Morningstar’s ESG Risk Rating for Funds (the Globes), Explained

Updated August 17, 2026. Quick answer: the globes are a relative rank within a category, not a measure of how sustainable a fund is. Morningstar says so in as many words: a fund can carry more ESG risk than another fund and still receive a better rating, if the two sit in different Morningstar Global Categories. Five globes means top of its own peer group. It does not mean low ESG risk in absolute terms, and it is not a judgement about whether a fund is ethical.

What the globes measure

The scale first:

For each fund that is eligible for a Morningstar ESG Risk Rating, the rating is expressed as 1 to 5 “globes,” whereby a higher number of globes indicates that the portfolio has lower ESG risk.

Note the direction, which trips people up: more globes means less risk. The rating measures exposure to environmental, social and governance risk, so a high score is the absence of something. Morningstar states it explicitly on the methodology page:

Please note that lower risk results in a higher rating.

Then comes the sentence that changes how you should read every globe rating you have ever seen:

the number of globes a fund receives is determined relative to other funds in the same Morningstar Global Category

This means that a fund could have more ESG risk than another fund yet still receive a better rating if those funds are in different Morningstar Global Categories

That is Morningstar’s own caveat, published on its own definition page. A five-globe energy fund and a five-globe technology fund are not making the same claim, because they were never compared to each other. Each was ranked inside its own Morningstar Global Category.

How a fund gets its globes

The underlying work is done by Sustainalytics, a Morningstar company:

Sustainalytics assigns its Portfolio ESG Risk Ratings by combining a portfolio’s Corporate ESG Risk Rating and Sovereign ESG Risk Rating

Funds are ranked within their category, then cut into five groups:

The ranked funds are divided into five groups, based on a normal distribution, and each receives a rating from High to Low.

For each peer group, the median scoring portfolio receives a 3 rating.

And the resulting percentile bands are published:

Percent rank rating depictions include the top 10% (High, 5 globes), followed by the next 22.5% (Above Average, 4 globes), the next 35% (Average, 3 globes), the next 22.5% (Below Average, 2 globes), and the bottom 10% (Low, 1 globe).

If those bands look familiar, they should: they are the same 10 / 22.5 / 35 / 22.5 / 10 split used by the fund star rating. Morningstar applies one percentile shape to both, measuring completely different things with it.

The exception that matters most

Buried in the same methodology description is a caveat with real consequences:

In practice, this can mean that all portfolios within some peer groups may receive the same corporate or sovereign rating.

In other words, where a peer group’s funds are not meaningfully different from one another on ESG risk, they can all end up with the same rating. A rating that is identical across a peer group is telling you the funds are alike, not that they are all good. It is worth knowing which situation you are in before treating a globe count as a differentiator.

The name has moved, and the old one is still a trademark

Morningstar’s current published term is the Morningstar ESG Risk Rating for funds. Many articles — and plenty of fund marketing — still call it the Morningstar Sustainability Rating. That older name is still listed as a Morningstar trademark in the company’s annual report to the SEC, so it has not been abandoned; it is simply not the term used on the current definition page.

What this page will not tell you: when the naming changed, or whether it was announced. Both texts were read for this page; no change notice was, so no date is asserted here. If you need the date, that is a question for Morningstar.

How to actually read a globe rating

• Read the category with it. The rating is meaningless detached from the peer group it was calculated in.
• Do not read it as an ethics score. It measures financially material ESG risk exposure, which is a different question from whether you approve of the holdings.
• Do not compare globes across categories. Morningstar’s own caveat above is the reason.

For the fund-selection questions that the globes cannot answer, how to research a mutual fund covers the expense ratio, category and holdings checks.

Sources

• Morningstar, “Morningstar ESG Risk Rating for Funds”, Investing Terms and Definitions. Source document. Read 2026-08-17.
• Morningstar, “Portfolio ESG Risk Rating”, Investing Terms and Definitions. Source document. Read 2026-08-17.
• Morningstar, Inc. Form 10-K for the fiscal year ended December 31, 2025. Filed 2026-02-13. Source document. Read 2026-08-17.

Every figure and quotation on this page was taken from the documents above, each fetched and read on 2026-08-17. Where those documents do not answer a question, this page says so rather than filling the gap.