A shot across the ESG bow for fund boards

Morningstar’s decision to strip 1,200 funds, with assets in excess of $1 trillion, of their ESG tag has huge implications. It is particularly significant for their directors.

Morningstar has announced that it is taking away the ESG designation from more than 1,200 funds in its classification system. Morningstar says that these funds have failed to deliver on their stated ESG goals.

Hortense Bioy, global head of sustainability research at Morningstar, told Bloomberg that sustainability tags were taken off ‘funds that say they consider ESG factors in the investment process, but that don’t integrate them in a determinative way for their investment selection.’ Bioy said funds that used ‘light or ambiguous ESG language’ were targeted.

To read more on this story see the March issue of The NED