State Street Offers New Tool to Gauge Environmental, Other Social Risks
27 March 2017 - 12:19AM
Dow Jones News
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)
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