Northern Trust has bolstered its environmental, social and governance (ESG) analytics through new capabilities to provide institutional investors with heightened insights and transparency.
With the importance of robust ESG analytics coming under the spotlight more than ever before – accelerated during the COVID-19 crisis – investors will increasingly be looking to their custodians for data and insights.
Northern Trust said its ESG Analytics Summary will give investors a periodic snapshot analysis across their equity and corporate bond portfolios – setting out scores against a range of ESG factors, United Nation’s (UN) Global Compact principles and business activity flags.
The detailed analysis enables investors to track changes in a fund’s ESG profile over time, compare results on an absolute and relative basis, and compare asset managers’ scores against each other.
It will also support institutional investors’ governance, risk management and regulatory reporting.
“ESG rules play a heightened role in global investor considerations, with institutions increasingly seeking to integrate sustainability factors into their portfolios,” said Serge Boccassini, product lead, investment accounting and analytic solutions at Northern Trust,
“To achieve that effectively, it is vital they understand their investment risks. Our analysis provides insights into clients’ ESG exposures to help them identify financial risks and opportunities – and help ensure their investments continue to be aligned with their values.”
These insights from the new ESG initiative are generated through Northern Trust’s global custody asset information with data provided in partnership with information services provider IdealRatings.
The provider for responsible investments has database solutions for equities, REITs, and fixed income aimed at global investment managers and asset owners.
Institutions can use the resulting data to support their governance and oversight objectives – for example, providing evidence of their ESG scores and exposures and supporting adherence to regulatory requirements and global standards, Northern Trust said in a statement.
“We are delighted to partner with Northern Trust to provide insights into global investors’ portfolio exposures,” said Mohamed Donia, CEO of IdealRatings.
“The ESG Analytics Summary provides enhanced transparency to help investors avoid companies that pose a greater financial risk due to their ESG practices – as well as satisfy regulatory requirements and meet global standards.”