Morningstar upgrades ESG ratings

Morningstar Sustainalytics has announced changes to its ESG risk ratings offering.

The changes include an upgrade to their corporate governance methodology covering 16000 companies and the strengthening of three ESG risk measures.

Sustainalytics says it will also strengthen its material ESG risk measures with new ratings for raw materials use and water and expanded data privacy and cybersecurity coverage which will underpin the ESG risk ratings methodology. It is expected that all companies in the coverage universe will complete this process by September 2024.

Laura Lutton, Director of ESG Product Management, Morningstar Sustainalytics, said, “Our clients look to Morningstar Sustainalytics to provide leading edge sustainable investment data, research and ratings to better address a myriad of ESG-related risks and opportunities and provide a consistent independent lens on financially material ESG issues. Our ESG Risk Ratings help investors identify company exposure to industry-level ESG risks and how effectively companies are managing that exposure. The world is constantly changing, creating a challenging environment for investors, and our ESG risk metrics need to evolve along with it. These enhancements represent the most significant change to our methodology since we introduced our flagship ESG Risk Ratings to investors in 2018. We’re extremely excited to offer this capability to our clients and to the market.”