Morningstar examines how ESG scores affect investor decisions

Ignites recently reported on a recent Morningstar paper regarding the influence of its ESG scoring system on investor decision-making. Evidently, investors are avoiding funds with low ESG scores but are not automatically seeking out funds with high ESG scores. According to the article, “A one-globe rating corresponded to a 3.7% lower growth rate over the tested period, the paper finds. Funds with better globe ratings did see higher growth rates, but the impact was much smaller — four-globe funds had a 1.5% higher growth rate while five-globe funds had a 1.4% higher rate.”