Northern Trust has enhanced its environmental, social and governance (ESG) risk exposure analytics capabilities to include new reporting for key environmental data categories, allowing clients to interrogate specific environmental risk indicators for their investments.
The service also delivers a new ‘ESG Insights: Environment’ report, offering a range of analytics, including carbon footprint analysis.
The resulting information can be used to inform asset managers and stakeholders about the environmental impact of their investment portfolio, as well as to generate data and analytics for annual disclosures.
“Environmental factors are the driver behind a number of initiatives requiring greater monitoring of material risks and increased disclosures,” said Serge Boccassini, product lead, investment accounting and analytic solutions at Northern Trust. “Our enhanced capabilities support clients in both areas – and can help them more closely incorporate the ‘E’ of ‘ESG’ into their decision-making.”
The Chicago-based custodian stated the information provided can also be used to gain fund-level oversight of environmental risks and drill-down to compare key scores and carbon footprint metrics across individual managers, portfolios, countries or sectors.
With changes in a fund’s environmental risk profile over time, it can help manage potential stakeholder concerns, financial or reputational risk and support alignment with a variety of sustainable investment frameworks. The release has been designed to align with the reporting recommendations of the Taskforce for Climate-related Financial Disclosures (TCFD) – an initiative by the Financial Stability Board to develop consistent climate-related financial risk disclosures.
The new capability is part of Northern Trust’s new ‘ESG Insights’ product suite, offered through its Investment Risk and Analytical Services group. Launched in April 2020, it provides investors with periodic snapshot analysis across their portfolios, setting out investment ‘scores’ against ESG factors.