Morningstar tool launched to filter ESG thematic funds

Educational website and tool intended to guide investors

Morningstar this week launched a new site designed to make sustainable investing easier to understand, guiding people to a range of more than 750 thematic funds.

The site, Investable World, “allows investors to explore themes such as water, food, energy, health and community, and weigh opportunities and trade-offs across varying investment approaches, from hedging against risk to prioritizing sustainable outcomes,” the company said in its announcement on Wednesday.

Investable World aims to educate visitors across those themes, Morningstar stated. The site also has a “data visualization tool” that people can use to select among hundreds of funds globally, filtering the range of products according to themes, performance, risk, maturity and impact.

The campaign comes as ESG has become more prominently featured in the news, largely as conservative state leaders have waged a war on it. Recently, several states have moved to ban ESG factors from being used in investment decisions. Sustainable investing is now a political topic, and the ferocity of differing opinions about it could leave the public wondering what to make of it.

“Today’s definition of what’s considered uniquely ‘investable’ for each person varies by the investor’s goals and conviction across three dimensions: performance, risk and sustainable impact,” Morningstar CEO Kunal Kapoor said. “Investable World brings transparency and accessibility to investors, empowering them to make choices that align with success on their own terms.”

The company also published an analysis piece, authored by director of ESG equity research Adam Fleck, finding there can be heightened investment risk for people seeking out company stocks that fit with positive societal change. For example, a public company aligned with UN Sustainable Development Goals can face ESG-related risks in other areas, the firm noted.

That also applies to mutual funds and ETFs, as only a third of the 759 thematic products in Investable World have a high or above average sustainability rating from Morningstar.