Governance Documents

ESG Methodologies

Morningstar Sustainalytics' ESG methodologies are designed to be rigurous, systematic, independent, capable of justification and with a focus on ensuring that the methodologies can be applied continuously and in a transparent manner.

Ways of Working

Morningstar Sustainalytics is committed to doing business in an ethical way, which includes compliance with applicable laws, rules, and regulations in the jurisdictions in which it operates. Accordingly, it continues to keep under review the evolving regulatory landscape, in particular the newly adopted ESG Rating Regulation and the prospect of regulation in the UK, in addition to the various ESG ratings and data codes of conduct being promoted across a number of jurisdictions.

Morningstar Sustainalytics aims to incorporate best practices from financial services and ESG into the design and application of its methodologies. Transparency and clarity are central, with the goal of enabling users to understand the purpose of each ESG Rating and how it is produced.

ESG Rating Regulation for ESG Rating Providers

As the final text of the ESG Rating Regulation is now published in the Official Journal, Morningstar Sustainalytics is working to finalize our implementation plan and perform necessary enhancements to its control framework in order to achieve compliance and obtain relevant authorizations once the regulation becomes applicable in July 2026.

Methodologies

As the ESG Rating Regulation recognizes that methodology development should remain independent and leaves it to the ESG rating providers themselves to determine their own methodologies, we do not anticipate material changes to the methodologies of our rating products. Instead, we are committed to integrating the ESG Rating Regulations standards and principles into our processes, while maintaining methodological independence and integrity.

The rigorous and thorough policies and processes we have in place reflect our long-standing dedication to transparent governance of our methodologies and implementing best practices. (Link to Policy-on-Policy section of the website)

Relevant details on data and methodologies are disclosed while maintaining an appropriate balance with proprietary and confidential information. Potential or actual conflicts of interest are also identified and communicated to safeguard independence and integrity.

Our methodologies are written in a clear, understandable, and logical fashion, using consistent language (as far as reasonably practicable), and a minimum of industry jargon and acronyms.

The ultimate objective is to ensure that methodologies are accessible and understandable to those who rely on them.