Northern Trust offers environmental analytics for clients to measure the carbon footprint of their investments

10th December, 2009

Northern Trust announced today that it will offer environmental emission analytics, enabling institutional investors and ultra high net worth individuals across the globe to effectively measure the carbon footprint of their investments. These new capabilities form part of Northern Trust’s existing suite of investment risk and performance analytics solutions.

This latest enhancement comes at a time of heightened awareness of the effects of carbon emissions on the environment, particularly as governments worldwide implement taxes and regulation on emissions. Is it also recognised that investing in companies with a poor carbon footprint may have a negative effect on a fund’s financial performance.

“Increasingly, we are seeing investors turn their attention towards measures which can accurately attribute environmental impact as an extension to established performance and risk analytics,” said Ian Castledine, global head of investment risk product for asset servicing at Northern Trust. “Local government pension funds in particular are facing a stronger regulatory environment, but the ability to accurately assess the carbon footprint of a portfolio is largely constrained by the lack of consistent or comprehensive environmental data disclosed by companies,” Castledine said.

Northern Trust is now able to provide its clients with these environmental analytics from data provided by leading global environmental data provider Trucost Plc, through the Style Research Portfolio Analyzer (SRPA). Trucost was established to help organisations, investors and governments understand the environmental impact of business activities in financial terms, and holds the world’s most comprehensive data on corporate greenhouse gas emissions.

"By combining the analytics received through Trucost’s methodology with Northern Trust’s existing performance and analytics capabilities, we are able to provide consolidated information to clients, enabling them to compare the carbon footprints of their managers and their relative performance alongside more traditional risk metrics and style analysis," Castledine said.

The data and analysis compiled by Trucost, enables investors to measure the carbon footprint of clients’ investments. This can help in manager selection, communications on environmental performance with stakeholders and regulatory bodies, and may lead to better financial returns.

“By providing investors with an integrated environmental analytics solution, trustees can make comparisons between funds and individual managers, and improve communications on environmental performance with stakeholders and regulatory bodies. This may ultimately result in a reduced environmental impact of their investments, without sacrificing financial performance,” Castledine said.

Northern Trust has provided risk and performance services for over thirty years. Capabilities delivered through the Investment Risk and Analytical Services group include risk monitoring, performance evaluation and compliance services.