On April 23, 2019 Portfolio Advisor reported that “(g)lobal ratings firm Morningstar recently published a ‘Sustainability Atlas’ examining and rating 46 country equity indices on ESG criteria.
Morningstar researchers analysed the firm’s entire suite of global equity indexes, representing 97% of global market capitalisation for the first time incorporating the firm’s Carbon Metrics to assess companies’ vulnerability to the transition from fossil fuels.
The Atlas reveals some striking differences between the world’s indices with some surprising winners and losers.
Northern Europe leads the way when it comes to corporate-level sustainability, with Denmark scoring highest on social criteria, the Netherlands on governance criteria, and Portugal on environmental criteria.
Finland is the world’s most sustainable stock market, thanks to holdings like Nokia, an ESG leader within the global technology hardware industry, Kone, another ESG leader in the machinery sector and Neste Corp, a downstream oil and gas company.
Colombia is the world’s highest-scoring non-European market for sustainability, despite the Atlas showing a high transition risk.
Hungary, ranking 13th out of 46, is another top-performing emerging market thanks to MOL, considered by Sustainalytics to be a leader among global oil and gas production companies. Taiwan is the top Asian market in terms of sustainability, thanks to the big role played by Taiwan Semiconductor Manufacturing, a global ESG leader.
China is last in global ESG rankings, primarily due to poor corporate governance among companies like Alibaba and Tencent relative to their global peers. Other Asian markets like Japan and Korea score poorly on corporate governance, due to underperformance from companies such as SoftBank and Toyota in Japan and Samsung in Korea.
The US ranks in the fourth quintile of global sustainability leaders because of a significant level of controversy from Amazon, Apple, and Microsoft, and poor governance scores from Facebook and Alphabet. On the other hand, the US is the only non-European country to rank in the best quintile for carbon risk.”
You may read the article on the Portfolio Adviser internet site.