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Sustainability Matters

Changes Make Sustainability Rating More Consistent

The Morningstar Sustainability Rating now takes into account portfolios over the previous 12 months.

This month, we are enhancing the Morningstar Sustainability Rating by expanding the number of portfolios that contribute to a fund's Sustainability Score and by using the broader Morningstar Global Category system as the peer group for assigning a fund's Sustainability Rating. We believe these enhancements make the rating a more reliable measure of the extent to which a fund incorporates sustainability factors in its security selection and portfolio construction.

The Morningstar Sustainability Rating is designed to give investors a way to assess the sustainability profile of the holdings in a fund's portfolio relative to a fund's peer group. To make that assessment, we use Sustainalytics' company ESG ratings, which evaluate the material environmental, social, and corporate governance-related risks and opportunities that a company faces. Company ESG scores are rolled up on an asset-weighted basis to get a Portfolio Sustainability Score, and a Sustainability Rating is assigned based on where that score ranks among a fund's peers, using a normal distribution.

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