Morningstar Indexes Introduces Morningstar® Eurozone Societal Development Select 80 Index℠

New index, designed to provide exposure to Eurozone-based companies committed to strong social policies and supported by data and risk ratings from Sustainalytics, will be licensed by HSBC.

LONDON, June 21, 2023 -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment insights, today announces the launch of the Morningstar Eurozone Societal Development Select 80 Index, an addition to its growing series of sustainability indexes. The new index, powered by the methodology of leading global index provider Morningstar Indexes and drawing on the leading ESG data and risk ratings of Morningstar Sustainalytics, has been exclusively licensed by HSBC as the basis for new index-based structured products.

Julien Thibaud, Global Head of Derivatives & Exchange Business Development for Morningstar Indexes, said: “We are excited to collaborate once again with HSBC to offer an ESG index-based approach for structured product investors. This new index draws on the leading global index methodologies of Morningstar Indexes and is based on the leading ESG research and data of Morningstar Sustainalytics. It is designed to address growing investor interest in impact and societal development-related investment strategies and market exposures.”

Vikram Puppala, Global Head of ESG Products for Morningstar Sustainalytics said: “We are proud to support an index for investors focused on the societal impacts of their portfolios. Companies operate in an interconnected socioeconomic context that affects human development through multiple lenses. These kind of collaborative index initiatives are a way forward for investors to meaningfully address basic social needs in global regions where it’s most urgent.”

Romain Benvenuto, Global Head of QIS Structuring, HSBC, said: ”We’re pleased to exclusively license the Morningstar Eurozone Societal Development Select 80 Index. HSBC will be able to offer products tracking the index, addressing our clients’ willingness to allocate capital toward companies that display commitments toward social goals.”

The Morningstar Eurozone Societal Development Select 80 Index provides investors with exposure to large- and mid-cap Eurozone-based companies that display a stronger commitment to policies that are aligned to the United Nations’ Sustainable Development Goals and support economic development in emerging market countries with the lowest levels of economic development according to the World Bank and the United Nations.

This new index begins with the Morningstar Eurozone Large-Mid Cap Index, with approximately 400 companies, and then selects and weights eligible constituents based on the Societal Development Score system of Sustainalytics in addition to a scaling factor based on company revenue.

In order to qualify for a societal development score, companies must have at least 5 of 32 key performance indicators (KPIs) as identified by Sustainalytics. Examples of KPIs include gender pay disclosure, fair trade products, human rights, working hours and bribery and corruption policies.

Once a company qualifies for index eligibility, its Societal Development Score is calculated based on its rankings across various key performance indicators for social and economic development policies. A scaling factor is then applied to this score based on what percentage of the company’s revenue is derived from markets defined as “low” or “lower middle income” by the World Bank or as a “least developed country” by the U.N.

The 80 top companies selected for the index based on their scaled societal development score, such as Veolia and LMVH, demonstrate a top-down commitment to social and economic policies that help emerging and underdeveloped countries as well as a commitment to doing business in these markets.

The new index joins Morningstar Indexes family of sustainable investing index solutions, a global range of market indexes designed to help investors address a variety of sustainable investment goals including ESG risk, climate and impact.

Morningstar continues to develop a broad range of market data, insights, investment tools and research to help a wide spectrum of sustainable investment goals across markets. Investor demand for ESG solutions has increased drastically in the last decade. According to Morningstar research, despite a number of macroeconomic pressures in the first quarter including rising interest rates, inflation and a looming economic slowdown, global sustainable funds continued to attract significant investor interest, with $29 billion of net new flows into global sustainable funds to finish the quarter at more than $2.7 trillion.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment insights 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 $246 billion in assets under advisement and management as of Dec. 31, 2022. The Company operates through wholly- or majority-owned subsidiaries in 32 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

About Morningstar Indexes

Morningstar Indexes, the fastest growing global index provider for the last two years according to Burton-Taylor, was built to keep up with the evolving needs of investors—and to be a leading-edge advocate for them. Our rich heritage as a transparent, investor-focused leader in data and research uniquely equips us to support individuals, institutions, wealth managers and advisors in navigating investment opportunities across all major asset classes, styles and strategies. From assessing risk and return with traditional benchmarks to helping investors effectively incorporate ESG objectives into their investment process, our range of index solutions spans an investment landscape as diverse as investors themselves. We help investors answer today’s increasingly complex questions so that they can more easily reach tomorrow’s goals.

About HSBC

HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in 62 countries and territories. With assets of $2,990bn as at 31 March 2023, HSBC is one of the world’s largest banking and financial services organisations.

About Morningstar Sustainalytics

Morningstar Sustainalytics is a leading ESG data, research, and ratings firm that supports investors around the world with the development and implementation of responsible investment strategies. For more than 30 years, the firm has been at the forefront of developing high-quality, innovative solutions to meet the evolving needs of global investors. Today, Morningstar Sustainalytics works with hundreds of the world’s leading asset managers and pension funds who incorporate ESG information and assessments into their investment processes. The firm also works with hundreds of companies and their financial intermediaries to help them consider material sustainability factors in policies, practices, and capital projects. With 17 offices globally, Morningstar Sustainalytics has more than 1,800 staff members, including more than 850 analysts with varied multidisciplinary expertise across more than 40 industry groups. For more information, visit www.sustainalytics.com.

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