Morningstar Sustainalytics Updates ESG Tools to Support EU Sustainability Compliance

Morningstar Sustainalytics has announced significant updates to its suite of tools designed to assist investors and corporations in navigating the evolving ESG regulatory landscape under the EU Sustainable Finance Action Plan. These enhancements include new research products and insights aimed at supporting compliance with the Corporate Sustainability Reporting Directive (CSRD), ESMA Fund Naming Rules, and the EU Taxonomy.

The expanded CSRD Aligned Data program aims to enhance transparency and accountability for EU companies. Catalina Secreteanu, Managing Director of ESG Solutions at Morningstar Sustainalytics, emphasized the urgency of this program, stating, “The EU has made significant progress in aligning company disclosures around ESG-related factors with traditional reporting requirements. Our new CSRD Aligned Data program helps our clients address these changes with confidence.” The CSRD Aligned Data provides comprehensive insights across over 450 criteria, covering up to 25,000 companies. This initiative is expected to impact around 50,000 companies within the EU, supporting detailed portfolio analysis and compliance with stringent EU standards.

To address concerns of greenwashing, Morningstar Sustainalytics has also introduced an innovative ESMA Fund Naming Rules Solution. Arthur Carabia, ESG Policy Research Director at Morningstar Sustainalytics, highlighted the importance of this solution, stating, “Our research shows that more than 1,600 funds are exposed to at least one stock potentially in breach of activity-based exclusion rules. Our new ESMA resource provides investors with a conservative approach to methodology while enabling them to customize exclusions to ensure regulatory alignment.” This solution aims to protect investors by ensuring that fund names accurately reflect ESG commitments and do not mislead stakeholders.

Morningstar Sustainalytics also announced enhancements to its EU Taxonomy Solution. Hortense Bioy, Head of Sustainable Investing Research at Morningstar Sustainalytics, discussed the updates, saying, “Leveraging our data powered by our enhanced EU Taxonomy solution, aligned investment opportunities are expected to grow further when reporting on alignment for the four new environmental objectives of the Taxonomy becomes mandatory.” The EU Taxonomy tool assists stakeholders in defining and investing in environmentally sustainable activities, tracking over $500 billion in aligned investments.