Morningstar launches portfolio carbon risk score
Morningstar has launched its new portfolio carbon risk score which will aim at helping investors evaluate a portfolio’s exposure to carbon risk.
According to its new risk score, portfolios that had low carbon-risk scores and low levels of fossil-fuel exposure would receive the Morningstar Low Carbon Designation which would allow investors to quickly find low-carbon funds.
Also, companies in these portfolios would have already low carbon emissions or would be working towards lowering these carbon emissions in line with the goals of the Paris Agreement by developing carbon solutions, the firm said.
Morningstar would assign the Carbon Risk Score to about of 30,000 funds globally, and the scores would range from low to high, which would be calculated based on company-level carbon-risk assessment from Sustainalytics, a provider of environmental, social and governance (ESG) and corporate governance ratings and research.
Morningstar’s global head of research, Kelly Haywood, said that climate change would force investors to seek the balance between their desire for high returns and a commitment to achieve a positive environmental impact.
“Given this, investors will need a means of more precisely analysing their portfolio exposures to ensure they meet the realities of a carbon-constrained future,” she said.
“The new Carbon Risk Score and Low Carbon Designation put that power in investors’ hands to monitor, manage, and reduce risks stemming from carbon exposure in portfolios.”
According to Morningstar, the carbon metrics would be calculated on a quarterly basis for any fund that has at least 67 per cent of its portfolio assets covered by Sustainalytics’ company-level carbon-risk research.
AUTHOR
Oksana Patron
Recommended for you
Asset managers may be encouraged to diversify their product ranges and branch into the retail or intermediary market but, two consultants argue, they may find it more complicated and costly than they expect.
The US$837 billion fixed income manager has created a new head of asset-based finance role amid the rising client demand for asset-based financing and tailored investment solutions.
Platinum Asset Management has rejected a bid from PM Capital to acquire its two listed investment companies.
Money Management understands Natixis Investment Managers is planning to launch its own private asset product for the Australian retail market.
