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FOR IMMEDIATE RELEASE

Morningstar Introduces Industry’s First Sustainability Rating for 20,000 Funds Globally, Giving
Investors New Way to Evaluate Investments Based on Environmental, Social, and Governance (ESG)
Factors
CHICAGO, March 1, 2016—To help investors evaluate funds based on environmental, social, andgovernance (ESG) factors, Morningstar, Inc. (NASDAQ: MORN), a leading provider of independentinvestment research, today introduced the Morningstar Sustainability RatingTM for funds. The new rating
will enable investors around the world to evaluate mutual funds and exchange-traded funds based on how
well the companies held in their funds are managing their ESG risks and opportunities.
Morningstar is rolling out the ratings and related ESG metrics today for approximately 20,000 funds globallyin Morningstar DirectSM, the company’s research platform for asset managers and wealth management
professionals, and Morningstar OfficeSM, the company’s practice management system for independent
financial advisors. In the coming weeks, Morningstar will launch the ratings on other platforms, including
Morningstar® Advisor WorkstationSM, Morningstar.com®, and other websites around the world.
In support of Morningstar’s sustainable investing initiative, Steven Smit, CEO of Morningstar Benelux, hasbeen named head of sustainability and will be responsible for leading the company’s initiative to bring thenew ratings and metrics to investors globally. Jon Hale, Ph.D., CFA, former head of manager research forNorth America, has been named head of sustainability research.
“Given the widespread and growing interest in sustainable investing around the world, investors needbetter tools to help them determine whether the funds they own or are considering adding to theirportfolios reflect best sustainability practices,” Smit said. “Our Sustainability Rating and related metrics will
provide investors with an ESG lens they can use to evaluate funds and, eventually, other managed

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products. Creating more insight into sustainability investing is a passion of mine and many others at
Morningstar. This initiative will help us better serve investors who place particular importance on
incorporating ESG factors into their investment decisions.”
The Morningstar Sustainability Rating helps investors gauge how well the companies held in a fund aremanaging the ESG issues most relevant to their industries and compare funds with one another, acrossMorningstar Categories, and to benchmarks. Morningstar calculates the rating based on the underlying
fund holdings and company-level ESG research and ratings from Sustainalytics, a leading independent
provider of ESG and corporate governance ratings and research.
“Many investors are interested in sustainable investing but unsure how to put it into practice,” Hale said.
“Our new rating makes it easier to compare funds based on their ESG attributes. In that way, investors canbetter determine how to incorporate sustainable investing into their portfolios, or assess the extent towhich their fund investments are upholding best sustainability practices.”
Hale added, “Some firms say that they invest according to sustainability principles, but it’s been hard toverify. Now investors can draw their own conclusions, using an independent, robust check of that claim
that’s based on comprehensive analysis of a fund’s holdings.”
The Morningstar Sustainability Rating calculation is a two-step process. First, each fund with at least 50
percent of assets covered by a company-level ESG score from Sustainalytics receives a Morningstar®

Portfolio Sustainability ScoreTM. The Portfolio Sustainability Score is an asset-weighted average of
normalized company-level ESG scores with deductions made for companies involved in controversial
incidents, such as environmental accidents, fraud, or discriminatory behavior. The Morningstar

Sustainability Rating is the Portfolio Sustainability Score relative to at least 10 category peers, assigned ina bell curve distribution. Funds receive Sustainability Ratings described as Low, Below Average, Average,
Above Average, and High, and depicted by globe icons where Low equals 1 globe and High equals 5globes. Morningstar assigns ratings to all funds that have more than half of their underlying assets rated bySustainalytics, not just funds with explicit sustainable or responsible investment mandates. Of theapproximately 20,000 funds with Morningstar Sustainability Ratings, 10 percent received 5 globes, 22.5
percent received 4 globes, 35 percent received 3 globes, 22.5 percent received 2 globes, and 10 percent
received 1 globe. Morningstar will update Portfolio Sustainability Scores when it receives new fund

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holdings data and will base them on the latest company scores from Sustainalytics. Morningstar will
update the Sustainability Rating each month using the most recent Portfolio Sustainability Scores.
Morningstar’s initial analysis of the ratings reveals that funds with explicit sustainable or responsible
mandates are generally practicing what they preach. Nearly two out of three such funds received thehighest ratings, more than double the percentage of funds with Sustainability Ratings overall. It’s important
to note that funds with explicit sustainable or responsible investment mandates comprise only about 2
percent of the fund universe.
Morningstar Direct and Morningstar Office users can screen for the Sustainability Rating for funds alongwith other ESG metrics, such as separate Environmental, Social, and Governance scores. In the future,
Morningstar plans to expand the number and types of investments that receive Sustainability Ratings aswell as add additional sustainable investing analytics and research.
For more information about Morningstar’s Sustainability Rating, including frequently asked questions anddefinitions, articles about sustainable investing, and the rating methodology, please visit the press kit andwebsite.
Morningstar will hold a webinar to discuss the Sustainability Rating and Morningstar’s approach tosustainable investing at 9 a.m. CT/4 p.m. ET on Tuesday, March 1, 2016. Click here to register. Follow theconversation on Twitter with the hashtag #MstarESG.
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 retirement plan providers and sponsors. Morningstar provides dataon more than 510,000 investment offerings, including stocks, mutual funds, and similar vehicles, alongwith real-time global market data on more than 17 million equities, indexes, futures, options, commodities,
and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers
investment management services through its investment advisory subsidiaries, with more than $180 billion
in assets under advisement and management as of Dec. 31, 2015. The company has operations in 27
countries.
About Sustainalytics
Sustainalytics is an independent ESG and corporate governance research, ratings, and analysis firm
supporting investors around the world with the development and implementation of responsible
investment strategies. With 14 offices globally, Sustainalytics partners with institutional investors who
integrate environmental, social, and governance information and assessments into their investment

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processes. Today, the firm has 250 staff members, including more than 120 analysts with varied
multidisciplinary expertise across more than 40 sectors. Through the IRRI survey, investors selectedSustainalytics as the best independent responsible investment research firm for three consecutive years—
2012 through 2014—and in 2015, Sustainalytics was named among the top three firms for both ESG andcorporate governance research. For more information, visit www.sustainalytics.com.
###©2016 Morningstar, Inc. All Rights Reserved.
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