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Commentary

Finding Morningstar's New Carbon Score for Funds

We created a new component in the Morningstar Fund Report beta to help individual investors easily identify portfolios with low carbon exposure.

Morningstar recently launched portfolio carbon metrics for 30,000 funds globally. These metrics help investors evaluate a portfolio's exposure to carbon risk.

We collaborated with Sustainalytics, a leading ESG research provider, to create an innovative carbon risk rating that evaluates how companies manage carbon risk. Morningstar leveraged Sustainalytics' carbon risk rating to generate asset-weighted portfolio carbon metrics that evaluate how well companies in a portfolio prepare to transition to a low-carbon economy by limiting carbon emissions and minimizing switching costs to new technologies. Core to Morningstar's new offering is the Morningstar Low Carbon Designation, a simple way to allow investors to easily identify funds that have low carbon transition risks and low fossil fuel exposure.

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