Northern Trust Asset Management has expanded its sustainability strategies, enabling institutional investors to combine Environmental, Social and Governance (ESG) investing solutions with the manager’s expertise in quantitative investing across developed and emerging markets.The Emerging Markets Quality Low Carbon Strategy aims to tackle climate change risk while enhancing performance through the integration of Northern Trust’s proprietary Quality factor, which targets companies that are efficiently managed, profitable, and have strong cash flows.
Designed to invest at the intersection of low carbon and high quality, the strategy is an example of Northern Trust’s approach of delivering quantitative investment solutions that focus on the efficient use of risk – without sacrificing performance. Driven by client demand, the strategy is executed using the investment manager’s proven record of innovation in ESG and quantitative investing.
“Having been at the forefront of ESG innovation for nearly 30 years, we’ve seen investors’ attitudes evolve over time,” says Marie Dzanis, head of Northern Trust Asset Management, Europe, Middle East and Africa. “Today’s investor not only wants to live their values – they want to partner with firms which can help them invest their values. At Northern Trust Asset Management, we’re passionate about identifying, building and delivering effective, responsible investment solutions – and we believe this can be achieved without sacrificing financial performance.”
“The quality of emissions data is constantly improving and this, coupled with the sophistication of our quantitative techniques, means we are in a strong position to combine Northern Trust’s core competency of quantitative investing with climate change investment considerations,” says Mamadou Abou-Sarr, global head of product development at Northern Trust Asset Management. “Our focus is to help investors avoid unintended risks and sector biases within their portfolios by targeting exposure to risk factors – achieved through our range of tailored strategies.”
The Emerging Markets Quality Low Carbon Strategy provides investors an environmentally cleaner exposure to emerging markets equities with a carbon intensity reduction target of 70 percent.
Other strategies, including Europe Value ESG, North America Value ESG or Emerging Markets Multifactor ESG, incorporate a set of norm-based and business-involvement screens. Within an end-to-end risk management framework, the strategies employ a proprietary multi-factor model using value, quality and momentum to score all investable constituents.
Northern Trust Asset Management also recently announced it had launched a World Green Transition Index Strategy, Small Cap ESG Low Carbon Index Strategy and has added thermal coal screens to its existing suite of Custom ESG Index Strategies to align with evolving investor preferences.