T. Rowe Price International Stock Fund has a number of attributes that may meet the expectations of sustainability-focused investors, despite some issues worthy of attention.
The ESG risk of T. Rowe Price International Stock Fund's holdings is comparable to its peers in the Global Equity Large Cap category, thus earning an average Morningstar Sustainability Rating of 3 globes. Funds in the same category rated 4 or 5 globes tend to hold securities less exposed to ESG risk. ESG risk measures the degree to which material environmental, social, and governance issues, such as climate change and inequalities, could affect valuations. ESG risk differs from impact, which is about driving positive environmental and social outcomes for society’s benefit.
One key area of strength for T. Rowe Price International Stock Fund is its low Morningstar Portfolio Carbon Risk Score of 7.1 and low fossil fuel exposure of 4.17% over the past 12 months, which earns it the Morningstar Low Carbon Designation. The fund is therefore well positioned to transition to a low-carbon economy.
One potential issue for a sustainability-focused investor is that T. Rowe Price International Stock Fund doesn’t have an ESG-focused mandate. A fund with an ESG-focused mandate would have a higher probability to drive positive ESG outcomes. The fund exhibits relatively high exposure (9.09%) to companies with high or severe controversies. Companies with high or severe controversies may be involved in incidents such as corruption, employee abuses, environmental incidents, and corporate scandals that pose serious business risks to the company.