Investment Operations

BNY Mellon Debuts Service to Evaluate ESG Factors in Investment Performance


BNY Mellon has launched of a range of reporting tools that the bank says will enable clients to track their portfolio investments based on environmental, social and governance (ESG) issues and United Nations Global Compact (UNGC) principles. The new reports are being introduced at a time when an increasing number of institutional investors are exploring how ESG and other types of sustainability data can help them fine-tune their risk management practices and investment decisions.

Additionally, analysts say the demand for ESG scoring is increasing as ESG-related regulatory requirements, including clauses within the European Union’s Directive on Pensions (IORP II), went into effect starting in January of 2019.

BNY Mellon clients will have the ability to view their total ESG and UNGC scores on equities at the account level versus relevant benchmarks over time. They will also have the ability to view the ESG and UNGC scores at the company-level, providing an assessment of their sustainability. The data used for these new reports is sourced through an agreement with Arabesque S-Ray®, an innovator in sustainability metrics that leverages machine-learning and big data to score approximately 7,000 of the world’s largest companies.

“This new service expands upon our existing post trade compliance monitoring service, which enables clients to screen and track their investments based on social and ethical factors,” said Fraser Priestley, Managing Director of Global Risk Solutions in EMEA at BNY Mellon. “We believe our new service around ESG metrics will be particularly helpful to a number of European pensions who, under a directive known as IORP II, are required to disclose the relevance and materiality of ESG factors and how they are taken into account for risk management processes.”

Starting in the fourth quarter of 2018, a number of BNY Mellon clients began receiving aggregate ESG and UNGC scores as a part of their existing Global Risk Solutions Analytics subscription service. ESG and UNGC information at the sub-score level is also available as an additional service to clients who seek more detailed information to assist with their performance and risk management practices.

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