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Solutions

Sustainable Investing

We Believe ESG Factors Are Pre-Financial Indicators

They have the power to shape a company’s financial viability and investors’ returns.

For more than 30 years, sophisticated and progressive ESG investors have chosen us for innovative solutions fit to withstand future market ebbs and flows. We help them by bringing clarity to investment opportunities and risks resulting from financially relevant environmental, social, and governance factors.

Portfolios Fit For The Future

As long-term investors, we craft portfolios to fit the needs of investors — today and in the future. More importantly, we recognize that when managed well, ESG factors can position a company for success but, when mismanaged, they can result in significant risks.

BUILDING SUSTAINABLE FUTURES

Requires Advocacy in Action

As early sustainability adopters and active industry advocates, we've worked hard to drive transparency in sustainable financial reporting and positive economic and societal change.

BUILDING SUSTAINABLE FUTURES

Combines Active Stewardship with ESG Analysis

As one of the world's largest investment managers, we appreciate our voice has influence. By combining ESG analysis with stewardship, we purposely and actively engage with companies we invest in to ensure sustainable practices and raise ESG standards — and use our proxy voting power to drive change.

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View of bridge over the sea

NORTHERN TRUST ESG VECTOR SCORE ™

Bring Greater Clarity to ESG Risk Assessment

We've spent more than three decades guiding some of the world's most progressive investors on their sustainable investing journeys, but we couldn't find a tool that could bring the clarity to ESG-related risk assessment that we needed. So, we built one.

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FOUR-STEP APPROACH

Rigorous analysis brings opportunities & risk into focus

Financially relevant ESG information has the power to impact a company's performance and, ultimately, investors' long-term risk-adjusted returns. That's why we employ rigorous analysis — and a four-step investment approach — to uncover this crucial information.

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STEP ONE: ANALYZE

Bringing Clarity to ESG Investing

We analyze business-related ESG issues — financially material and industry-specific factors — that can shape short- and long-term results. Key to our process is our proprietary framework of measurable ESG targets and decades of practical experience building ESG portfolios.

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STEP TWO: MEASURE

Key to Performance: Priorities & Progress

We use external best-in-class ESG1 data, proprietary research, analytics, and exclusionary screens to select key performance indicators to measure how well publicly traded companies perform on business-relevant, financially material ESG issues and topics.

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STEP THREE: MONITOR

Separating the Leaders from the Laggards

We continually assess the sustainability performance of the securities in our ESG portfolios. We develop a comprehensive view — separating the leaders from the laggards — and flag companies that require additional research or targeted engagement.

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STEP FOUR: ENGAGE

Active Stewardship: The Power of Persuasion

Stewardship is an integral part of our investment process. We take an active ownership approach, identifying long-term risks that potentially affect shareholder value and engaging on substantive issues — those that can affect business on many levels.

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1  Best-in-class ESG is industry terminology referring to an investment approach that selects companies that are leaders in implementing ESG.

Related Content

Sustainable Investing PhilosophyRead Article
Stewardship ReportRead Article
TCFD ReportRead Article

CONTACT US

To learn more about our distinctive solutions and client experience, call us today.

Important Information

About Sustainable Investing
At Northern Trust Asset Management (“NTAM”), we define Sustainable Investing as encompassing NTAM’s investment strategies and accounts that utilize values-based and norms-based screens, best-in-class and ESG integration, and/or thematic investing that may focus on a specific issues such as climate risk. NTAM’s Sustainable Investing platform includes portfolios designed by NTAM as well as those portfolios managed to client-defined methodologies or screens.  As data, analytical models, and portfolio construction tools available in the marketplace have evolved, so has NTAM’s Sustainable Investing platform. NTAM’s Sustainable Investing platform, originated from client-specified Socially Responsible Investing tools, now encompasses a broader set of tools and capabilities.

ESG Investing Risk: The risk stemming from the ESG factors that the Fund applies in selecting securities. The use of ESG factors in securities selection may affect the Fund’s exposure to certain companies or industries and cause the Fund to forego certain investment opportunities. The Fund’s performance results may be lower than the broader equity market or than other funds that do or do not use ESG factors, scores, or screens in their securities selection process, or use a different ESG methodology. Information used by the Fund to evaluate ESG factors, including data provided by the Fund’s third-party vendor, may not be readily available, complete or accurate, which could negatively impact the Fund’s ability to accurately determine companies’ ESG ratings, which in turn could negatively impact the Fund’s performance. Currently, there is a lack of common industry standards relating to the development and application of ESG criteria which may make it difficult to compare the Fund’s principal investment strategies with the investment strategies of other funds that apply certain ESG criteria or that use a different third-party vendor for ESG data.

The Fund’s assessment of a company, based on the company’s level of involvement in a particular industry or ESG controversy or the company’s ESG ranking or rating, may differ from that of other funds or an investor. Information used by the Fund to evaluate ESG factors may vary across providers and issuers as ESG is not a uniformly defined characteristic. ESG standards differ by region and industry, and a company’s ESG practices or data providers’ assessment of a company’s ESG practices may change over time. As a result, the companies in which the Fund invests may not reflect the beliefs and values of any particular investor and may not be deemed to exhibit positive or favorable ESG characteristics if different metrics were used to evaluate them. Regulatory changes or interpretations regarding the definitions and/or use of ESG criteria could have a material adverse effect on the Fund’s ability to invest in accordance with its investment policies and/or achieve its investment objective.

Past performance is not indicative of future results.

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, Northern Trust Asset Management Australia Pty Ltd, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.

Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. For more information, read our legal and regulatory about individual market offices.
 
This material is directed to professional clients only and is not intended for retail clients. For Asia-Pacific markets, it is directed to institutional investors, expert investors and professional investors only and should not be relied upon by retail investors.