Morningstar - Q1 2020 - 6

Contributors

Magazine

Seth Sherwood

Equity analyst Seth Sherwood is the chair
of Morningstar's ESG Committee, which
includes analysts and strategists from Morningstar
offices around the world. The mission is
to incorporate financially material environmental,
social, and governance issues into Morningstar's
equity analysis.
In "Seeing the Light" (Page 25), Sherwood
and coauthors Tancrede Fulop and Travis Miller
explore the interplay between a company's
ESG risk and its sustainable competitive advantage,
or moat. "The relationship between moats
and ESG risk doesn't just go in one direction, and
people should be careful about extrapolating
moatworthiness based on lack of ESG risk,"
Sherwood cautions. "Conversely, while a moat
could signal a lack of ESG risks, it could also serve
as a bulwark against risks that may emerge.
Consider Equifax: If it weren't part of an oligopoly,
its data privacy breach might have had a more
extreme valuation impact."
Data security is just one looming and complicated
issue that the ESG Committee must monitor. "Our
role is to figure out what is financially material and
integrate it prudently," says Sherwood. "We
are a global department, covering more than 1,500
companies in 11 sectors, and the way ESG issues
affect companies can vary by sector and region."

Lloyd Miller

This issue's incisive artwork is by Morningstar
magazine regular Lloyd Miller, whose illustrations
have neatly conveyed our ideas since our first
cover in 2007. "Full disclosure, I've always wanted
to incorporate an eye chart into an illustration,"
Miller says. "They are such striking graphic images
by virtue of their practical design, with the large
letters at top being the most memorable at
a glance and the following letters in diminishing
sizes suggesting more to be observed beneath
the surface. The combination of the chart and the
phoropter device-which measures visual
acuity-parallels the theme of this issue: a close
look at the importance of ESG."
Miller's work has also appeared in such publications as the Harvard Business Review,
The New York Times, The Wall Street Journal, and
The Nation. He is based in New York City.

6

Morningstar Q1 2020

Editor-in-Chief Jerry Kerns
Managing Editor Laura Lallos
Editorial Board David M. Blanchett, Sarah Bush, Elizabeth Collins,
Lee Davidson, Adam Fleck, Sylvester Flood, Jon Hale, Thomas M. Idzorek,
Ben Johnson, Paul D. Kaplan, Haywood Kelly, Dan Kemp, Grant
Kennaway, Alex Morozov, Daniel Needham, Don Phillips, Jeffrey Ptak,
Hal Ratner, Daniel Rohr, Anthony Serhan, Christopher Traulsen
Contributors Joshua Aguilar, Karen Andersen, Holly Black, Damien
Conover, Michael Finke, Tancrede Fulop, Brett Horn, Charles
Keenan, Jason Kephart, Russel Kinnel, Maciej Kowara, Alec Lucas, Travis
Miller, Matias Möttölä, Megan Pacholok, David Pang, Andy Pettit,
John Rekenthaler, Sheryl Rowling, Lorenzo Sanchez, Madison Sargis,
Seth Sherwood, Aron Szapiro, Ian Tam, Michael Wu, Phillip Zhong
Art Director Alex Skoirchet
Designer Paul Zdon
Illustrator Lloyd Miller
Photographers Matthew Gilson, Christopher Lane, David Lees,
David Woolfall
Proofreader Mike Eiler
Publisher Leslie Marshall
Director of Advertising Sales Stuart Roge
Regional Sales Directors Dan Atkinson, Tony Lignelli, Joanna Sawyer
Morningstar, Inc.
CEO Kunal Kapoor
Managing Director, Design David Williams
Chief Marketing Officer Rob Pinkerton
Editor-in-Chief Nicolas Owens
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