Morningstar Introduces Low Carbon Transition Leaders Indexes
New indexes draw on the strengths of
This series of nine new global, regional, and single country benchmarks is designed to help investors target a broad range of companies from every sector that are leading their peers in their readiness for—and action towards— transitioning to a low-carbon economy. The indexes are underpinned by tangible, forward-looking metrics including the Sustainalytics Low Carbon Transition Ratings, which identify which companies are taking the most action toward aligning with net zero.
“Investors are focusing on the growing market impact of climate change, whether for managing investment risk or pursuing investment opportunity. Our clients want a simple and transparent way to identify and invest in the companies best positioned to thrive and survive in this scenario. Our Low Carbon Leaders are companies with management that understand how to evolve their business in this context to protect and grow their market share and innovation.”
The indexes identify climate transition leaders by grouping companies from the parent index by sector, ranking them according to their composite Low Carbon Transition Leaders Score and capturing the top scoring 50% of each sector by market cap. The Low Carbon Transition Leaders Score considers a company’s current carbon intensity as well as its management score from the Sustainalytics Low Carbon Transition Ratings. The indexes also emphasize companies that report carbon emissions and are reducing their carbon intensity, as well as those whose business activities contribute positively to the environment.
Companies included in the indexes are leading their peers in their approach to climate transition. Examples include Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor chip manufacturer and Orsted, the largest energy company in
“Our clients are grappling with an increasingly complex investment landscape and trying to get better understand how the transition to a low carbon economy will impact markets and companies. They are asking for better indexes, tools and analysis to differentiate between companies that are taking steps to reduce greenhouse gas emissions and are well positioned to succeed in a low carbon economy, and which may be left behind. Incorporating our Low Carbon Transition Ratings within an index methodology enables our clients to apply a forward-looking climate transition risk lens to their global portfolios and invest in leaders across all sectors.”
About
About Morningstar Indexes and Morningstar Sustainalytics
Morningstar Indexes and Morningstar Sustainalytics have recently formed a strategic alignment to provide a more holistic and robust ESG offering to Morningstar clients. This growing collaboration includes ESG-related products, insights and research.
As the fastest-growing global index provider for the last two years according to
Morningstar Sustainalytics is a leading ESG data, research, and ratings firm that supports investors around the world with the development and implementation of responsible investment strategies. For more than 30 years, the firm has been at the forefront of developing high-quality, innovative solutions to meet the evolving needs of global investors. Today, Morningstar Sustainalytics works with hundreds of the world's leading asset managers and pension funds who incorporate ESG information and assessments into their investment processes. The firm also works with hundreds of companies and their financial intermediaries to help them consider material sustainability factors in policies, practices, and capital projects. Morningstar Sustainalytics has analysts around the world with varied multidisciplinary expertise across more than 40 industry groups. For more information, visit www.sustainalytics.com.
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Source: Morningstar, Inc.