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Comparative Analysis Between Developed and Emerging Markets report by Morningstar

The Comparative Analysis Between Developed and Emerging Markets report by Morningstar explores the rise of ESG investing and the importance of understanding how companies handle ESG risks. Using the Sustainalytics ESG Risk Ratings framework, it evaluates companies in emerging and developed markets from 2018 to 2022. The study examines changes over time, across markets, sectors, market caps, and company types. It finds that companies in developed and emerging economies are improving their ESG Risk Ratings at different rates.

The key highlights and takeaways from the ESG Comparative Analysis conducted by Morningstar are as follows:

  • Nine emerging markets improved their ESG Risk Ratings scores faster than the global average, indicating progress in ESG performance.
  • Developed markets generally improved faster than emerging markets for average ESG Risk Rating scores from 2018 to 2022, except for the Industrials and Consumer Discretionary sectors where emerging markets showed better results.
  • Emerging markets are three to six years behind developed markets regarding ESG risk, indicating a lag in ESG performance.
  • The gap in ESG Risk Ratings between large and mid-market cap groups has narrowed for emerging markets, showing progress in ESG performance.
  • Improvements in emerging markets' private sector ESG risk scores are nearly as substantial as those in developed markets, indicating a positive trend in ESG performance.
  • Public companies in both emerging and developed markets showcased higher ESG Risk Ratings in the latter years of the analysis, indicating a convergence with private companies' scores.

Read the Comparative Analysis Between Developed and Emerging Markets report here:

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