• 70% feel that ESG factors have become more material in the past five years
• Barriers to ESG implementation cited: impact on returns, lack of available products and reluctance of clients and stakeholders
• Two-thirds say ESG data has improved in quality, but 48% say they would benefit from more accuracy, 42% from more timeliness and 41% from more objectivity

CHICAGO, Oct. 6, 2022 – Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, through its Morningstar Indexes and Sustainalytics teams, today published its first Voice of the Asset Owner global survey of institutional asset owners.

The survey reveals that a large, influential group of global investors who consider sustainability to be material to the investment process have not yet fully implemented ESG in their portfolios.

The global quantitative study, designed by Morningstar Indexes and Morningstar Sustainalytics, included 500 global asset owners from 11 countries representing approximately $32.7 trillion in assets under management. Asset owners taking part included insurance, OCIO/multi-manager, family office and sovereign wealth, as well as pension funds. Sixty-four percent of those surveyed oversee more than $1 billion in assets, 36% more than $10 billion and 12% more than $100 billion.

High-level findings include:

• ESG Widely Considered Material. The vast majority (85%) of survey respondents believe ESG factors are material to investment policy. Most (70%) feel ESG factors have become more material in the past five years.
• ESG Implementation Still Going Slowly. Only 29% of survey respondents say ESG factors are being considered for more than half of their organization’s total assets under management. When asked about barriers to full implementation of ESG strategies, asset owners cited concern about impact on returns, lack of available products and reluctance of clients and stakeholders as top factors.
• ESG Ratings, Data & Tools Improving, But Need to Get Better. About two-thirds of asset owners surveyed have seen a marked improvement in the quality of ESG data, ratings, indexes and tools available over the past five years, with just one in ten seeing a decline in standards. Yet AOs still see plenty of room for improvement in ESG tools, with nearly half (48%) saying they would benefit from more accuracy, 42% from more timeliness, and 41% from more objectivity of ESG data. Furthermore, developments in regulation, data, reporting, analytical tools and investment processes appear to be interdependent, with each aspect shaping, and being shaped by, the others.

“As an ESG ratings, data and service provider, we embarked on the Voice of the Asset Owner survey to gain better insight into the needs of our asset owner clients,” said Morningstar Indexes Head of ESG Strategy Tom Kuh. “Findings show ESG considerations to be a major driver of asset owner investment policy, but we’re still far from full investment portfolio implementation. Probing this mismatch, our survey uncovered the reasons why ESG implementation is a slow roll.”

“We were reminded through our discussions with asset owners of all shapes, sizes and approaches around the world that ESG investing is complex as well as diverse and is progressing at different speeds and stages,” added Kuh. “We were also reminded that, despite their differences and the fact that each is on a different stage in their own ESG journey, asset owners are quite unified in their ESG commitment.”

This new multi-phase survey, conducted for Morningstar by Opinium in conjunction with Collie ESG, aims to gather insight into the evolving role of asset owners and the growing influence that ESG factors and sustainable investment considerations are having on the global market ecosystem. The first phase of the survey consisted of live qualitative interviews with fourteen asset owners across North America and Europe. This laid the foundation for the second phase, consisting of global quantitative research, whose results are being published today.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $253 billion in assets under advisement and management as of June 30, 2022. The Company has operations in 29 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.