The UK stock market is often described as a collection of “old economy” stocks. Some of the country’s biggest companies come from the oil, mining, tobacco and the defense sector, and face scrutiny of environmental, social and governance concerns.
The first quarter of the market rotation away from US technology and the tariff sales in April made it difficult for investors to resolve ESG. Bat In 2025, it rose almost 10%, with weapons company BAE Systems ba The stocks are 50% higher.
However, UK stocks are inherently high risk from an ESG perspective, and how do they compare to rival markets?
MorningStar Sustainalytics Company Level ESG Risk Assessment It measures the degree to which an enterprise’s economic value is at risk due to ESG factors. And this risk assessment is ranked as negligible, low, medium, high, or severe.
The company is assigned a score based on exposure to certain material risks and how well it manages those risks.
Of the top 10 companies Morningstar UK Indexthree have a “high” ESG risk rating.
shell shell, The London-based multinational oil and gas company leads the pack with a score of 36.5. BP follows after the company BP. High ESG risk of 33.20, British American cigarettes Bat There are 30.5 points.
Still, Shell’s score is ranked 61st in an industry cohort of 293 companies. This means there are oil companies with a 60 bad ESG risk score.
Are we and European stocks at low risk?
Comparing with Morning Star US Market Index, Morningstar developed the Market Europe Ex UK Index,and Morning Star Japan Index, Morningstar UK Index More and more companies are rating high ESG risk.
US Index, Facebook and Instagram Owner Meta Platform Meta While Mitsubishi has received its acclaim for the Morningstar Japan Index, it is the only stock out of the top 10 due to its high ESG risk.
Market Europe Ex UK index developed by Morningstar is also an outlier. This is because the top 10 owners are not branded as having high ESG risks by maintaining them. However, the cohort is larger when it comes to moderate ESG risk.
For MorningStar US Index, Amazon.com amznBerkshire Hathaway brk.A,Alphabet Inc. googland Tesla TSLA All have undergone a medium ESG risk classification.
At Morningstar Japan Index, Toyota Motor, Hitachi, and Mitsui Financial Finance have a moderate ESG risk rating. And Morningstar’s developed market Europe Ex UK Index, nestle nesn, Roche rog, Novo Nordisk New b, Siemens she, and all-null gies tte All have a moderate ESG risk assessment.
FTSE 100 companies have ESG plans
ESG investments allow investors to exclude certain companies from their portfolio if they do not meet appropriate environmental, social, or governance standards.
However, this is not always easy as companies’ public messaging about sustainable investments may differ from reality. The annual report is packed with bold ESG commitments on governance, community impact and corporate social responsibility, but it is difficult to measure how successful these are.
Report from consulting company PWC, Navigate Net Zeroconsidered efforts to decarbonize decarburization from the UK’s largest companies. This is firmly categorized into a wider ESG movement environmental area.
The report found that only 26 out of 100 companies have excluded “comprehensive, measurable, specific actions.”
“Many businesses share their ambitions to commit to a more sustainable future, but they often lack delivery plans,” the report said.
“While FTSE 100 companies typically have transition plans and sustainability reports, the quality and inclusiveness of outcomes and behaviors vary.
“So, there’s a clear intention when it comes to committing to a more sustainable future, but action is slow.”
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