Morningstar, a US-based investment research provider, has unveiled plans to launch first environmental, social, and governance (ESG) scores for global mutual and exchange-traded funds later in 2015.
Morningstar said that it will base the scores on ESG company ratings from Sustainalytics, a provider of ESG and corporate governance ratings and research.
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The company expects to roll out the fund-level ESG scores in the fourth quarter of 2015 through Morningstar Data feeds and its major software platforms in 2016.
The scores will enable investors to compare funds across categories, relative to benchmarks, and over time using ESG factors. Investors can also drill down to see scores for each of the three Environmental, Social, and Governance pillars.
Morningstar will create asset-weighted composite ESG fund scores based on company-level Sustainalytics ESG ratings using its comprehensive portfolio holdings data.
Swiss private banking group Julius Baer will act as Morningstar’s first client to license the ESG scores for its fund research team, the company said in a statement.
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By GlobalDataMorningstar currently tracks the holdings of over 200,000 global managed products, while Sustainalytics provides ESG ratings on more than 4,500 companies.
Morningstar’s director of manager research North America Jon Hale said: "As part of our mission of helping investors reach their financial goals, we have a long tradition of innovative research centered on good stewardship, lower costs, and more transparency for investors.
"We want to bring even greater transparency and accountability to the investment industry with ESG research, data, and tools, while helping investors to put their money to work in ways that are meaningful to them."
Sustainalytics CEO Michael Jantzi said: "We applaud Morningstar for its innovation and look forward to working together to create a new standard for fund benchmarking."
