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Our Sustainability Rating Methodology Got an Upgrade

Three enhancements make the rating even more useful for ESG investors.

Our Sustainability Rating Methodology Got an Upgrade

Jon Hale: Hi everyone, I’m Jon Hale, head of sustainable investing research at Morningstar. Starting this month, we’ve made some enhancements to the Morningstar Sustainability Rating for funds.

The enhanced version differs from its predecessor in three ways: First, it is focused on material ESG risk, rather than on a broader array of ESG issues, some of which may not be financially material to investors. Second, company ESG risks can now be compared across industries, rather than only within industry peer groups. And third--the new rating is simple and transparent, no longer requiring a complicated calculation.

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