The Task Force on Climate-related Financial Disclosures (TCFD) framework is gaining significant uptake globally, as it is shifting from a voluntary approach to being the main global regulatory response to climate risk, with many regions now mandating it for compulsory climate reporting.
To help investors navigate the scope of the TCFD recommendations, Morningstar Sustainalytics offers a robust set of Climate Solutions that includes valuable insights into a company’s alignment with global climate goals as well as its exposure to physical climate risks.
Baseline Carbon Footprint
Quantify the baseline Carbon Footprint of your portfolio.
Our Solutions
Carbon Emissions Data
Backed by best-in-class multi-factor regression models, Morningstar Sustainalytics’ Carbon Emissions Data provides investors with powerful insights to assess and analyze companies’ greenhouse gas emissions.
How We Can Help
- Understand a company’s historical scope 1, 2 and 3 carbon intensity and footprint.
- Gain insights into how investment allocation decisions affect portfolio level carbon intensity and footprint.
- Disclose the weighted average GHG emission intensity or carbon footprint of owned or managed investments.
Analyze Low Carbon Transition Risks and Opportunities
Understand Transition Risks from a Low Carbon policy scenario and identify opportunities to decarbonize your portfolio.
Our Solutions
Low Carbon Transition Ratings
Morningstar Sustainalytics’ Low Carbon Transition Ratings are designed to provide investors with a forward-looking science-based assessment of a company’s current alignment to a net-zero pathway that limits global warming to 1.5 degrees Celsius by 2050.
How We Can Help
- Leverage our Implied Temperature Rise research to identify if a company is aligned with a well -below 2° Celsius scenario.
- Use cumulative total emissions to assess the magnitude of potential transition risk across the value chain of each holding, and incorporate into value-at-risk assessment.
- Pinpoint companies highly misaligned with the energy transition, and that have poor management preparedness or conversely pinpoint companies on track to meet net-zero ambitions.
- Benefit from our TCFD module to determine the sufficiency and quality of a company’s public climate-related disclosures.
- Identify priority topics/themes and companies for engagement activities.
Analyze Physical Climate Risks and Opportunities
Assess the risk of your assets from a comprehensive measure of the physical effects of climate change under two scenarios.
Our Solutions
Physical Climate Risk Metrics
Morningstar Sustainalytics’ Physical Climate Risk Metrics are designed to help investors understand their direct and indirect exposure to physical climate risks and the potential financial impacts to their portfolio companies.
How We Can Help
- Understand the financial impacts of physical climate risks considering a company’s revenue, physical asset value, and operating cash flow.
- Disclose direct and indirect exposure to physical climate risks for portfolio holdings. Exposure metrics are calculated as separate signals that align to the TCFD recommendations and are aggregated into a single overall assessment.
- Identify companies for engagement to better understand mitigation and adaptation strategies.
Identify Climate-Related Opportunities
Identify the proportion of revenue and business activities aligned with climate-related opportunities.
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Our Solutions
Impact Metrics
Morningstar Sustainalytics’ Impact Metrics are a set of company-level metrics that provide investors with useful measures of companies' environmental and social impact. The metrics are aligned to Sustainalytics' proprietary ESG Impact Framework and the UN Sustainable Development Goals (SDGs).
How We Can Help
- Gain insights into the portfolio’s revenue exposure to climate activities.
- Drill down into the portfolio constituents and identify climate impact alignment at the holding level.
- Support strategies to tilt portfolios to align with the climate objectives.
- Advance engagement, due diligence, and target setting by monitoring and reporting on the degree of impact alignment in portfolios and mandates.
Define Climate Investment Strategies and Engage Stakeholders
Our services enable you to engage business stakeholders to influence action.
Our Solutions
Stewardship Services
Morningstar Sustainalytics’ Stewardship Services help investors to generate positive and meaningful ESG and climate change-related outcomes. Our Net-Zero Transition Engagement Program supports investors looking to align their investment portfolios with decarbonization targets. The program also aims to deliver on investors’ ambitions and stewardship commitments made through various net-zero initiatives.
How We Can Help
- Collaborate with our team to engage with high-emitting industries to drive alignment to the Paris Agreement.
- Improve climate-related governance, strategy, and risk management, and strengthen climate-related financial disclosures.
- Disclose net-zero engagement activities and progress.
Delivery Options
Support analysis and reporting with access to all company and portfolio-level assessments through Morningstar Sustainalytics’ user-friendly investor interface, Global Access.
Data Servicing Access through our FTP or API services is available to integrate Climate research through an internal system of your choice.
Assess Issuer Disclosure with TCFD
A TCFD module is included in our Low Carbon Transition Ratings to assess and track the comprehensiveness of issuer disclosure and translate our assessment of issuers’ managerial preparedness across the four thematic areas recommended by the TCFD (governance, strategy, risk management, and metrics and targets).
Report Insights
An overall score indicating the proportion of TCFD-related indicators that the company is reporting of the total indicators it is expected to report. A view into the company's ranking for its subindustry is also provided.
A summary of how the overall Low Carbon Transition management score of the company is scored for each TCFD thematic area is provided at a glance.
The TCFD Reporting Assessment evaluates the extent to which a company is reporting on specific criteria recommended by the TCFD, as well as the quality of the governance, strategy, risk management and metrics & targets the company has disclosed
For each thematic area of the TCFD, the relevant management indicators recommended by the TCFD are summarized and assessed for their inclusion in the company's current disclosure. The weighting for each indicator and final weighted score for the thematic area is provided to show its contribution to the overall management score.
Get in touch to learn more about how we can help you navigate the TCFD recommendations
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Consistent approach to ESG assessments across the investment spectrum.
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As recognized by Environmental Finance and the Climate Bonds Initiative.
Related Products
Carbon Emissions Data
Evaluate and analyze companies’ GHG emissions across scope 1, 2, and 3 emissions.
Learn More
Net Zero Transition Engagement Programme
Establish an effective climate-focused dialogue with high-emitting companies on their journey to net zero carbon emissions.
Learn More
Physical Climate Risk Metrics
Assess and disclose the direct and indirect physical climate risks of climate change related exposure.
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