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External Risk Assessment

Added on 07-06-2014

Company

State Street

Network

CSR Europe

Year

2014

Business challenge

We are pleased the MSCI Risk Assessment rated us “AA” for integrating our environmental and social factors into our enterprise-wide risk management systems — underscoring the strength of our ESG investment products.

MSCI ESG Research Intangible Value Assessment (IVA) provides research, ratings, and analysis of companies’ risks and opportunities arising from ESG factors as compared with industry peers. The IVA-company rating is expressed on a seven-point scale (AAA-CCC). We received an AA rating, continuing our three year upward trend. Our overall strengths included continued improvement, increased disclosure, and expanded coverage of ESG risk and improvements in privacy protection disclosure. MSCI cited talent attraction and retention in the medium term as an area for potential improvement.

Description

ESG risk assessment is performed annually by an executive in our risk division. The topics assessed are pulled from key performance indicators but also from the Global Reporting Initiative. The assessment is performed externally by MSCI and discussed in full detail within our CR governance structure and reported on in the full CR Report.

Impact

ENVIRONMENTAL AND SOCIAL PRODUCT MANAGEMENT/ESG CONSIDERATION IN INVESTMENTS

On the MSCI ESG Intangible Value Assessment, we ranked in the 71st percentile in the Responsible Investment category.

STRENGTHS

  • Availability of ESG-themed investment options
  • Bulk of client assets are invested in listed equities and cash, which have minimal relative ESG risk
  • Expansion of ESG team coverage, including proxy voting procedures and the establishment of subcommittees dedicated to each ESG pillar and ESG-related products

TALENT RECRUITMENT AND RETENTION/ PROFESSIONAL DEVELOPMENT AND TRAINING

On the MSCI ESG Intangible Value Assessment, we ranked in the 71st percentile in the Human Capital Development category.

STRENGTHS

  • Provides guides to acquired employees to ease transition
  • Regular employee surveys
  • Professional development and online training opportunities

Challenges/Lessons learned:

ENVIRONMENTAL AND SOCIAL PRODUCT MANAGEMENT/ESG CONSIDERATION IN INVESTMENTS

AREAS OF POTENTIAL IMPROVEMENT

  • Prepare for potential increase in client ESG demand
  • Continue ESG integration into State Street’s governance systems 

TALENT RECRUITMENT AND RETENTION/ PROFESSIONAL DEVELOPMENT AND TRAINING

AREAS OF POTENTIAL IMPROVEMENT

  • Alleviate increased pressure on human capital from acquisitions and layoffs
  • Create procedures related to formal employee grievance reporting or escalation

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