US finance giant BNY Mellon has teamed up with research firm Sustainalytics to provide ESG research to depositary receipts clients.
Depositary receipts (DRs) are US instruments issued by a US bank to represent a foreign company’s listed shares and BNY Mellon says it is the first depositary bank to offer such an ESG service to the market, worth $876bn at the end of last year according to data from IPREO.
DRs can be listed on major stock exchanges including the New York Stock Exchange, NASDAQ, the London Stock Exchange and the Luxembourg Stock Exchange.
Speaking to Responsible Investor, Guy Gresham, managing director and head of global investor relations advisory in BNY Mellon’s depositary receipts business, said the move reflected a growing interest from companies to understand the ESG space. “They know they need to focus on this,” he said. “But it is challenging as there is a lot of noise.”
Gresham said BNY Mellon partnered with Sustainalytics as it has the broadest coverage of its client base: “It allows clients to see what research is being developed on them and identify where they are outperforming or underperforming their peers on disclosure.”
He added that it would help match clients with appropriate profiles to investors, adding: “Normally sustainability research firms are feeding out to the investor community. Our clients will see what investors are consuming and hopefully evolve.”BNY Mellon’s Depositary Receipts business will offer its clients access to Sustainalytics’ ESG research and ratings, as well as custom benchmark reports that provide a lens through which issuers are viewed by investors. Sustainalytics will also offer clients access to in-house industry analysts who can provide deeper insight on ESG issues.
“Companies working with BNY Mellon will benefit from a deeper understanding of how investors view their sustainability practices and how they can improve upon them to attract new investments,” said Sustainalytics’ CEO, Michael Jantzi.
The DR market grew by more than $53bn (7%) to $876bn last year, according to IPREO data cited by BNY Mellon in a market review issued in January (link to BNY Mellon’s DR home page).
Online retailer Alibaba’s giant $25bn initial public offering led a wave of the Chinese deals that accounted for one-third of the year’s capital raisings, it says.
The top five listed DRs by value:
- Alibaba (China)
- Baidu (China)
- Petrobras (Brazil)
- Vale (Brazil)
- BP (UK)