Morningstar Sustainalytics’ Post

What do business ethics, product safety, flood risks, and carbon emissions have in common? They are all ESG issues, and they are all material to business viability. https://bit.ly/3W0dNJ0 Read our latest article to explore what ESG materiality is and gain insight on what investors need to know when considering the materiality of ESG issue in their portfolios. #ESG #climate #ESGmateriality #ESGresearch #sustainablefinance #sustainableinvesting

The widespread adoption of emerging computing applications, such as autonomous vehicles, artificial intelligence and 5G communication technology, is significantly boosting demand for semiconductors. This exponential demand for semiconductors contributes to both resource strain and ESG risk for semiconductor fabs. In this article, Marloes Spanjersberg, ESG Research Senior Analyst, explores strategies for semiconductor fabs to manage the growing risk of supply bottlenecks. Key findings include: 🌍 Most of the semiconductor industry’s raw materials risk stems from supply concentration, rather than physical scarcity, where they are often sourced from only a few countries or regions. ⚠️Supply concentration risks can be further hampered by elevated geopolitical risks, where, for example, Africa and China supply approximately 70% of tantalum and silicon globally, which are widely used in semiconductor manufacturing. ♻️Initiatives to increase the share of reused or recycled materials in manufactured products can alleviate sourcing risks by reducing the need for virgin raw materials, however, these initiatives do not fully replace raw material inputs. Read the full article here https://bit.ly/464IFN4. #rawmaterial #semiconductors #computerchips #silicon #ESG

How is corporate governance a material ESG issue? https://bit.ly/461LKgJ The quality of corporate governance significantly influences risk management, efficiency, and reputation, necessitating transparency to shareholders. Morningstar Sustainalytics' Adam Fleck, CFA explains how our ESG Risk Ratings methodology looks at corporate governance by: ➡️ Assessing Governance Risk: We examine board effectiveness, including composition, roles, and supporting committees. We assess director expertise, independence, and structures to ensure effective discharge of duties. ➡️ Addressing Executive Compensation Risks: Within our ESG risk ratings framework, we evaluate risks associated with executive compensation. Emphasis is placed on aligning remuneration with shareholder interests through transparent disclosures, performance-based incentives, and sustainability targets. ➡️ Analyzing Shareholder Influence: We investigate the impacts of majority shareholders and voting rights, focusing on potential risks to minority shareholders and adherence to the one share/one vote principle. ➡️ Navigating Governance Controversies: Lastly, we consider controversies surrounding corporate governance, including mergers, shareholder disputes, and remuneration issues, to identify and address potential challenges impacting a company's governance landscape. Learn more about Material ESG Issues on our website: https://bit.ly/4eTUx8N

From supply chain failures to stranded assets, climate change poses serious risks to investment portfolios across every sector. https://bit.ly/3zwQoqT In his latest paper Martin Vezér, PhD examined the challenges faced by 3,373 entities covered by Morningstar Sustainalytics’ Low Carbon Transition Ratings and listed on the Morningstar Global Large-Mid Cap Equities Index. Key findings include: ✅ Among the covered entities, 19% are moderately misaligned to net zero, while 38%, 23% and 15% are significantly, highly and severely misaligned, respectively.  ✅ We note that physical climate risks vary widely, though companies in most sectors face related losses of between 1% and 5% of their operating cash flow. ✅ Our analysis identified 10 companies that we view as facing less low carbon transition risk than their sector peers, though we also note that each has room for significant improvement­. These include Canadian Natural Resources Limited (CNRL), Walmart, TSMC, Dr. Reddy's Laboratories, Cathay Financial Holdings Co., Ltd., Unibail-Rodamco-Westfield, Siemens, Lundin Mining Corporation, CORPORACION ACCIONA ENERGIAS RENOVABLES SL, and Vodacom. ➡️ Read the full report to learn more: https://bit.ly/3zwQoqT #sustainability #ESG #Riskmanagement

Navigating ESG-related regulations can be complex and demanding. We want to understand which aspects are most challenging for you. Your feedback will contribute to a better understanding of industry-wide issues. #ESG #SFDR #CSRD #SDR

🌟 The Morningstar Sustainable Investing Summit 2024 agenda is now available! 🌟 🔗View the agenda here: https://bit.ly/4eSiMUw Get ready for main stage sessions on critical topics such as climate litigation, climate transition, regulation, human rights, AI, and more. We're preparing you to lead the way in sustainable investing and drive impactful change. 📅 7 – 8 November 2024 📍Beurs van Berlage, Amsterdam 👉 Visit our website to view the main stage agenda and apply for your ticket today. Institutional investors and heads of corporate sustainability attend for free. Don’t miss out! #MSIS24 #SustainableInvesting #ClimateAction #CorporateSustainability #AI #HumanRights #ClimateLitigation Morningstar Sustainalytics #MorningstarIndexes

Around the world, ESG-related regulations are becoming more prevalent as governments demand transparency from both investors and companies about progress on their sustainability commitments. In this landscape, it's essential to evaluate how prepared organizations are to meet these new standards. Join the conversation and let us know your level of confidence in meeting these regulatory challenges. #ESG #SustainableInvesting #Regulations #InstitutionalInvestors #AssetManagement

One of the most common ways that companies might mislead investors about their exposure to climate risks is by downplaying the severity of the risks that they face. Or by omitting specific details about those risks. https://bit.ly/3VAY5UB Morningstar Sustainalytics' Alicia White explains how physical climate risk metrics can help investors assess the true climate risks companies face and how they can impact the bottom line. #ESG #ClimateRisk #SustainableInvesting

What could a changing political landscape in the EU mean for sustainability-focused regulations? We dive into this question and more in the latest episode of ESG in Conversation. https://bit.ly/4cALSpz Listen to learn about: ➡️ The state of the #ESG and #climate regulatory landscape ➡️ Asset owners’ thoughts on the materiality of ESG issues ➡️ Updates to Morningstar Sustainalytics' corporate governance framework #ESG #materiality