State Street announced it has enhanced its portfolio of environmental, social and governance (ESG) offerings with the launch of ESGXSM, a new analytics tool designed to provide information to help clients bring transparency and standardisation to their ESG investing.
State Street also announced today agreements with new data providers, including Arabesque, to complement its existing agreement with TruValue Labs, announced earlier this year. ESGX offers clients the ability to receive their ESG data sets from any or all of the data providers State Street is collaborating with.
Developed by State Street Global ExchangeSM, State Street’s data and analytics business, ESGX will provide clients with a web platform through which they can assess ESG factor exposure in their portfolios, such as a company’s carbon footprint, the type of labor used in a supply chain, and board diversity statistics. Clients will also have the ability to review reports, which can be updated daily, that show how the ESG profile of a portfolio has evolved over time.
“Having a view into a company’s non-financial profile is increasingly important to the growing number of investors and regulators who understand the impact of ESG factors on risk and returns,” said John Plansky, global head of State Street Global Exchange. “The root of firm valuation is the disclosure of relevant information, and it’s critical that we bring new technologies to market that can provide added transparency for clients looking to better understand their investment portfolios through an ESG lens.”
Global ESG assets under management climbed to almost $23 trillion in 2016, a 25 percent increase from 20141. Yet, according to a recent State Street study, while traditional obstacles to ESG investing are fading, the one significant barrier that remains is the lack of transparent, standardized and quality data.
Included in the new ESGX analytics platform, State Street’s ESG Solutions business will offer Arabesque S-Ray™, an algorithm-based technology that analyzes the sustainability performance of the world’s largest listed corporations, using self-learning quantitative models and data scores as a risk management and compliance measure.
“We believe ESG data provides a new dimension to investing, giving investors more information than ever before about the DNA of a company,” said Andreas Feiner, head of ESG Research at Arabesque. “We are delighted to be collaborating with State Street to offer our proprietary analytics tool.”
“Investors want to perform well while being responsible, and they need access to ESG data to do that effectively,” said Mark McDivitt, head of ESG Solutions at State Street Global Exchange. “We’re consistently hearing from clients that they need reliable ways to measure exposure to non-financial ESG factors. The combination of our ESGX analytic tool and these ESG data options will give them access to data and a range of insights that hasn’t previously existed.”