Low Carbon Transition Rating
ESG Controversies Research Methodology Update
September 2025
Page last updated April 2025
Morningstar Sustainalytics is refining our Controversies Research product to provide clearer and more contextualized information about how controversies may relate to a company.
Clearly Delineating Between ‘Impact’ and ‘Risk’
In September 2025, Morningstar Sustainalytics will assess the impact and (financial) risk of an event separately.
Impact Event Category Assessment
An impact event category assessment will be based on four factors:
- Scale: the gravity of the impact.
- Scope: the size or spread of the impact
- Remediation: the actions that have be taken to manage, reverse or compensate the impact.
- Role: how much of the impact of an event is attributed to the organization.
Risk Event Category Assessment
A risk event category assessment will be based on analyzing the financial risk factor posed by the event and the potential erosion of the company’s enterprise value, adjusted for the company’s financial health.
Event Category 3-5
We are replacing the “Outlook” Assessment with “Category Change Scenario.”
Category Change Scenario
The Category Change Scenario field reviews the conditions necessary for an upgrade or downgrade of the underlying impact and/or risk assessments.