Portuguese stocks rank highest on sustainability

Morningstar has published its Sustainability Atlas, which examines sustainability scores of 35 Morningstar Country Indexes, covering more than 90% of global market capitalization, to provide an overview of the geographical opportunities and risks of sustainable investing.

Through six maps Morningstar shows the range of country index scores in terms of their overall sustainability scores and their five components (ESG scores, controversy
scores, environmental scores, social scores, and governance scores), which indicate how well the companies in the various Morningstar country indexes are coping with sustainability issues.

Among all the country indexes, the Morningstar Portugal Index has the highest Morningstar sustainability score of 67.5.

None of the Portugal index’s constituents are currently involved in a major ESG-related controversy, which results in the lowest possible deduction based on the Morningstar controversy score. While Portugal is a small and concentrated index, the basket is mostly composed of stocks with ESG scores that rank above average or high in their respective global industry peer groups.

The report also shows that Nordic countries are a key area of opportunity for sustainable investments. The Denmark, Sweden, Norway, and Finland indexes all rank in the highest quintile for sustainability scores.

On a regional basis, companies domiciled in the eurozone tend to have strong ESG performance relative to their global industry peers. Asian and emerging-markets countries, on the other hand, tend to have lower scores overall and on all three pillars: environmental, social and governance.

In this Sustainability Atlas, the Morningstar Japan Index performed poorly with a second-lowest governance score of 44.6, even when governance has been a hot topic in Japan in recent years. China, for its part, sits at the bottom of the group, with a governance score of 40.4.

Click here to read the full report.

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