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Technology & Data

Morningstar Introduces Eurozone Societal Development Index

Investment data and analytics provider Morningstar has added to its sustainability index range with the launch of the Morningstar Eurozone Societal Development Select 80 Index. It draws on the methodology of index provider Morningstar Indexes and the ESG data and risk ratings of Morningstar Sustainalytics. Morningstar recently combined its Index and Sustainalytics businesses to strengthen the firm’s ESG offering. The index offers investors exposure to large- and mid-cap Eurozone based companies that “display a stronger commitment” to UN SDG-aligned policies and support emerging market countries’ economic development. The 80 top companies are selected for the index based on a scaled societal development score that is calculated from their rankings across various key performance indicators for social and economic development policies. In order to qualify for a social development score, firms must have at least five of 32 KPIs as identified by Sustainalytics, including gender pay disclosure, fair trade products, human rights, working hours and bribery and corruption 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 UN. Vikram Puppala, Global Head of ESG Products at Sustainalytics, said: “Companies operate in an interconnected socioeconomic context that affects human development through multiple lenses. These kind of collaborative index initiatives are away forward for investors to meaningfully address basic social needs in global regions where it’s most urgent.” 

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