Sustainable Products and Services are the Foundation of Northern Trust's Responsible Investment Principles
The foundation of Northern Trust's responsible investment principles, as with our entire decision-making process, is that we will act in a manner to protect our clients’ financial well-being.
At the end of 2016, Northern Trust Asset Management managed $54 billion of assets globally that incorporate ESG criteria, including six ESG funds and two newly launched ESG exchange-traded funds (ETFs). With ESG trends continuing to strengthen, our ESG pooled fund platform grew to over $5 billion. Northern Trust's investment oversight solutions offer our investors comprehensive analysis, insights and monitoring, as well as asset class portfolios that include traditional market-based metrics and ESG exposures.
We have a comprehensive set of investment policies encompassing responsible investing factors such as our bespoke ESG pooled fund policies, our engagement policy that pertains to our European index funds, corporate governance and internal engagement principles and our custom proxy voting policy with ESG guidelines. In 2016, we also published our Northern Trust Stewardship Statement, which touches on the company's commitment to proxy voting, engagement and transparency. Stewardship aims to enhance the quality of engagement between institutional investors and companies in order to promote the long-term success of companies, such that the ultimate providers of capital (investors) also prosper. Responsibility for stewardship is shared between companies and investors, and effective stewardship benefits both parties as well as the economy as a whole. In light of our efforts, Northern Trust Asset Management was awarded Tier 1 status by the Financial Reporting Council.
As a leading investment manager, we recognize our additional influence and responsibilities to our clients and to society as a whole. Northern Trust Asset Management has utilized the services of Hermes Equity Ownership Services (EOS) to implement shareholder engagement across 21 of our EMEA equity products. The basis for Hermes EOS' approach in carrying out engagement activities on behalf of the funds, is the Northern Trust Responsible Ownership Engagement Policy.
Northern Trust's global platform for ESG investing is aligned with our fiduciary heritage and commitment to offer solutions to meet our clients' diverse objectives. Northern Trust manages three of the top 10 largest ESG index funds globally. Our Northern Trust World Custom ESG Fund had the #1 global inflow for an ESG index fund in 2016. Northern Trust is an industry pioneer and award-winner in smart beta strategies with our proprietary Northern Trust Quality Score and factor analytic tools that analyze factor exposures of our clients’ portfolios.
Our team of ESG experts actively engages with the wider sustainability community by sharing thought leadership, expertise and insight to help push sustainability and stewardship forward. Northern Trust Asset Management is a signatory to the United Nations Principles for Responsible Investing (UNPRI), with which it also partners on a variety of working groups including equity, fixed income, out-reach and assurance. We also report information to the Carbon Disclosure Project (CDP) and actively participate in the investor advisory group at the Sustainable Accounting Standards Board (SASB). Additionally, Northern Trust Asset Management is a member of the Institutional Investor Group on Climate Change (IIGCC) and the Banking Environment Initiative (BEI).
NORTHERN TRUST ESG FUNDS
Northern Trust funds integrate or screen for a variety of different ESG factors including United Nations Global Compact, tobacco, weapons, firearms, gambling and nuclear weapons. As an asset manager, we also have the capability to:
- Manage assets to a socially responsible index. We have partnerships with all of the leading index providers and can design additional ESG indices on behalf of clients.
- Manage assets to a traditional index while excluding a client-directed list of companies. We currently manage restricted accounts to most major index series across asset classes. Accounts can be managed to replicate the risk & return characteristics of the broad index or the restricted index.
- Manage assets to a traditional index while interpreting a client's Socially Responsible Investing SRI/ESG guidelines. We currently manage a group of accounts for which we interpret the client guidelines and create a restricted list to synchronize with the investment management process.
NORTHERN TRUST MANAGED FUNDS
- Northern Trust Global Sustainability Fund
- Northern Trust World Custom ESG Equity
- Northern Trust World Custom ESG EUR Hedged Equity Index Fund
- Northern Trust North America Equity Index UCITS
- Northern Trust Europe Equity Index
- Northern Trust Emerging Markets Custom Low Carbon Optimised Equity Index Fund
- Northern Trust Emerging Markets Custom ESG Equity Index Fund
- Northern Trust Emerging Markets Custom ESG Equity Index UCITS FGR Fund