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Sustainability Matters

Enhancement to Sustainability Rating Emphasizes Material ESG Risk

The globe rating now reflects company ESG risks both within and across industry groups.

Since we launched the Morningstar Sustainability Rating in March 2016, sustainable investing has continued to grow. One study reported that assets under management across all sustainable investing strategies (institutional and retail) grew 38% to nearly $9 trillion from the start of 2016 to just the start of 2018, nearly two years ago. Sustainable funds in the United States have been attracting record inflows. They set calendar-year records in 2017 and 2018, and through September 2019, they have attracted nearly 3 times more than in all of 2018.

More asset managers have added the consideration of environmental, social, and corporate governance criteria to their investment process. More than 2,300 have signed the Principles for Responsible Investment. In addition, nearly 300 funds available to U.S. investors have recently noted the addition of ESG criteria to their process in their prospectus. When we launched the Sustainability Rating, about 165 funds available to U.S. investors had a sustainable investing mandate. Today, that number is 291 and counting.