Northern Trust Asset Management expands sustainability strategies

Two new sustainable quantitative solutions offer exposure to emerging markets

Northern Trust Asset Management has expanded its range of sustainable quantitative solutions with the launch of the Emerging Markets Quality Low Carbon Strategy and the Emerging Markets Multifactor ESG Strategy.

The two new strategies were added to the range in 2019, which already comprises the Europe Value ESG and North America Value ESG strategies.

The sustainability strategies enable institutional investors to combine environmental, social and governance (ESG) investing solutions with Northern Trust Asset Management’s quantitative investing expertise across developed and emerging markets.

The aim of the Emerging Markets Quality Low Carbon Strategy is 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.

Northern Trust Asset Management said the strategy will provide investors with an “environmentally cleaner” exposure to emerging markets equities, with a carbon intensity reduction target of 70 per cent.

In line with the Europe Value ESG and North America Value ESG strategies, Emerging Markets Multifactor ESG incorporates a set of norm-based and business-involvement screens.

According to the investment manager, the strategies employ a proprietary multi-factor model using value, quality and momentum to score all investable constituents.

Mamadou Abou-Sarr, global head of product development at Northern Trust Asset Management, said: “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.”

Northern Trust Asset Management recently announced the launch of its World Green Transition Index Strategy and Small Cap ESG Low Carbon Index Strategy, and added thermal coal screens to its existing suite of Custom ESG Index Strategies “to align with evolving investor preferences”.

Marie Dzanis, head of Northern Trust Asset Management, Europe, Middle East and Africa, added that investors’ attitudes to ESG innovation has evolved over time.

“Today’s investor not only wants to live their values – they want to partner with firms which can help them invest their values,” Dzanis said.