Low Carbon Transition Rating
A Rules-Based ESG Risk Assessment
How Morningstar Sustainalytics Approaches Our Research on Companies
July 2024
- Morningstar Sustainalytics is committed to transparency regarding all ESG research including the ESG Risk Rating and scoring model.
- Morningstar Sustainalytics takes a neutral, rules-based approach to assessing each company including their ESG risk. This objective approach is applied consistently to all companies we rate to ensure fairness.
We are often asked by companies for advice on how to improve their ESG Risk Rating score. Our response is consistent:
The Morningstar Sustainalytics Research Team working on a company’s ESG Risk Rating update does not provide consulting advice on how to improve your score. We follow a rules-based approach based on our research methodology, which we apply consistently across the broad spectrum of companies we assess. We are committed to full transparency concerning the details of our research process and ratings scoring model.
By maintaining a level playing field, Morningstar Sustainalytics can ensure that all companies are assessed fairly and that no firm receives an undue advantage over their counterparts. Our objective is to maintain the independence and integrity of Morningstar Sustainalytics’ ESG research.
Morningstar Sustainalytics’ rules-based approach applies to all companies we assess as part of the ESG Risk Rating process regardless of their status, scale, and circumstances. This includes public and private companies and applies equally whether a company is rated under the Comprehensive or Core research frameworks: The Comprehensive framework is generally applied to large-cap companies; and the Core framework is used to assess smaller-cap companies.
Morningstar Sustainalytics shares our guidelines with all companies we assess. Our objective is to be fully transparent and to ensure that all companies are equally informed about our requirements.
What types of information does the Morningstar Sustainalytics Issuer Relations Team provide as part of the ESG risk assessment?
Morningstar Sustainalytics’ Issuer Relations Team can provide information on or clarify any of the following details about the ESG Risk Rating methodology:
- Indicator descriptions, rationale, and criteria. This includes any updates.
- Process-related queries. This includes information regarding timelines, using the Issuer Gateway and troubleshooting.
Not provided as part of the ESG Risk Rating assessment/annual update
- Morningstar Sustainalytics’ Issuer Relations and Research teams do not provide consulting advice in terms of recommendations or changes with the intention of helping a company achieve an improved score.
- Morningstar Sustainalytics’ Issuer Relations and Research teams do not provide feedback on sustainability and ESG reporting in general.
- Morningstar Sustainalytics’ Issuer Relations and Research teams will not make changes to the ESG methodology in response to any company’s individual request. The Methodology team is responsible for reviewing suggested updates to the methodology.
Contact Morningstar Sustainalytics’ Issuer Relations team if you have any questions.