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FlexShares ESG&Clmt Dev Mkts ex-US Cr FEDM Sustainability

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Sustainability Analysis

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Sustainability Summary


FlexShares ESG&C lmt Dev Mktsex-USCrIdxFd has a number of positive attributes that a sustainability-focused investor may find appealing.

This strategy has an above-average Morningstar Sustainability Rating of 4 globes, indicating that the ESG risk of holdings in its portfolio is relatively low compared with those of its peers in the Global Equity Large Cap category. ESG risk provides investors with a signal that reflects to what degree their investments are exposed to risks related to material ESG issues, such as climate change and inequalities, that are not sufficiently managed. ESG risk differs from impact, which is about seeking positive environmental and social outcomes.

FlexShares ESG&Clmt Dev Mktsex-USCrIdxFd has a sustainability or ESG-focused mandate. Funds with an ESG-focused mandate are more likely to align with the expectations of an investor who cares about sustainability issues. FlexShares ESG&Clmt Dev Mktsex-USCrIdxFd has a Carbon Risk Score of 7.30, indicating portfolio companies face low carbon-related risks in the transition to a low-carbon economy. Currently, the fund has 8.60% involvement in fossil fuels, which compares favorably with 8.62% for its average category peer. Companies are considered involved in fossil fuels if they derive some revenue from thermal coal, oil, and gas. Its 10.47% involvement in carbon solutions is higher than the 8.58% average involvement of its peers in the Foreign Large Blend category. Carbon solutions include products and services related to renewable energy, energy efficiency, green buildings, green transportation, and so on.

The fund aims to avoid, or limit exposure to, companies in violation with international norms, such as the UN Global Compact or the Universal Declaration of Human Rights.

By prospectus, the fund aims to avoid, or limit its exposure to, companies associated with controversial weapons, tobacco, thermal coal, and small arms. The fund mostly fulfills this goal; however, it does exhibit 0.41% and 0.46% exposure to companies involved in thermal coal and small arms, respectively. This compares with 0.59% and 0.93% for its average peer in the Global Equity Large Cap category. The fund exhibits moderate exposure (4.86%) to companies with high or severe controversies. From bribery and corruption to workplace discrimination and environmental incidents, controversies are incidents that may negatively affect stakeholders, the environment, or the company’s operations.

ESG Commitment Level Asset Manager