BNY Mellon has debuted a range of reporting tools to track investments based on environmental, social and governance (ESG) issues and United Nations Global Compact (UNGC) principles.
The global custodian said it hopes to capture demand from institutional investors that are exploring how ESG and other types of sustainability data can help them fine-tune their risk management practices and investment decisions.
“This new service expands upon our existing post-trade compliance monitoring service, which enables clients to screen and track their investments based on social and ethical factors,” said Fraser Priestley, managing director of global risk solutions, EMEA, BNY Mellon.
The launch of the services comes as regulators propose new ESG-related requirements, including clauses within the EU’s Directive on Pensions (IORP), which came into effect in January, requiring pension funds to disclose the relevance and materiality of ESG factors and how they are being taken into account for risk management processes.
Clients of BNY Mellon will be able to view their total ESG and UNGC scores on equities at the account level verses relevant benchmarks over time.
The data used for these reports is sourced through an agreement with Arabesque S-Ray, an ESG consultancy that uses machine learning and big data to score the world’s largest companies in terms of their ESG rating.
Custodians could play a large role in the ESG space as they look to take up the role of a big data aggregator in order to inform clients of relevant ESG developments.
A report by Aite Group in December suggested custodians have the capabilities to provide ESG and data ratings.
As well as BNY Mellon, other custodians including State Street, BNP Paribas, and Societe Generale have taken the lead in providing ESG services.