Sustainable Investing at Northern Trust

Dec 2, 2019 9:00 AM ET
Article

Northern Trust offers investment capabilities with sustainable objectives in equity, fixed income and real assets. The approach and objective of a sustainable investing strategy is multi-dimensional, and may apply differently to different asset classes. While sustainability factors may be broad in nature, we focus on certain key issues and approaches in our Core Aspects investment framework.

Our comprehensive Sustainable Investing Philosophy encompasses responsible investing factors such as our bespoke ESG pooled fund policies, our engagement policy for our People / European index funds, corporate governance and internal engagement principles and our Employees custom proxy voting policy with ESG guidelines.

By serving as an active owner representing shareholders’ ESG interests, we believe we will help portfolio companies produce sustainable value. Sustainable investing is based on the Shared philosophy that ESG analytics can complement quantitative or fundamental investment Value Sustainable Products techniques to mitigate risks or capture new opportunities. Our definition of sustainable investing is built on the acknowledgement that the long-term financial success of our clients and shareholders is dependent upon a healthy global environment, a stable society and well-functioning/well-governed companies. We view the integration of ESG factors as a long-term aspect of our fiduciary heritage.

Northern Trust ESG Funds

Selected Northern Trust funds integrate or screen for a variety of diferent ESG factors including Memberships the United Nations Global Compact principles, 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 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 and 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 client guidelines and create a restricted list to synchronize with the investment management process. 

At the end of 2018, Northern Trust Asset Management managed over $80 billion of assets globally that incorporated ESG criteria, including two new ESG equity funds launched in 2018: the North American ESG Fund and the Europe Value ESG Fund.

Read more from Northern Trust's ninth Corporate Social Responsibility (CSR) report