Type to search

Morningstar Launches Low Carbon Transition Leaders Indexes

Morningstar Launches Low Carbon Transition Leaders Indexes

Listen to this story:

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., 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.

Related Article: Morningstar Debuts Transatlantic SDG Index with Sustainalytics and Citi for ESG Impactful ESG Investing

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.


Related Articles