If you want to see how the funds you’re invested in fare when it comes to environmental, social and governance factors, there’s a rating for that.
The Morningstar Sustainability Rating measures how well an investment fund’s holdings stack up on ESG issues compared to its peers.
The measurement is put together using the thousands of portfolios that Morningstar collects from mutual funds, ETFs and managed portfolios around the world. The firm then applies company-level data from its partner firm, Sustainalytics, to come up with asset-weighted scores for funds.
Investors can access the ratings by going to the Morningstar website. The score appears as globes, with five representing the highest score and one the lowest. Those symbols appear alongside other fund information, including an overall Morningstar rating. The top 10 percent of funds in each category receive five globes.
The score has provided a way to see how well funds that are branded as ESG funds are executing on those strategies.
“Virtually all of the intentional funds do well, meaning they score at least four or five globes,” said Jon Hale, sustainability research expert at Morningstar.