State Street updating study on ESG data

Project getting lots of interest from clients

Global banking, asset management and custody group State Street is in the process of updating its own 2008 study which looked at the environmental, social and governance ratings offered by 11 commercial suppliers.
It says the original study found that ESG-related issues have gradually exerted a stronger influence on economic performance over time
The update, taking in the financial crisis, is being conducted with the Sydney Advanced Research Center in response to demand from Australian investors.
“We have experienced a high level of interest in the findings from Canadian and European clients as well as some US clients,” State Street said.
The Boston-based company said its compliance capability lets clients review their environmental, social and governance criteria – and that it is now providing such analytics for 12 clients, representing around $284bn of assets, or 1.5% of assets under custody.Asset management arm State Street Global Advisors now has $85.8bn managed using ESG criteria, 5% of its total AUM. “Because the needs of our clients vary significantly, we consider ourselves a ‘quiet leader’ in ESG investing,” State Street says in its new Corporate Social Responsibility Report.
“As ESG becomes increasingly mandated by investors, those companies with good ESG ratings may become the preferred holdings while the portfolio weights of poorly rated companies risk being decreased.”
Rival firm BNY Mellon has said it plans to use ESG data to help it identify companies that will outperform in the future.
Elsewhere in the State Street report, SSGA’s chief executive Scott Powers says that the division decided to change its default policy on proxy voting at the end of last year. Instead of automatically voting with management, the firm will now abstain as a matter of course. “This strikes the correct balance in our fiduciary duty.”