Northern Trust has enhanced its analytical capabilities to provide pension funds and other global institutional investors with heightened insights and transparency over their environmental, social, and governance (ESG) risk exposures.
The ESG Analytics Summary, prepared by Northern Trust’s Investment Risk and Analytical Services group, provides investors with periodic snapshot analysis across their equity and corporate bond portfolios — setting out investment “scores” against a range of ESG factors, United Nation’s (UN) Global Compact principles, and business activity flags.
This 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. These insights are generated by combining Northern Trust’s global custody asset information with data provided in partnership with information services provider IdealRatings.
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. It can be used to facilitate discussions with their investment managers and manage potential stakeholder concerns and reputational risk.
ESG analytics can also supplement traditional investment analytics — providing a more holistic view of investment risks, exposures and opportunities. For example, during volatile market conditions, understanding the strength of a company’s governance structures and processes can give investors a timely and more complete picture of its resiliency.
More and more investment management firms are taking ESG and renewables into account. In fact, earlier this month, BlackRock’s Global Energy & Power Infrastructure Fund (GEPIF) announced it achieved a $5.1 billion final close of Global Energy & Power Infrastructure Fund III (GEPIF III), making it the largest alternative investment fundraise in BlackRock history. The final close value also exceeded both the original fund target of $3.5 billion and the original hard cap of $4.5 billion.