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Explore the Morningstar Sustainability Report
The Morningstar Sustainability Rating measures how well the investments within a fund’s portfolio are managing their ESG risk relative to the fund’s Morningstar Global Category peers. Historical Corporate Score Sovereign Sustainability Score These are proportional to the relative weight of the corporate and sovereign (long-only) positions in the fund’s portfolio. The Morningstar Portfolio Corporate Sustainability Score and Portfolio Sovereign Sustainability Score are each an asset-weighted average of Sustainalytics’ company-level ESG Risk Rating and Sustainalytics’ Country Risk Rating, respectively.
The Overall Sustainalytics ESG Risk Score for a company is measured by evaluating its exposure to and the management of Material ESG Issues (MEIs). For each issue, exposure can be considered either as Manageable or Unmanageable risk. Unmanageable risks are those outside the boundaries of a management’s control based on the assumption that the company continues its inherent business. For a company’s risk portion that is manageable, a management assessment is applied based on the strength of company commitments, actions, and outcomes demonstrating how well a company is managing its ESG exposure. Any risk to an ESG issue not properly managed by the company or that is unable to be managed by the company is considered Unmanaged Risk. The ESG Risk Ratings are considered an absolute risk assessment, which means the output is comparable across sectors, industries, and subindustries.
The Morningstar Portfolio Pillar Scores are a separate and complementary calculation to the Portfolio Sustainability Score. They provide a reliable, objective way to break down the Corporate Sustainability Score into separate Environmental (E), Social (S), and Governance (G) pillars. Sustainalytics considers a range of Material ESG Issues (MEIs) for each company, mapping each one to relevant ESG pillars. These scores give users a sense to what degree environmental, social, and governance issues are contributing to the total unmanaged ESG risk score of a company.
This table shows the average percentage of corporate revenue per Morningstar Sustainalytics Impact Theme. The Coverage % is the percentage of assets under management of corporate holdings that have available data on each theme. Currently, these metrics only apply to the corporate portion of a portfolio, therefore the percentages calculated may be derived from a partial portfolio only, for example in the case of allocation, balanced, or fixed-income portfolios.
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