Morningstar starts ESG fund ratings

SRIMorningstar has started rating 20,000 funds by sustainability factors and appointed its Benelux head to lead the initiative.

The environmental, social and governance (ESG) factors used in the ratings will help investors evaluate mutual funds and exchange-traded funds based on how well companies in the funds manage their ESG risks and opportunities.

Steven Smit, chief executive officer of Morningstar Benelux, has been named head of sustainability and will be responsible for leading the company’s ESG ratings initiative.

“Given the widespread and growing interest in sustainable investing around the world, investors need better tools to help them determine whether the funds they own, or are considering adding to their portfolios, reflect best sustainability practices,” said Smit.

Morningstar has partnered with Sustainalytics, an ESG research house, for the project.

Morningstar said the number and types of investments that receive sustainability ratings will be expanded.

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