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The Hidden ESG Risks of Feel-Good Companies

A sharper focus on environmental, social, and governance (ESG) factors means investors are increasingly faced with the freedom to express their personal preferences while seeking to meet their long-term objectives. Morningstar offers a set of ratings and classifications to help investors personalize their portfolios in the journey toward sustainable investing, including measures of fundamental equity analysis and sustainability measures like the ESG Risk Rating and Impact Metrics. A company whose revenue is well-aligned with impactful activities is not precluded from facing ESG risk because Morningstar views impact as fundamentally different from ESG risk.

This piece by Adam Fleck provides an overview of how the interplay between ESG risk and impact alongside more-traditional analysis can provide a rich set of options for investors looking to optimize their individual portfolios. To learn more, visit the Investable World website at


What's Inside

  • A glimpse into which Morningstar's various ratings and classifications can help investors navigate potential investment choices.
  • An overview of the correlation and lack thereof of ESG risks and impact metrics.
  • A shortlist of (recommended) stock picks with low ESG risk and solid impact revenue alignment.