State Street ESG Risk Analytics and Reporting Solution – Case Study
State Street has added another layer to its ESG Risk Analytics and Reporting Solution via a strategic engagement with S&P Global Trucost. The arrangement will enable users of the State Street solution to access Trucost data on risks relating to climate change, natural resource constraints, and broader ESG factors.
What does the service do?
State Street’s risk analytics tool already uses six ESG data providers to provide as much information as possible on ESG analytics to clients. Existing vendors include Sustainalytics, MSCI and Arabesque.
“We, over the course of the last two years, we’ve been focusing on an ESG analytics tool,” Daniel Cheever, head of State Street Institutional Services, Australia, said.
“We have partnered with a range of vendors because we are of the view that there is no single source of truth.”
“They have their different areas of specialisation. Trucost is very focussed on climate. And we do have a combination of vendors, some that are based on the traditional analysts’ model…others are using artificial intelligence to come up with an ESG score on a daily basis.”
Why is it important to offer a service like this to your clients?
Along with regulatory pressure, investors are increasingly understanding the benefits of an ESG approach to all kinds of investing, in terms of maximising alpha generation.
“In a recent survey we did 77 per cent of our clients were looking to strengthen the ESG integration into their investment management process,” he said.
The ESG Risk Analytics and Reporting Solution sits on State Street’s traditional risk platform which clients use to do assessments and stress tests on portfolios of various market scenarios. Clients can look through the dashboard to individual stocks, sectors or asset classes. State Street can also develop custom reporting if a client requests it.
The service currently has a good representation across the range of ESG metrics but Cheever said they would continue to look for the right partners to provide further data.