Tricia Rothschild, Head of Global Advisor Solutions, Morningstar speaks with Julie Cooling, Founder and CEO, RIA Channel about environmental/social/governance (ESG) investing trends and the new
Morningstar Sustainability Ratings for investment managers.
ESG encompasses issues well beyond the traditional socially responsible investing (SRI) category. Per the CFA Institute, examples of ESG issues may include:
Environmental Issues: climate change and carbon emissions, air and water pollution, energy efficiency, waste management, water scarcity, biodiversity and deforestation.
Social Issues: gender and diversity policies, human rights, labor standards, employee engagement, customer satisfaction and community relations.
Governance Issues: board compensation, executive compensation, audit committee structure, bribery and corruption policies, lobbying activities, and political contributions.
Rothschild discusses a new ESG rating system for fund evaluation. With $21 trillion and growing in the ESG investing category, advisors are seeking ways to identify and incorporate ESG strategies into client portfolios. Morningstar also created 20 new
ESG indexes.
