Skip to Content
Sustainability Matters

A Closer Look at Our New Tools to Assess Carbon Risk in a Portfolio

We explore how Morningstar's new metrics go beyond carbon footprinting.

Mentioned: ,

The new Morningstar Portfolio Carbon Risk Score gives investors the means to evaluate the carbon risk embedded in a fund's portfolio. Sometimes referred to as transition risk, carbon risk addresses how vulnerable a company is financially to the transition away from a fossil-fuel-based economy to a lower-carbon economy. Such a transition is required to keep the global temperature rise this century well below 2 degrees Celsius above preindustrial levels. It's a transition that is already under way, as companies respond to pressure to lower their carbon emissions from regulators, customers, other stakeholders, and investors. As for the latter, more and more investors globally are interested in understanding carbon risk and its implications for the risk and return of their portfolios.

Let's take a closer look at how the Carbon Risk Score works, how to use it, and what the initial scores indicate about funds.

Jon Hale does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.