Northern Trust Asset Management Launches Quantitative ESG Strategy for EMEA and APAC Investors
The intersection of high quality and highly rated ESG and quality factors means investors in this strategy may benefit from both factor-based investing and ESG characteristics.
Northern Trust Asset Management (NTAM), one of the world’s leading investment managers, has expanded its suite of responsible quantitative investment solutions, with the launch of the NT World Quality ESG Strategy, which has been available for U.S. investors since 2015.
The strategy seeks to efficiently target high-quality stocks and companies with higher relative environmental, social and governance (ESG)-ratings whilst defining a responsible investment universe and managing climate change risk. The strategy will be accessible to investors in certain jurisdictions across Europe and Asia-Pacific.
The strategy incorporates the hallmarks of NTAM’s responsible quantitative investment solutions, including a focus on quality companies and a strong emphasis on controlling risk.
“We believe material environmental, social and governance factors are pre-financial indicators that can affect a company’s future financial viability and clients’ long-term risk-adjusted investment returns. When managed well, they can position a company for success and when mismanaged, they can result in significant risks,” said Julie Moret, global head of sustainable investing and stewardship at NTAM. “The intersection of high quality and highly rated ESG and quality factors means investors in this strategy may benefit from both factor-based investing and ESG characteristics.
The NT World Quality ESG Strategy takes a holistic view on sustainability that incorporates both financial quality and ESG profile into security selection. The approach enables investors to access a differentiated ESG integration that not only incorporates ESG metrics, but removes exposure to certain lower-scoring ESG securities, and seeks to reduce carbon footprint relative to the benchmark, with the existing strategy delivering a 64 percent reduction in CO2 intensity and an 81 percent reduction in CO2 potential emissions (as at March 31, 2022).
Michael Hunstad, head of quantitative strategies at NTAM, said: “For more than 25 years, we have been researching and managing quantitative active strategies using factors to provide systematic, targeted exposure to compensated equity risks. Our proprietary quality score augments the quality bias found in many ESG strategies whilst our portfolio construction techniques seek to avoid uncompensated risks.”
NTAM is a founding member of the One Planet Asset Manager Initiative, which sees member asset managers commit to advance the understanding of the implications of climate-related risks and opportunities within long-term investment portfolios through engagement, research and sharing of investment practices. It is also a founding member of the Climate Action 100+ initiative that engages with 166 companies representing 80% of corporate greenhouse gas emissions globally and a supporter of the Financial Stability Board Task Force on Climate-related Financial Disclosure (TCFD) – a consortium established in 2015 to develop a voluntary, consistent framework for use by companies to disclose climate-related financial risk to investors and other stakeholders.
Entrusted with more than US$1 trillion of investor assets, including $100+ billion in sustainable investing assets under management (as of 30 June, 2022), NTAM is among the world’s largest investment managers.
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At Northern Trust Asset Management (“NTAM”), we define Sustainable Investing as encompassing all of NTAM’s investment strategies and accounts that utilize values based and norms based screens, best-in-class and ESG integration, or thematic investing that may focus on a specific ESG issue such as climate risk. NTAM’s Sustainable Investing includes portfolios designed by NTAM as well as those portfolios managed to client-defined methodologies or screens. As the data, analytical models and aforementioned portfolio construction tools available in the marketplace have evolved over time, so too has NTAM. NTAM’s Sustainable Investing encompasses strategies and client assets managed in accordance with client specified responsible investing terms (historically referred to as Socially Responsible), as well as portfolios that leverage contemporary approaches and datasets, including ESG analytics and ESG thematic investing.
About Northern Trust Asset Management
Northern Trust Asset Management is a global investment manager that helps investors navigate changing market environments, so they can confidently realize their long-term objectives. Entrusted with US$1 trillion of investor assets as of June 30, 2022, we understand that investing ultimately serves a greater purpose and believe investors should be compensated for the risks they take — in all market environments and any investment strategy. That’s why we combine robust capital markets research, expert portfolio construction and comprehensive risk management to craft innovative and efficient solutions that deliver targeted investment outcomes. As engaged contributors to our communities, we consider it a great privilege to serve our investors and our communities with integrity, respect, and transparency.
Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Belvedere Advisors LLC, Northern Trust Asset Management Australia Pty Ltd and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 23 U.S. states and Washington, D.C., and across 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2022, Northern Trust had assets under custody/administration of US$13.7 trillion, and assets under management of US$1.3 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit us on northerntrust.com. Follow us on Twitter @NorthernTrust or Northern Trust Corporation on LinkedIn.
Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/terms-and-conditions.
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