What it is
Morningstar integrates Sustainalytics ESG Risk Ratings directly into its free stock and fund research platform. Individual investors can access ESG risk scores for publicly traded companies, see how funds rate on sustainability criteria, and filter investments by ESG performance. The ratings measure a company's exposure to material ESG risks and how well it manages them.
Why we picked this
Sustainalytics is one of the two dominant ESG rating agencies (alongside MSCI), and Morningstar makes its risk ratings freely available to retail investors. For individual investors who do not have $20,000/year for a Bloomberg terminal, this is the most accessible source of institutional-grade ESG risk data.
Key takeaways
- Sustainalytics covers over 12,500 companies, rating ESG risk on a 0-100 scale where lower scores indicate less unmanaged risk.
- The ratings focus on financially material ESG issues, not general sustainability, making them directly relevant to investment decisions.
- Morningstar's Sustainability Rating (globe rating) aggregates Sustainalytics scores at the fund level, making it easy to compare ETFs and mutual funds.