At Morningstar, we believe that transparency powers progress. We know that access to data will help investors make better, more informed decisions. We’re just as certain that our company’s stakeholders – our shareholders, employees, clients, and communities – deserve transparency into how we conduct our business.
Our latest Corporate Sustainability Report examines the work we’re doing to build a resilient, future-focused firm. When it comes to our workplace, we hold ourselves to high standards of transparency, particularly on topics that are material for the success of our business, such as employee engagement and equity in compensation. Morningstar established market-leading transparency around our global gender and US racial pay gaps in 2021, disclosing just how many people were affected by this gap—and the dollar amount we spent to improve it. At the time, we took a risk, surfacing data that reflected the gap prior to any adjustments; we believed this would push us to improve our approach and would set a standard for transparency in our industry. This disclosure ultimately led to an 80% reduction in the amount spent on pay equity adjustments since 2021. And this year, we’ve received external recognition as a Fair Pay Workplace.
We’ve made adjustments to our climate strategy, too. This year, we enhanced our data collection, storage, and disclosure of emissions measurements. We are working across the business to implement new approaches to strengthening our environmental impact strategy, including the transition of our data centers to sustainability-focused cloud platforms, and expanding our use of renewable energy. We’ve been transparent about our growth and our challenges in this area; we’ve re-stated historical emissions as we’ve gained better access to data. We believe this information will help stakeholders make decisions as they position themselves for a transition to a low-carbon economy.
Providing this kind of transparency on global issuers and investments, along with the data to assess progress, is what Morningstar does for investors – it’s a key component of our mission to empower investor success. We deliver environmental, social, and governance data, research, products, and services because we understand that these supplemental measures (such as gender balances on an executive team, or emissions per employee) can be important information for all kinds of investors—from sophisticated asset managers to individual savers—to align their investments with their view of the future.
As my colleague John Rekenthaler has repeatedly pointed out (most recently in "Should ESG Investing Be Criminalized?" and "The Politicians Who Oppose Investment Freedom"), ESG data, tools and assessments aren’t well understood. Morningstar is trying to close that gap. Our reports, including our new TCFD Report and our UK Gender Pay Gap Report, don’t just ready our organization for the realities of emerging global regulation. They also provide investors, stakeholders, and Morningstar’s own leaders with tools to better examine and compare the firm’s governance, risk management, and strategy in a future that includes climate transition and quickly shifting workforce realities.
Sustainability efforts, measured transparently using clear, comparable data, are factual—not controversial. They’re critical information for workers who seek reliable safety standards, for first-time job seekers who want transparent compensation programs, and for all kinds of investors, focused on the future and seeking to align their investments with their values. Our work is designed to ensure that Morningstar can continue to support investors for the long term and drive sustainable progress to materially improve our business.
I invite you to learn more about these efforts in our 2023 report.