Morningstar Sustainalytics

Yesterday, following weeks of speculation and leaks, the EU Commission published the omnibus packages of proposals on sustainability and investment simplification. These are proposals to amend the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy Regulation. Morningstar Sustainalytics' Anne Schoemaker, Senior Director, Product Management, ESG Products, has been following these rapid developments and provides her insights on what it means for companies and investors. Read the article here https://mstar.co/vst8b0 Key insights include: 🏢 Companies with over 1,000 employees and more than EUR 450 million in turnover (USD 473 million) will continue to report on their EU Taxonomy key performance indicators (KPIs). Companies below this threshold will not fall in scope of mandatory taxonomy reporting. ➖ The scope of companies reporting on CSRD will be reduced by 80% and a “stop-the-clock” measure will postpone reporting for companies that are due to report in 2025 and 2026. A more reduced and streamlined standard will be developed. ⚖️ The CSDDD will see changes to its civil liability rules, penalties, and due diligence revisions interval. Only direct business partners are, in principle, within scope for due diligence. #EUOmnibus #CSRD #CSDDD #EUTaxonomy #responsibleinvesting

In recent months, many US companies have rolled back their diversity, equity, and inclusion (DEI) initiatives, citing an evolving legal and political landscape. In their latest article, Kasey Vosburg, Director, ESG Research & Methodology, and Hortense Bioy, CFA, Head of Sustainable Investing Research, analyze the impact of these rollbacks to companies' ESG Risk Ratings. Their analysis found: ↕️Not all reported rollbacks in DEI initiatives will have the same impact. While some changes may signal material shifts in corporate policy, potentially resulting in increased ESG risks, others are primarily a reframing of DEI discourse. 🧮Due to the relatively low weight of DEI in Sustainalytics’ ESG Risk Rating, they do not anticipate significant changes to overall ratings. 🔍Despite limited financial materiality, investors may be concerned about broader implications, including societal impacts and potential weakening of other ESG commitments, such as climate risk disclosure. Read the article here: https://mstar.co/yncdq4 #DEI #ESG #diversityequityinclusion

Read our latest newsletter on the EU Omnibus, SBTi targets, CEO pay and more. #ESG #responsibleinvesting

Day 3 of the Pensions and Lifetime Savings Association's Investment Conference in #Edinburgh, and what an incredible few days it’s been! We heard from our very own Hortense Bioy, CFA and Paul Schutzman on measuring transition risk and opportunities to take climate action in portfolios, through a range of strategies, and had the chance to speak with many attendees on pension investment, and innovations shaping the future of retirement outcomes. Thank you to the PLSA for hosting a fantastic event, 800+ attendees! If you haven’t stopped by our stand yet, there’s still time to do so and discuss how to navigate the transition🎯. #MorningstarIndexes #PLSAInvest25 #PensionInvestment

As nature rises to the forefront of investor and corporate agendas, 2025 will be another crucial year for advancing #biodiversity efforts. In her new article, Yu Rung (Ruby) Jeng, Engagement Manager, Stewardship Services, highlights the key focus areas companies and investors should prioritize to meaningfully address biodiversity loss. They include: 🌲 Zero Deforestation: Managing land conversion to halt habitat loss and climate change. 🌊 Oceans: Eliminating overexploitation of oceans through proper governance and guidance. 🌾 Regenerative Agriculture: Restoring biodiversity through sustainable farming and incentives. ♻️ Circular Economy: Efficiently managing natural resources via sustainable production and consumption. 🌱 Nature Finance: Leveraging the growing appetite to fund biodiversity. Read the full article here: https://mstar.co/dice86 #regenerativeagriculture #circulareconomy #deforestation #oceanconservation #naturefinance

Day 3 of the Pensions and Lifetime Savings Association's Investment Conference in #Edinburgh, and what an incredible few days it’s been! We heard from our very own Hortense Bioy, CFA and Paul Schutzman on measuring transition risk and opportunities to take climate action in portfolios, through a range of strategies, and had the chance to speak with many attendees on pension investment, and innovations shaping the future of retirement outcomes. Thank you to the PLSA for hosting a fantastic event, 800+ attendees! If you haven’t stopped by our stand yet, there’s still time to do so and discuss how to navigate the transition🎯. #MorningstarIndexes #PLSAInvest25 #PensionInvestment

In 2024, many high-emitting companies across the EU scaled back or delayed deadlines for achieving carbon reduction targets through 2030 and many early-stage projects to scale low-carbon technologies were scrapped. Morningstar Sustainalytics’ Stewardship Team were keen to get to the bottom of what was going on in the region, so in November 2024, Amar Causevic, Engagement Manager, Stewardship, and Marta Mancheva-Gentry, Engagement Manager, Stewardship, embarked on a field trip to learn how EU industry leaders were navigating the complex challenges of the energy transition. Based on their visit to green energy facilities in Germany, France, and Spain, they found that: 🧱 EU companies face structural barriers to their decarbonization efforts, including those related to EU subsidies, high interest rates, lack of customer commitment, and lack of manufacturing capacity. 🗣️ Despite these obstacles, the companies engaged with on this trip, such as BASF, Iberdrola, Air Liquide, and Acerinox, have remained committed to their net zero ambitions - investing in low-carbon technologies and projects, engaging with policymakers, and strategically positioning themselves within low-carbon value chains. ♟️ Bold and coordinated action from policymakers, industry leaders, and investors is needed to address these challenges, if the goal of a sustainable and resilient energy system in the EU is to be achieved. Read their on the ground insights here: https://mstar.co/w9jvox #ESG #stewardship #greenenergy

Tian Yu, Senior Climate Content Specialist at Morningstar Sustainalytics, attended the Geneva Net Zero Symposium last week and shares his key takeaways from the conference 👇🏽

𝐌𝐨𝐫𝐧𝐢𝐧𝐠𝐬𝐭𝐚𝐫 𝐒𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐥𝐲𝐭𝐢𝐜𝐬 𝐖𝐞𝐥𝐜𝐨𝐦𝐞𝐬 𝐃𝐚𝐯𝐢𝐝 𝐏𝐚𝐠𝐥𝐢𝐚𝐫𝐨, 𝐂𝐡𝐢𝐞𝐟 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐲 & 𝐏𝐫𝐨𝐝𝐮𝐜𝐭 𝐎𝐟𝐟𝐢𝐜𝐞𝐫 Based in London, David Pagliaro will lead the Sustainalytics global product strategy across all client segments and key regions. David brings over 20 years of experience, having held senior leadership roles at Risk Global, State Street and S&P. We are excited to have David on board as we continue to expand our capabilities to help our clients navigate an increasingly complex investment and regulatory landscape.