Morningstar: Asset Owners Nimbly Navigate a Global Market in Transition

Morningstar's fourth annual global asset owner survey finds a rethink on asset allocation amid changing global landscape, continued innovation in climate investing and a push for more direct engagement

Morningstar, Inc. (NASDAQ:MORN), a leading provider of independent investment insights, today published findings from its fourth annual Voice of the Asset Owner survey, showing a rethink on asset allocation, growing differences in ESG approaches and environments around the world, further progress and innovation in climate-related investing and a push for more standardized and higher quality ESG indexes, data and investment tools.

The global quantitative survey, conducted by Morningstar Indexes and Morningstar Sustainalytics, included more than 500 asset owners (AOs) across 11 countries in North America, Europe and APAC with combined assets of approximately $19 trillion. Participants included pension funds, insurance general accounts, outsourced CIOs (OCIOs) and family offices, with six in 10 managing $1 billion or more and nearly three in 10 (29%) managing $10 billion plus. Deriving from the results of our qualitative interviews with asset owners globally earlier this year, quantitative questions covered investment outlook approach, ESG materiality, perspectives on implementation and the quality of data, ratings and indexes.

Paul Schutzman – Head of Institutional Investor Solutions, Morningstar, said: "Findings from our fourth annual global asset owner conversation show a community firmly rooted in their fiduciary duty navigating increasingly uncertain global capital markets and a tumultuous regulatory and policy environment. Notable new findings this year include consideration toward moving away from US assets, differing ESG approaches and operating environments around the world, increasing sophistication in climate investing and an uptick in support for standardized frameworks and ESG regulation in the face of regulatory rollbacks."

Disrupted World Order Prompting a Global Rethink on Asset Allocation

• More than three in four (76%) AOs globally view increasing trade disputes as material to their investments, with this trend consistent across all regions.
• When AOs were asked about a range of geopolitical issues that have been material to their investments in the last year, 73% cited the current US administration and 62% cited US dollar weakness.
• Four in 10 asset owners report reducing – or planning to reduce – their allocation to the US, citing factors like currency risk and policy uncertainty.

ESG Materiality Growing, But Depends on Where You Sit

• One in five asset owners report ESG considerations applying to more than 75% of their AUM, up eight percentage points from 2024.
• More than 6 in 10 (61%) AOs globally say ESG considerations go "hand-in-hand with my fiduciary duty," up eight percentage points from 2024.
• Nearly six in 10 (58%) AOs believe ESG materiality has increased in the past 5 years, with the US the only country with an ESG materiality deficit, i.e. more respondents perceive ESG as having become less material (34%) than those feeling it has become more material (30%).

Climate Innovation – Push for Deeper Strategies, Better Tools & More Engagement

• AOs put climate transition readiness (56%), energy management (48%) and physical climate risks (42%) at the top of their list of most material environmental factors.
• Carbon footprinting has emerged, with one in two measuring the carbon footprint of their investments in order to promote transition readiness, up seven percentage points over last year.
• Those AOs accounting for climate transition readiness are much more likely to favor engagement to promote real-world emissions reduction (47%) over portfolio decarbonization (29%).

Regulatory Rollbacks & Blowbacks – A Step in the Wrong Direction?

• The majority of AOs (55%) globally consider ESG regulations to be a help, more than double (27%) the amount considering them to be a hindrance.
• When asked about recent regulatory rollbacks on ESG (EU omnibus & SEC guidelines) many more AOs consider these a step in the wrong (46%) than the right direction (27%).
• AOs increasingly cite standardized frameworks as a helpful feature of ESG regulations, with 61% citing them this year, up 8 percentage points from 2024 and 15 percentage points from 2023.

"Asset owners continue to set the standard for global investing and are demanding higher quality indexes, data and tools to support their mission," said Rob Edwards, EMEA Managing Director for Morningstar Indexes. "Notably, our clients are asking for better metrics to track company progress on rapidly progressing issues like climate transition, energy management and physical climate risk."

Arnold Gast, ESG Research Director at Morningstar Sustainalytics, noting the growing sophistication of asset owners around climate-related investing, said "our clients are moving the ball forward when it comes to portfolio-level ESG analysis and implementation, looking at quantitative as well as qualitative analysis on impact, visual analytics, sector and region-specific ESG benchmarks, forward-looking ESG metrics and regulatory compliance tracking."

About Morningstar Indexes and Morningstar Sustainalytics

Morningstar Indexes and Morningstar Sustainalytics together provide a holistic and robust ESG offering to Morningstar clients. This growing collaboration includes ESG-related products, insights and research.

As the fastest-growing global index provider for the last five years according to Burton-Taylor International Consulting, Morningstar Indexes was built to keep up with the evolving needs of investors—and to be a leading-edge advocate for them. Morningstar's rich heritage as a transparent, investor-focused leader in data and research uniquely equips Morningstar Indexes to support individuals, institutions, wealth managers and advisors in navigating investment opportunities across all major asset classes, styles, and strategies. From assessing risk and return with traditional benchmarks to helping investors effectively incorporate ESG objectives into their investment process, our range of index solutions spans an investment landscape as diverse as investors themselves. We help investors answer today's increasingly complex questions so that they can more easily reach tomorrow's goals. Please visit indexes.morningstar.com for more information.

Morningstar Sustainalytics is a leading ESG data, research, and ratings firm that supports investors around the world with the development and implementation of responsible investment strategies. For more than 30 years, the firm has been at the forefront of developing high-quality, innovative solutions to meet the evolving needs of global investors. Today, Morningstar Sustainalytics works with hundreds of the world's leading asset managers and pension funds who incorporate ESG information and assessments into their investment processes. The firm also works with hundreds of companies and their financial intermediaries to help them consider material sustainability factors in policies, practices, and capital projects. Morningstar Sustainalytics has analysts around the world with varied multidisciplinary expertise across more than 40 industry groups. For more information, visit www.sustainalytics.com.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment insights in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers and owners, retirement plan providers and sponsors, institutional investors in the debt and private capital markets, and alliances and redistributors. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $352 billion in AUMA as of June 30, 2025. The Company operates through wholly- or majority-owned subsidiaries in 32 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on X (formerly known as Twitter) @MorningstarInc.

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