Morningstar adds carbon transition indexes

Morningstar has announced the launch of its Low Carbon Transition Leaders Indexes.

The launch includes nine new global benchmarks that use Sustainalytics Low Carbon Transition Ratings. Morningstar says the indexes are designed to help investors target a broad range of companies from every sector that are leading their peers in their readiness for—and action towards— transitioning to a low-carbon economy.

The indexes identify climate transition leaders by grouping companies from the parent index by sector, ranking them according to their composite Low Carbon Transition Leaders Score and capturing the top scoring 50% of each sector by market cap. The Low Carbon Transition Leaders Score considers a company’s current carbon intensity as well as its management score from the Sustainalytics Low Carbon Transition Ratings. The indexes also emphasize companies that report carbon emissions and are reducing their carbon intensity, as well as those whose business activities contribute positively to the environment.

Rob Edwards, Global Director of ESG Product Management, Morningstar Indexes, said, “Investors are focusing on the growing market impact of climate change, whether for managing investment risk or pursuing investment opportunity. Our clients want a simple and transparent way to identify and invest in the companies best positioned to thrive and survive in this scenario. Our Low Carbon Leaders are companies with management that understand how to evolve their business in this context to protect and grow their market share and innovation.”