Sustainalytics Insight: Climate Risk = Investment Risk; Global Equities Through a Climate Lens
Did you know that nearly four of ten (38%) of more than 3,300 large- and mid-cap public companies are significantly misaligned to net zero goals? Indeed, tightening global ESG regulations and reporting standards for issuers require investors to look at climate strategies through a much sharper lens. This is according to new research from Morningstar Sustainalytics utilizing its Low Carbon Transition Ratings (LCTR), Physical Climate Risk Metrics (PCRM) and based on a portion of the global investment universe as identified by the Morningstar Global Markets Large-Mid Cap Index.
The new study, by Morningstar Sustainalytics ESG Research Associate Director Martin Vezer, PhD, examined 3,373 companies listed within the Morningstar global equities benchmark, finding that 38%, 23% and 15% of these companies by index weight were significantly, highly or severely misaligned with future net zero goals.
Global Equities Through the Lens of the Morningstar Sustainalytics Low Carbon Transition Ratings
Martin Vezer, ESG Research Associate Director, Morningstar Sustainalytics, said:
“Climate change is a material and growing risk among the myriad of concerns facing public companies today. The better investors understand this risk and how companies are adapting to it, the better prepared they are to navigate risks related to climate change and develop appropriate investment strategies.”
Alex Bryan – Director of Equity Product Management, Morningstar Indexes, said:
“Our broad market benchmarks provide investors with robust exposure to the global opportunity set and are a strong foundation on which to build more specific analytics around ESG-related investment risks.”
To speak in more detail with Martin or Alex, reach out to Tim Benedict at [email protected] or (203) 339-1912.
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