Valeria Dinershteyn discusses Northern Trust Asset Management’s future in sustainable investment

Ahead of the Sustainable Investment Forum Europe taking place in Paris on the 12th March 2019, we caught up with Valeria Dinershteyn, Sustainability Investment Specialist, EMEA, to discuss Northern Trust Asset Management's future in sustainable investment.

What is Northern Trust Asset Management’s history with ESG?

We have been involved in Sustainable investing for over 30 years and have more than $80 billion in “ESG” assets under management globally(1). At Northern Trust Asset Management, we believe investing ultimately serves a greater purpose – and should be done intentionally and efficiently. With a long-standing history of creating ESG-aware products, we combine our capabilities with clients to meet their needs.

This leads me onto the importance of ESG criteria being fully incorporated in both our solutions and the work of our partners in our various investment teams. We see sustainable investing as being a part of the firm’s DNA; we build out our Factor Investing range with ESG criteria front of mind; our index portfolio managers create new custom index solutions with the same focus, and our product strategists are concentrated on cementing ESG criteria into our propositions. I firmly believe that this is the only way to truly incorporate an ESG or Sustainable investing approach.

Can you tell our readers a bit about your role at Northern Trust Asset Management, which is a newly created role? What are your main areas of focus?

Indeed, the role was created to strengthen our sustainability presence and advocacy of ESG investing in EMEA, responding to growing demand in the region. The role serves as a conduit between our clients, the ESG community and our thirty-plus year history of innovation within sustainable investing. More importantly, it reaffirms Northern Trust Asset Management’s ongoing commitment to providing investors with sustainable investing solutions that seek to deliver competitive, risk-adjusted returns.

The task at hand is multi-faceted to say the least. Our ESG product range spans multiple asset classes, including Equity, Fixed Income and listed Real Estate and leverages our strength in Factor investing, multi-asset and liquidity strategies. Northern Trust Asset Management boasts a range of expertise and our scale allows us to drive and shape sustainable investing for our clients and the industry. This, for me, made joining the Northern Trust Asset Management team a really attractive opportunity.

Certainly, Europe has been the forerunner for development in sustainable investing. Our clients have been very forthcoming with their ideas and developing new solutions tailored to their needs and objectives have been the hallmark of our approach. I look forward to engaging with our clients, contributing to product innovation and promoting our sustainable investment capabilities further.

What are the biggest ESG trends and themes you're seeing right now?

We recently published our ESG trends for 2019 report, which illustrates our views and is then reflected in our product range. This year, we defined several macro themes, and several investment themes within sustainable Investing.

The main macro themes are Climate Change, Resource Scarcity, and Population Dynamics (referring to higher levels of awareness for ESG among millennials and a willingness to act upon it) which we believe will continue to be crucial in shaping the ESG landscape.

With regards to investment trends, our main theme centers on the integration of ESG beliefs expanding across the asset class spectrum beyond the equity space and thus broadening its adoption. Sustainable Fixed Income and listed Real Estate have been a focal point for us in the last year and will be a priority focus for 2019.

Improved standards and new materiality metrics such as SASB’s ESG materiality analysis and Task Force on Climate-Related Financial Disclosure (TCFD), but to name a few,  have greatly supported the unification and standardisation of the ESG space, an important development for both the institutional and retail market.

Can you name any ESG factor that you think isn't receiving the attention it should by the investor community? Is there any particular area where many companies are lagging behind?

Yes, governance! We firmly believe that in some cases, for example emerging markets, there is a necessity to have additional governance screens to facilitate the exclusion of companies that may raise concerns over the structure or operations of their businesses. Investing in small cap companies is another space we also see opportunity to improve governance. The space is prone to its own set of nuances, for example ownership structures whereby a company is still controlled by the founding party, which can sometimes get overlooked.

There are certain aspects of climate change risks and opportunities, which, I believe, are still not receiving the attention they deserve. For instance, we see opportunities in the Real Estate sector, investing in those companies which are well-governed and incorporate climate change in their strategy.

Looking ahead, how different players incorporate physical risk factors, posed by climate change, into their products will be an interesting watch.

You're kindly supporting our upcoming Sustainable Investment Forum Europe in Paris on 12 March. What attracted you to the event?

The credibility of the Forum with European investors and the attendees themselves make for an informative and important event for Northern Trust Asset Management. Both Climate Action and the UNEP Finance Initiative are important to the ongoing efforts of promoting sustainable investing. The Sustainable Investment Forum is an important platform for us to showcase our passion and capability within sustainable investing to a broad investor audience that are rightly searching for innovative solutions to their investment needs within an ESG framework. The Forum provides a platform to reach out to the appropriate institutional demographic, informing them of our approach and offering thought leadership in an effort to foster new relationships and strengthen existing ones.

Northern Trust Asset Management is a Silver Sponsor at the Sustainable Investment Forum Europe, taking place on 12 March 2019, find out more here. 

Visit Northern Trust Asset Management's website here.

(1) Source NTAM. Date as at 31/12/2018

This publication is for investment professionals and should not be relied upon by retail investors. This publication is for informational purposes only and is not intended to be, and should not be construed as, an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice.

The views expressed are those of the author at the time of writing, are not necessarily those of Northern Trust Asset Management as a whole and may be subject to change.

Every effort is made to ensure the accuracy of any information provided but no assurances or warranties are given.

For further information on Northern Trust Asset Management structure and regulatory authorisations, please visit https://www.northerntrust.com/disclosures