Industry-first offering aims to educate and assist issuers with the ramifications of Environmental, Social and Governance investing
To help its global corporate clients better understand the implications of Environmental, Social and Governance (ESG)-related investing, BNY Mellon’s Depositary Receipts (DR) business has announced the launch of an ESG Advisory Solutions offering.
Building on a suite of capabilities it has refined and added over the past year, the new service aims to assist issuers in developing an effective ESG strategy that’s fully integrated into their capital markets and investor relations activities.
Shifts in how society views environmental and social issues have made them important elements influencing investment decisions. Investment using an ESG focus, or screen, has seen significant growth in recent years. Some estimates now put ESG-influenced assets at over US$21 trillion, accounting for more than 30% of all equity assets worldwide. These shifts also present challenges both to investors and issuing companies – for the investor, in identifying appropriate benchmarks for analysis, and for issuers, over what additional areas of disclosure may be needed.
“BNY Mellon is the first in the DR industry to make available a wide range of ESG data and insight specifically designed to help issuers understand ESG’s many implications,” said Christopher M. Kearns, CEO of the company’s Depositary Receipts business.
“Material non-financial information such as ESG is a critical component to asset owners, asset managers and issuers alike. As markets continue to create new risks and opportunities for global corporates, we want to ensure our clients are at the forefront of understanding how best to respond,” he added.
BNY Mellon’s support for depositary receipts issuers covers four key areas:
Education and Benchmarking – Through its collaboration with Sustainalytics – a leading provider of environmental, social and governance research and analysis – BNY Mellon will help identify material themes within a client’s peer group and industry, including company-specific ESG ratings, peer benchmarking reports, and sector trends.
Engagement Policy and Strategy – BNY Mellon will help develop a roadmap to assist clients in understanding key investor ESG concerns, examining internal ESG practices, and assist in reviewing communications efforts with investors and relevant stakeholders.
Intermediary Engagement – BNY Mellon will make sure clients understand the major players, including ESG ratings providers, sustainability index providers, specialized firms and associations, and proxy advisors.
Investor Engagement – BNY Mellon will help identify investors that have embedded active ESG criteria into their investment processes and facilitate engagement with them.
Momentum is growing from investors and companies to more carefully consider the ramifications of ESG factors. The number of institutional investor signatories taking part in the United Nations-backed Principles for Responsible Investment Initiative – a global network dedicated to advancing responsible investment practices – grew by 19% in 2014 and now includes more than 1,300 signatories representing over $45 trillion in assets under management.*
While ambiguity remains over the ultimate degree to which ESG factors affect investment returns, they are likely to remain on the public’s agenda and, whether through market evolution or regulatory mandate, grow in importance.
* PRI: Principles of Responsible Investment 2015 – PRI fact sheet. http://www.unpri.org/news/pri-fact-sheet/