Morningstar, Inc. acquires 40 percent ownership stake in Sustainalytics

In a continuing and growing commitment to helping investors integrate sustainability considerations into portfolio decisions, Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, and Sustainalytics, a leading global provider of environmental, social, and governance (ESG) research and ratings, today announced that Morningstar has acquired a 40 percent ownership stake in Sustainalytics. The direct investment represents an important milestone in Morningstar’s long-term sustainability strategy and intends to support Sustainalytics’ ability to deliver high-quality, innovative ESG products and services to the global investment community.

In August 2015, the two firms announced a strategic collaboration that resulted in the March 2016 launch of the Morningstar Sustainability Rating™ for global mutual and exchange-traded funds (ETFs). The ratings, which now cover more than 35,000 mutual funds and ETFs, use Sustainalytics company-level ESG research, allowing investors to gauge how well companies held in their funds are managing ESG issues. The Sustainability Rating is available in Morningstar DirectSM, Direct Cloud, Morningstar OfficeSM, Advisor WorkstationSM, 15 global Morningstar websites, and Data Feeds. Building upon the Sustainability Rating and its work with Sustainalytics, in October 2016 Morningstar launched the Global Sustainability Index Family, a series of 27 global equity indexes designed to provide a standard for sustainability investing. In addition, Morningstar released company level ESG metrics for the holdings of 35,000 mutual funds and ETFs and Morningstar Portfolio Sustainability Reports in April 2017, and a tool that enables investors to screen portfolios for various ethical issues in June 2017.

“Enhancing this relationship enables us to leverage the expertise Sustainalytics has built over the last 25 years, and build on the momentum we started with the launch of the Sustainability Rating,” said Kunal Kapoor, Morningstar’s chief executive officer. “We have the largest ESG fund coverage universe today, and we look forward to continuing to meet the increasingly sophisticated ESG needs and requirements of our clients through integrated solutions and innovative research that highlights good stewardship, lower costs, and transparency for investors.”

The studies supporting the growth in responsible investing are plentiful. According to the Global Sustainable Investment Alliance, almost 30 percent of professionally managed assets today are associated with responsible investment strategies. At the institutional level, more than 1,700 asset managers, asset owners, and other financial market participants are now signatories to the U.N.-backed Principles for Responsible Investment (PRI), representing $62 trillion in assets under management.

“We welcome Morningstar as a new and significant shareholder,” said Michael Jantzi, chief executive officer of Sustainalytics. “Close collaboration with Morningstar over the last two years has helped to broaden distribution of our ESG research, allowing Sustainalytics to work with more asset managers and owners to integrate ESG into their investment processes. Our entire executive team is excited about expanding our relationship with Morningstar and continuing to work together to bring meaningful ESG insights and innovative products and services to investors worldwide.”

As part of the transaction, Steven Smit, head of sustainability at Morningstar, will join the Sustainalytics board of directors and the Sustainalytics executive team has taken a minority equity stake in the company.

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