Despite the progress made at COP27-the 2022 United Nations Climate Change Conference-developed nations are still failing to meet their $100 billion-per-year climate financing commitment made in 2009. Countries With the Lowest Carbon Risk: The Netherlands, Switzerland, Denmark, United StatesĪnother important consideration is climate change. Two important names within the Chinese index, Industrial and Commercial Bank of China IDCBF and Bank of China BACHY, hold an ESG Risk Rating classified as High. Both companies hold a Medium ESG Risk Rating and have a concerning involvement in controversies. Internet giant Tencent TCEHY is the biggest name within the index, followed by Alibaba BABA. Moreover, tweets from CEO Elon Musk reportedly to affect the share price remain a corporate governance concern.Ĭhina, for its part, falls to the bottom of the fourth quintile, ranking 39th out of the 48 markets. Tesla has been involved in repeated incidents related to the timely delivery of its cars, the safety of its Autopilot technology, and the management of its workforce. Tesla’s management of human capital and product governance risks reveals significant shortcomings, according to Sustainalytics. benchmark, Tesla TSLA, shows medium ESG risk and a “significant” level of controversy. ASML is an ESG leader (especially in the corporate governance and human capital fields) among semiconductor equipment producers.Īnother important name of the U.S. Morningstar Portfolio Sustainability Scores: The Netherlands Maintains Its Spot at the Top, Hong Kong Joins the Podiumįor the fourth consecutive year, the Netherlands continues to have the world’s most sustainable stock market, thanks to holdings like ASML Holding ASML, the biggest constituent of the benchmark. Here, we explore some key findings about the ESG practices of countries around the world. The company-level scores are sourced from Sustainalytics, which is a Morningstar company whose metrics also power the Morningstar Sustainability Rating for funds. The Morningstar Sustainability Atlas uses the constituents of Morningstar country indexes to examine the sustainability profiles of 48 country-specific equity markets. Financial advisors and asset managers can use this data to identify countries with the greatest ESG investment opportunities and most significant risks. These nations-particularly those in the north-have always been ahead of the curve on ESG, but a few other countries also feature exceptionally strong sustainability profiles. So, from a geographical point of view, how do countries around the world compare on this front? According to the latest edition of the Morningstar Sustainability Atlas, European countries lead the pack in ESG practices. Sustainable investing and the consideration of environmental, social, and governance factors have now become part of the investment mainstream. ![]() These two major events gave a further boost to a trend that had already been going on for some time: More end investors want their investments to make a difference and support the view that ESG risk is material.
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