Building a Sustainable Future
Environmental, social, and governance (ESG) investing is top of mind for investors globally. Driven by new initiatives, expanding opportunities, and investors’ own sustainability goals, commitment to ESG initiatives continue to build.
As members of the Net Zero Asset Managers initiative, we are proud to announce our interim targets for 2030 to ensure our portfolios reach net-zero greenhouse gas emissions by 2050 or sooner.
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Defining Your ESG Goals
Amid environmental and societal challenges, and incoming ESG regulations, how can investors build long-term resilience in their portfolios while benefiting from new investment opportunities?
We advise that investors define and develop specific ESG investment objectives and goals, based on their vision, mission and investment goals. Common investor objectives can include alpha generation, risk mitigation, adhering to ESG regulations or aligning the portfolio to the investor’s values. Investment principles can be developed based on these objectives, which will form the ESG investment strategy.
ESG Investment Strategies
ESG Integration
ESG data is available to all teams at State Street, across all asset classes and investment styles. Our active portfolio managers systematically integrate ESG signals and factors into the investment analysis and decision-making process, to mitigate risk and identify opportunities for long-term outperformance
Climate Investing
This is a thematic investment approach that aims to align portfolios with the transition to a low carbon economy and a reduction in global warming to well below 2°C.
For investors seeking to align portfolios with the Paris Agreement goals and the transition to a low-carbon economy, we offer a variety of options across equities and fixed income. Our Sustainable Climate Strategies allow investors to benefit from both mitigation of current and future emissions, and adaptation to embedded climate risks.
ESG for Index Investors
Index investing offers a wide range of benefits for ESG investors, including diversification and transparency. Index strategies provide investors with a clear-cut way to achieve broad diversification in their portfolios, which further strengthens risk mitigation. In addition, buy/sell decisions in index strategies are based on pre-stated rules, so the investment exposures are clear and transparent. Finally, as one of the world’s largest index managers, we can engage with portfolio companies to make meaningful change.
Data Analytics
We built a transparent, multi-source data architecture to help investors that we can leverage for our ESG analysis and to generate R-Factor scores. We can also provide ESG analysis at the portfolio level to help investors understand their ESG exposures.
ESG: Important to Our Investment Philosophy
At State Street, our mission is to invest responsibly to enable economic prosperity and social progress. As one of the world’s largest asset managers, we can partner with clients to achieve their ESG objectives through our global expertise in ESG research, investment strategy and data analytics.
Through engagement, voting and thought leadership, we encourage companies to enhance diversity at the board level, strengthen board leadership and improve disclosure on their sustainability practices.
Further information on our stewardship approach can be found in our Annual Stewardship Report.
