Domini Impact Investments LLC, a specialised impact investment advisor, has achieved the prestigious 'Leader' designation in Morningstar's ESG Commitment Level ranking.

This recognition places Domini among an exclusive group of only eight asset managers worldwide to attain this top-tier distinction.

Morningstar's ESG Commitment Level serves as a qualitative gauge, offering investors valuable insights into asset managers' commitment to environmental, social, and governance (ESG) principles.

Introduced in 2020, this assessment has gained prominence as ESG considerations have become increasingly vital for investors. This year marked Domini's inaugural inclusion in the qualitative rating, where it stood out among the 108 firms evaluated globally.

In Morningstar's assessment, firms bearing the 'Leader' label share a common belief that sustainability objectives align seamlessly with long-term financial returns, a conviction that permeates every level of their organisations.

Morningstar's ESG Commitment Level evaluation plays a crucial role in helping investors identify asset managers dedicated to driving sustainable outcomes. With the growing proliferation of ESG-focused funds and concerns surrounding issues like greenwashing, heightened oil prices, and political factors, the need for thorough due diligence in manager selection has never been more apparent. Morningstar aptly underscores this point, stating, "Sustainability-focused investors should exercise discernment when choosing managers."

Among the 'Leader' category, Morningstar's report highlights that these firms have consistently been pioneers in creating innovative frameworks for assessing ESG risks and the broader impacts—both positive and negative—that companies and investments have on the environment and society as a whole.

Morningstar's evaluation methodology revolves around three key pillars: philosophy and process, resources, and active ownership.

• Philosophy and Process: This pillar scrutinises a firm's history in sustainable investing, the alignment of its investment philosophy with ESG principles, and the depth and consistency of ESG integration across its range of investment offerings.
• Resources: Specialised sustainability expertise and robust ESG data are pivotal in sustainable investing, and this pillar examines the asset manager's capability and knowledge in this critical area.
• Active Ownership: A firm's engagement and proxy-voting policies, its track record of supporting ESG shareholder resolutions, and the transparency it maintains in these activities are key considerations in the active ownership pillar.

While Domini and a select few others achieved the 'Leader' distinction, most asset managers were positioned in the tiers below. These included 21 firms with an 'Advanced' ESG Commitment Level, 48 with a 'Basic' rating, and 31 with a 'Low' ESG Commitment rating. Notably, the majority of the ranked asset managers were headquartered in the United States (45) and the United Kingdom (22).

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Source: Domini