Northern Trust plans to introduce passively managed ESG investments

Long-term goal is to integrate the UN PRI framework

Northern Trust, the US investment and custody giant, says it plans to introduce a set of passively managed environmental, social and governance (ESG) investment solutions to clients and prospects this year.

It is assessing ESG index providers and plans to introduce a “suite of passive solutions” to the market as it looks to integrate the United Nations Principles for Responsible Investment as its framework for responsible ownership.

The Chicago-based financial group plans also to introduce “a broader array” of responsible investing solutions through its multi-manager platform as well as focusing additional resources on responsible investing, it says in its new Corporate Social Responsibility report.

The finance giant added that it is now formally tracking the demand for responsible investment solutions that appear in requests for proposal (RFPs). This gives it “key demand signals and a medium to support product development and internal advocacy”.

In addition it has developed an ESG questionnaire for inclusion in RFP requests associated with manager searches within its multi-manager business. This enables it to gauge firms’ capabilities and commitment to ESG investing.

Northern Trust, which has $4.6trn (€3.54trn) under custody and $716.5bn under management, added it would review human rights standards for suppliers and include a supplier code of conduct.Over the three-to-five year horizon, Northern Trust aims to review ESG strategy by its board and increase senior management participation with top level ESG organizations. Another goal is to increase responsible investing among its partners, clients and vendors globally. It comes as Northern said its clients had requested more information on its socially responsible investing capabilities.

Formally tracking RI demand in RFPs

Its fund management arm, Northern Trust Global Investments, currently has around $17bn in socially screened strategies, or 5% of total assets.

One of its flagship RI products is the Northern Trust Global Sustainability Index Fund, which uses data from MSCI’s ESG research team.

The company also said it has partnered with an unnamed external data provider to offer environmental emission analytics.
“Using our analytics tools, in addition to the emissions data, clients may reduce investment risk from carbon and other environmental impact costs, while maintaining their overall investment strategy and financial performance,” Northern Trust says. Link