Global investment manager Northern Trust Asset Management (NTAM) announced today the launch of the Northern Trust ESG Vector Score, a new tool designed to determine the magnitude and direction of ESG risks for companies, aimed at assessing companies.

According to NTAM, the new tool provides a consistent, transparent methodology to gain greater clarity into the financial impact of sustainability on companies, in order to build and manage sustainable portfolios.

NTAM President Shundrawn Thomas said:

“The Score aligns with the firm’s philosophy that investors should be compensated for the risks they take – in all market environments and any investment strategy. We consider this an essential tool to measure how a company is managing its ESG business risks.”

The new scoring solution comes as ESG investment scoring tools proliferate in the market, with varying information, reporting components and levels of transparency, and many investors noting that different systems provide significantly divergent ratings of companies. In order to provide a more consistent and transparent framework, the Northern Trust ESG Vector Score brings together two leading sustainability disclosure standards and frameworks, the Sustainability Accounting Standards Board’s (SASB) Standards, and the Task Force on Climate-related Financial Disclosures’ (TCFD) Recommendations. The methodology applies TCFD’s anticipatory framework on governance, strategy and risk management, beyond simply climate, to all financially material ESG risks across the SASB Standards, resulting in a comprehensive risk assessment, according to NTAM.

Thomas said:

“Managing more than $139 billion of ESG assets, we’ve observed firsthand the challenges of navigating the increasing volume of data providers, varying information, and levels of transparency as interest in ESG investing has accelerated. The Score solves this challenge, strengthening our ability to have a clearer picture of a company’s ESG-related business risks that could impact it’s performance.”

NTAM stated that it has already started using the ESG Vector scores on products including its recently launched ETFs in EMEA, and plans on integrating the score into new equity and fixed income ESG investment strategies they are currently building, as well as for guiding stewardship activities.

NTAM Head of Global Product Sheri Hawkins said:

“NTAM plans on using the ESG Vector Score to assist in prioritizing its corporate engagement, thus further aligning our sustainable investment platform and stewardship. This allows us to lead more deliberate engagements, as well as track progress over time with a consistent metric.”

The post NTAM Launches ESG Scoring Tool Providing Material, Forward-Looking Company ESG View appeared first on ESG Today.