HSBC launches ESG portfolio reporting service for asset owners and managers

Custodians continue to step into the provision of ESG transparency and insight to meet growing demand from their clients.

By Jonathan Watkins

HSBC has launched a reporting service that provides asset owners and managers with an independent measurement of how focused their listed asset investments are on environmental, social and corporate governance (ESG) issues. 

The new service will allow insurance companies, pension funds and sovereign wealth funds, and the asset managers that invest their money, to keep track of the ESG ratings of their large holdings.

There has been increasing demand for greater transparency and more insight in this area with ESG strategies on the rise and regulation on the horizon. 

Consistent data has always been a thorn in the side for the buy-side and custodians have been looking to step into the role of providing transparency into ESG scores and ratings. 

  “ESG is rising up the agenda for our clients, regulators and investors alike. This reporting service will enable our Securities Services clients to gain meaningful insights into ESG aspects of their portfolios using independent scores and ratings,” said Chris Johnson, director of market data for securities services at HSBC.  

“This tool will enable securities services clients to see at a glance how large holdings in their selected portfolios are performing using recognised independent ESG criteria.”  

HSBC said the reporting service will consist of a monthly reporting dashboard, including portfolio-level analysis using ESG ratings, and carbon emissions data.

The reporting service will use scores and ratings from leading ESG rating providers MSCI, Sustainalytics and Vigeo Eiris, and can be applied equally to specialist ESG and non-ESG portfolios. The bank plans to increase its list of providers over time. 

“We expect this product to appeal to asset owners who are seeking independent reporting on the ESG profile of their investments. It will enable them to discuss ESG aspects of large positions in their funds with their managers,” said Johnson. “Asset manager clients, who already have an in-house ESG capability, could use the report to compare with their own research.” 

Asset managers have become increasingly vigilant on companies that are not progressing on ESG issues. Last week, BlackRock punished more than 50 companies including US oil major ExxonMobil and Swedish carmaker Volvo over their lack of progress on tackling global warming.

In March, three of the world’s largest pension funds teamed up earlier this year to throw their roughly $2 trillion weight behind sustainable investing, citing their need to support long-term growth over short-term returns. 

The California State Teachers’ Retirement System (CalSTRS) along with the $1.6 trillion Government Pension Investment Fund (GPIF) in Japan and USS Investment Management, all launched a joint attack on the short-termism of companies and asset managers.