Morningstar, a provider of independent investment insights, has announced the launch of its Morningstar Low Carbon Transition Leaders Indexes.
This innovative series represents a strategic collaboration between Morningstar Sustainalytics, a top ESG ratings, research, and data provider, and Morningstar Indexes, recognized as the world’s fastest-growing global index provider.
The introduction of the Morningstar Low Carbon Transition Leaders Indexes™ aims to support investors looking to invest in companies across various sectors that are leading in their preparedness and actions toward transitioning to a low-carbon economy. These indexes are grounded in concrete, forward-looking metrics, such as the Sustainalytics Low Carbon Transition Ratings, which highlight companies making significant strides towards net-zero alignment.
Morningstar stands at the forefront of delivering independent investment insights. By leveraging its expertise in ESG ratings, research, and global indexing, Morningstar provides valuable resources for investors aiming to make informed decisions in a shifting market landscape.
The Morningstar LCTL Indexes offer investors an avenue to identify and invest in companies demonstrating leadership in climate transition. By organizing companies from the parent index by sector and ranking them based on their composite Low Carbon Transition Leaders Score, the indexes highlight the top 50% of companies in each sector by market cap.
This approach takes into account a company’s current carbon intensity and its management score from the Sustainalytics Low Carbon Transition Ratings. Furthermore, the indexes prioritize companies that report and actively reduce their carbon emissions, and those whose business activities positively impact the environment.
Inclusion in these indexes signifies that companies are at the forefront of their peers in climate transition efforts. Notable examples include Taiwan Semiconductor Manufacturing Company (TSMC), the largest semiconductor chip manufacturer globally, and Orsted, Denmark’s leading energy company and a global decarbonization pioneer.
“Investors are focusing on the growing market impact of climate change, whether for managing investment risk or pursuing investment opportunity. Our clients want a simple and transparent way to identify and invest in the companies best positioned to thrive and survive in this scenario. Our Low Carbon Leaders are companies with management that understand how to evolve their business in this context to protect and grow their market share and innovation,” Morningstar Indexes Global Director of ESG Product Management Rob Edwards said.
“Our clients are grappling with an increasingly complex investment landscape and trying to better understand how the transition to a low carbon economy will impact markets and companies. They are asking for better indexes, tools, and analysis to differentiate between companies that are taking steps to reduce greenhouse gas emissions and are well positioned to succeed in a low-carbon economy, and which may be left behind.
“Incorporating our Low Carbon Transition Ratings within an index methodology enables our clients to apply a forward-looking climate transition risk lens to their global portfolios and invest in leaders across all sectors,” Morningstar Sustainalytics Director, Global Commercial Strategy, Climate Solutions, Anya Solovieva said.
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