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Northern Trust Asset Management Launches Climate Aware Emerging Market Index Strategy


Northern Trust Asset Management, one of the world’s leading investment managers, continues to expand its sustainability solutions with the launch of a unique, sustainable emerging market green transition index strategy, with climate change considerations as a cornerstone.

The strategy complements the asset manager’s existing World Green Transition Index strategy, launched in 2019. Together the strategies, using the MSCI World Index and the MSCI Emerging Markets Index as their parent indices, offer investors globally, subject to local distribution rules, the ability to obtain climate-aware exposure to the MSCI ACWI universe via custom indices designed by Northern Trust Asset Management and managed by MSCI.

“We are pleased to offer this latest strategy which enables our clients exposure to equities that combine ESG screens with a climate aware approach, whilst harnessing the exposure to emerging markets,” said Valeria Dinershteyn, senior sustainable investing strategist, for Europe, Middle East, Africa and Asia-Pacific at Northern Trust Asset Management.

“Our strategy enables the incorporation of climate change considerations into a rules-based equity solution and revolves around five distinct climate-aware components to intelligently hedge the risks, and, importantly, incorporate the investment opportunities of tomorrow’s world. The result is a close to 70 percent reduction in carbon emissions intensity and almost 100 percent in potential carbon emissions of the strategy against the parent benchmark.” (according to MSCI data)

The Northern Trust sustainable emerging markets green transition index strategy will combine Northern Trust’s proprietary Environmental, Social and Governance (ESG) exclusion approach with screens to minimize climate related risks and include positive tilts to maximize opportunities to benefit from the transition to a low carbon economy.

Screens applied include fossil fuel exclusions (with the strategy fully fossil-fuel free, excluding companies with fossil-fuel reserves), and energy screen, to minimize current and potential exposure to carbon emissions and reduce exposure to any other associated risks. Positive tilts are then applied to companies with green revenues and a strong climate strategy by using the innovative MSCI Transition Risk Management Score.

“The strength and uniqueness of this strategy is in how it incorporates the opportunities of climate change alongside the hedging of risks, thereby increasing exposure to companies with either green revenues (such as alternative energy or energy efficiency) or a strong long-term climate policy and robust carbon reduction targets,” said Marie Dzanis, head of Northern Trust Asset Management in Europe, Middle East and Africa (EMEA). “This latest strategy underlines Northern Trust Asset Management’s continued innovation, industry collaboration and focus on sustainability. We strive to ensure we meet our clients’ needs and better serve investors on their journey to a lower carbon economy.”

Entrusted with US$1 trillion of investor assets, Northern Trust Asset Management is among the world’s largest investment managers. The firm helps investors navigate changing market environments so they can confidently realize their long-term objectives. Northern Trust has more than 30 years of sustainable investing expertise and innovation and is a UNPRI signatory and manages four of the top 10 largest ESG index funds globally (according to: eVestment. Data as of Sep 30 2020. Universe for comparison consists of 58 total passive equity products within "All ESG Universe).

Northern Trust Asset Management is a founding member of the One Planet Asset Manager Initiative, which sees member asset managers commit to advance the understanding of the implications of climate-related risks and opportunities within long-term investment portfolios through engagement, research and sharing of investment practices. It is also a founding member of the Climate Action 100+ initiative that engages with 167 companies representing 80% of corporate greenhouse gas emissions globally and an official endorser of the Financial Stability Board Task Force on Climate-related Financial Disclosure (TCFD) – a consortium established in 2015 to develop a voluntary, consistent framework for use by companies to disclose climate-related financial risk to investors and other stakeholders.

ENDS

About Northern Trust Asset Management

Northern Trust Asset Management is a global investment manager that helps investors navigate changing market environments, so they can confidently realize their long-term objectives. Entrusted with US$1.1 trillion of investor assets as of December 31, 2020, we understand that investing ultimately serves a greater purpose and believe investors should be compensated for the risks they take — in all market environments and any investment strategy. That’s why we combine robust capital markets research, expert portfolio construction and comprehensive risk management to craft innovative and efficient solutions that deliver targeted investment outcomes. As engaged contributors to our communities, we consider it a great privilege to serve our investors and our communities with integrity, respect, and transparency.

Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Belvedere Advisors LLC and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 22 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of December 31, 2020, Northern Trust had assets under custody/administration of US$14.5 trillion, and assets under management of US$1.4 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Please visit our website or follow us on Twitter.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Please read our global and regulatory information.

http://www.northerntrust.com

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