up Sustainalytics’ ESG scores of individual companies on an asset-weighted basis to get a portfolio Sustainability Score; we then assign a rating based on how well a fund’s score stacks up with its Morningstar Category peers.