Comprehensive Ethical Management
The Business Ethics Material ESG Issue (MEI) focuses on managing general professional ethics, covering taxation, accounting, anti-competitive practices, and intellectual property. In industries lacking a separate Bribery and Corruption issue, Business Ethics may also encompass this area, along with specific topics like Medical Ethics and Financial Services Ethics.
Global regulatory fines for anti-money laundering violations reached USD 26 billion from 2008 to 2018, prompting regulators to mandate robust compliance systems. Business ethics controversies can significantly impact top companies.
Morningstar Sustainalytics’ Assessment Approach
Morningstar Sustainalytics assesses business ethics by considering risks associated with the absence of active management through policies, programs, and systems.
Regulators intensify scrutiny on compliance systems, especially in banking and finance. Legal or ethical misconduct carries financial and reputational risks. A strong ethical framework is crucial. Investors can use Morningstar Sustainalytics’ ESG Risk Ratings to identify exposed companies and evaluate risk management effectiveness.