STT State Street Corporation

By Justin Baer 

Asset managers, pensions and endowments will soon be able to screen their investments more easily for environmental, social and governance risks.

The development is thanks to State Street Corp., which is launching a new set of analytical tools aimed at capitalizing on the appetite for responsible investing. Many firms have made similar strides to help investors tackle ESG exposure, but few can harness as much data as State Street, whose custody business safeguards $29 trillion.

The custody unit gives State Street a window into clients' entire portfolios, allowing them to offer ways to analyze reams of data on those holdings. That core custody business has produced steady, if underwhelming, profit margins, compelling State Street to hunt for new ways to tap into the data and potentially undiscovered investment ideas buried within.

At the same time, interest in so-called environmental, social and governance investing is surging. More investors are looking to ensure their holdings more closely reflect their values on everything from workforce diversity to limits on their carbon footprint. The overall market for ESG investments has swelled to $40 trillion in U.S. assets under management last year, up 33% since 2014, according to the Forum for Sustainable and Responsible Investment.

"We have the root data, everything about the company itself," said Lou Maiuri, head of State Street's analytics and markets businesses. "We sit on 12% to 15% of the world's assets."

To help in its effort, the Boston-based bank has held discussions with more than 15 research firms, including MSCI Inc., Sustainalytics and TruValue Labs, to license their data. State Street plans to add those companies' research and ESG ratings alongside its existing risk-management and analytics systems for some 300 clients.

The plans follow efforts by State Street's money-management division, State Street Global Advisors, to add several exchange-traded funds and other offerings that invest in assets that screen stocks for environmental and social-justice criteria. The money manager said earlier this month it would push companies to put more women on their boards, a campaign punctuated by the placement the "Fearless Girl" statue near Wall Street's bronze bull.

State Street formed its Global Exchange business in 2013 to showcase the bank's analytics.

Some of the division's recent offerings include a private-equity index based on the data produced by its clients, and a quantitative-investment tool, called MediaStats, that tracks patterns in consumer behavior and media coverage.

Write to Justin Baer at justin.baer@wsj.com

(END) Dow Jones Newswires

March 26, 2017 09:04 ET (13:04 GMT)

State Street (NYSE:STT)
Historical Stock Chart
From Mar 2024 to Apr 2024

State Street (NYSE:STT)
Historical Stock Chart
From Apr 2023 to Apr 2024