Morningstar Introduces Low Carbon Transition Leaders Indexes

New indexes draw on the strengths of Morningstar’s Sustainalytics & Indexes businesses to deliver diversified, broad exposure to companies leading their sector peers in their readiness for—and action towards—climate transition

Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment insights, announces the launch of the Morningstar® Low Carbon Transition Leaders (LCTL) Indexes™, the latest strategic collaboration between leading ESG ratings, research, and data provider Morningstar Sustainalytics and Morningstar Indexes, the world’s fastest growing global index provider.

This series of nine new global, regional, and single country benchmarks is designed to help investors target a broad range of companies from every sector that are leading their peers in their readiness for—and action towards— transitioning to a low-carbon economy. The indexes are underpinned by tangible, forward-looking metrics including the Sustainalytics Low Carbon Transition Ratings, which identify which companies are taking the most action toward aligning with net zero.

Rob Edwards – Global Director of ESG Product Management, Morningstar Indexes

“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.”

The indexes identify climate transition leaders by grouping companies from the parent index by sector, ranking them according to their composite Low Carbon Transition Leaders Score and capturing the top scoring 50% of each sector by market cap. The Low Carbon Transition Leaders Score considers a company’s current carbon intensity as well as its management score from the Sustainalytics Low Carbon Transition Ratings. The indexes also emphasize companies that report carbon emissions and are reducing their carbon intensity, as well as those whose business activities contribute positively to the environment.

Companies included in the indexes are leading their peers in their approach to climate transition. Examples include Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor chip manufacturer and Orsted, the largest energy company in Denmark and a world leader in decarbonization.

Anya Solovieva – Director, Global Commercial Strategy, Climate Solutions, Morningstar Sustainalytics

“Our clients are grappling with an increasingly complex investment landscape and trying to get 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.”

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment insights in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $264 billion in assets under advisement and management as of Sept. 30, 2023. The Company operates through wholly- or majority-owned subsidiaries in 32 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

About Morningstar Indexes and Morningstar Sustainalytics

Morningstar Indexes and Morningstar Sustainalytics have recently formed a strategic alignment to provide a more holistic and robust ESG offering to Morningstar clients. This growing collaboration includes ESG-related products, insights and research.

As the fastest-growing global index provider for the last two years according to Burton-Taylor International Consulting, Morningstar Indexes was built to keep up with the evolving needs of investors—and to be a leading-edge advocate for them. Morningstar's rich heritage as a transparent, investor-focused leader in data and research uniquely equips Morningstar Indexes to support individuals, institutions, wealth managers and advisors in navigating investment opportunities across all major asset classes, styles, and strategies. From assessing risk and return with traditional benchmarks to helping investors effectively incorporate ESG objectives into their investment process, our range of index solutions spans an investment landscape as diverse as investors themselves. We help investors answer today's increasingly complex questions so that they can more easily reach tomorrow's goals. Please visit indexes.morningstar.com for more information.

Morningstar Sustainalytics is a leading ESG data, research, and ratings firm that supports investors around the world with the development and implementation of responsible investment strategies. For more than 30 years, the firm has been at the forefront of developing high-quality, innovative solutions to meet the evolving needs of global investors. Today, Morningstar Sustainalytics works with hundreds of the world's leading asset managers and pension funds who incorporate ESG information and assessments into their investment processes. The firm also works with hundreds of companies and their financial intermediaries to help them consider material sustainability factors in policies, practices, and capital projects. Morningstar Sustainalytics has analysts around the world with varied multidisciplinary expertise across more than 40 industry groups. For more information, visit www.sustainalytics.com.

©2024 Morningstar, Inc. All Rights Reserved. The information, data, analyses and opinions contained herein (1) include the proprietary information of Morningstar, (2) may not be copied or redistributed, (3) do not constitute investment advice offered by Morningstar, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete or accurate. Morningstar has not given its consent to be deemed an "expert" under the federal Securities Act of 1933. Except as otherwise required by law, Morningstar is not responsible for any trading decisions, damages or other losses resulting from, or related to, this information, data, analyses or opinions or their use. References to specific securities or other investment options should not be considered an offer (as defined by the Securities and Exchange Act) to purchase or sell that specific investment. Past performance does not guarantee future results. Before making any investment decision, consider if the investment is suitable for you by referencing your own financial position, investment objectives, and risk profile. Always consult with your financial advisor before investing.

Indexes are unmanaged and not available for direct investment. Morningstar indexes are created and maintained by Morningstar, Inc. Morningstar® is a registered trademark of Morningstar, Inc.

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