Measuring Transition Risk in Fund Portfolios

Understanding the risks posed by climate change can help investors make better decisions. The Morningstar® Portfolio Carbon Risk ScoreTM is a new metric that investors can use to evaluate carbon risk at the portfolio level. The scores, calculated quarterly based on the most recent portfolios in the Morningstar database, can be used to compare funds with each other, with their Morningstar Category average, and with their benchmarks.

In this paper, you will learn:
  • What the Carbon Risk Score is and how it works
  • How carbon risk is measured and the limitations of carbon footprinting
  • The carbon-risk profile of global funds by Morningstar Category