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How BNY Mellon is looking to fix ESG’s ‘data problem’ and turbocharge the market’s record flows (BK)


BNY Mellon

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There is a perennial problem that has plagued investors big and small looking to park their money in investments that reflect their values: a confusing lack of consistency. One measure dubs a company a sustainable investment because it has a diverse board, but another says that because it contributes to air pollution, it should not be recognized as such.

As inflows into products governed by ESG — environmental, social, and corporate governance — standards hover near all-time highs with trillions of dollars on the line, a new tool that custody banking giant BNY Mellon has rolled out is trying to address investors’ concerns as well as help asset managers build portfolios and conduct due diligence.

“Clients were saying that they were confused, especially asset owners, by the fact that different vendors of data came up with very different conclusions on the same investment, whether is it sustainable or not,” said Corinne Neale, the firm’s global head of business applications for BNY Mellon’s data and analytics solutions business, in a recent exclusive interview with Insider, referring to professional investors.

That feedback around what defines “sustainable” roughly a year ago prompted Neale and Roman Regelman, chief executive of asset servicing and head of digital, to take a closer look at what the firm is doing to help clients analyze securities with an ESG lens. BNY Mellon’s application, in the form of a series of dashboards an investor can view on a screen, covers some 2.4 million securities including mutual funds and ETFs. 

Read more: Corporations rushed to address the Capitol riot and political donations. Here’s how those moves reflect the rise of sustainable investing.

The firm is also giving clients a line of vision into how the wider industry is investing. Along with helping investors scan for securities that reflect their values based on criteria they choose — from companies that prioritize clean water and sanitation or affordable and clean energy to those not involved with child labor in their supply chains, to name some selections — the tool has a feature that can give some visibility into certain strategies’ popularity. 

Part of their thinking behind the app is that if they can provide transparency around what is and is not a sustainable investment, more investors would likely contribute to the market.

“People have been talking about ESG for a long time. But now is the time. Things are changing,” Regelman said. 

“I think the reason it’s so critical is because it’s not just a buzzword. It’s really a data problem. And frankly, that’s why we have ESG as part of our data analytics. Because it’s not just a good thing to do, which it is, of course. It’s a data problem,” he said.

That the world’s largest custodian — with some $39 trillion in assets in its care, and $2 trillion in directly managed assets as of Sept. 30 — has created a tool to help investors define sustainability highlights growing demand for transparency in the now-ubiquitous ESG market.

The term itself has been controversial …read more

Source:: Business Insider

      

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