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Sustainable Investing

Special Report: ESG Risk and Opportunity

Morningstar analyzes how various industries are tackling the environmental, social, and governance risks they face--and which companies are best positioned.

In a recent letter to the CEOs of asset managers, BlackRock CEO Larry Fink called climate change "a defining factor in companies' long-term prospects." Climate risk is, says Fink, an investment risk. At the 2018 Morningstar Investment Conference, GMO founder Jeremy Grantham made a similar argument--and suggested that there's money to be made by investing in companies that are addressing these risks.

”In the past few years, ESG analysis of companies has taken an important step forward, becoming increasingly centered around the concept of materiality," notes Jon Hale, head of Morningstar’s sustainability research. An environmental, social, or governance issue is "material” if it can be reasonably expected to have a financial impact on the company by denting future growth, increasing costs, or both.

Of course, companies in different industries are exposed to different sets of material ESG risks. Carbon emissions is a significant risk for oil and gas companies, for example; software companies, meanwhile, face challenges from issues of data privacy and security.

In this Special Report, our analysts examine the impact ESG issues may have on their respective sectors and industries. Specifically, they're gauging how these issues may affect the competitive advantages and economic moats, valuations, and uncertainty ratings of the stocks they cover. And they’re addressing which companies stand to benefit.

We’ll be adding to this report over time, so be sure to bookmark this page.

How Are Energy and Utilities Companies Managing ESG Risk? Our analysts examine the utilities, integrated oils, and midstream industries through the lens of ESG.

Understanding the Emissions Challenge An assessment of integrated oils' efforts to reduce greenhouse gas intensity.

ESG Implications for Midstream Oil and Gas Environmental issues take center stage.

The Renewable Future Utilities winners and losers as the U.S. goes green.

Winds Are Shifting in U.S. Power Generation Market We expect natural gas and renewable energy, particularly solar and wind, to battle for the top spot.

How ESG Risk Affects Pharma and Biotech Moats and Valuations Morningstar and Sustainalytics offer complementary methodologies.

9 Winners Managing ESG Risk These stocks are well-positioned to tackle the material environmental, social, and governance risks facing their industries.

4 Healthcare Stocks Attractive on Valuation and ESG Risk Morningstar's Karen Andersen explains how ESG issues affect Big Pharma and biotech companies.

A Close Look at Pharma Firms With an ESG Lens An ESG frame helps us bring a better look at valuation within the healthcare sector.

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