Vanguard, Fidelity Investments fall short in ESG fund ratings

Fund giants including Vanguard Group and Fidelity Investments have been given low ratings by research firm Morningstar in its first in-depth assessment on incorporating environmental, social and governance factors into investment decisions.

Photo: M. Spencer Green/AP/Ritzau Scanpix/AP

Investment research firm Morningstar rated 40 asset managers around the world and found that more than a quarter of those do not integrate ESG at all or do so in a very limited way, according to a report on Tuesday. It ranked firms and funds in a four-tier scale from Leaders and Advanced, to Basic and Low.

Among the latter was Vanguard, the world’s second-largest money manager, given a low score because sustainable strategies accounted for only a fraction of assets under management and its ESG team is relatively small. Fidelity Investments was also given a low rating for not actively engaging with firms by writing letters or sponsoring shareholder resolutions, while its standards for environmental and social issues were too vague, Morningstar said.

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