Following these exclusions, any constituents lacking sufficient independence across ownership, board representation, key corporate committees and audit and remuneration committees are filtered out.
“This Index is unique in combining industry screens, norms-based screens and governance screens,” said Thomas Kuh, executive director, MSCI ESG Indices. “Research shows that good corporate governance matters and the addition of the governance screen should improve the quality of the companies in the index from an ESG perspective.”
According to a Northern Trust study, Changing Perspectives on Passive Investing, published in 2012, 44 percent of institutional investors incorporate ESG considerations within their investment planning. This supports research from the Global Sustainable Investment Alliance which indicates that 22 percent of assets globally invested currently incorporate ESG criteria. Meanwhile, allocation by institutional investors to emerging markets has increased by 30 percent in the last three years according to research by EIRIS.
“We believe there are three key drivers behind the growth in ESG considerations,” said Mamadou-Abou Sarr, senior product specialist for global index management at Northern Trust. “These include the obligation of asset owners to abide by their internal governance policies or the broader regulatory environment, and the growing recognition of the importance of ESG as an investment theme. The latest custom index and fund contribute to our existing ESG capabilities and address the challenge of combining ESG criteria with exposure to emerging markets.”As of 31 December 2012, Northern Trust managed more than US$20 billion in socially screened assets for clients across the globe. It has over 20 years of experience managing socially responsible portfolios and socially-screened assets. In late 2012, Northern Trust announced it had launched the World Custom ESG Equity Index Fund which enables institutional investors across the globe to meet commonly held ESG criteria. To read more about emerging markets and ESG Investing, read our white paper here. About Northern Trust Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide. Northern Trust, a financial holding company based in Chicago, has offices in 18 U.S. states and 16 international locations in North America, Europe, the Middle East and the Asia-Pacific region. As of December 31, 2012, Northern Trust had assets under custody of US$4.8 trillion, and assets under investment management of US$758.9 billion. For more than 120 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit www.northerntrust.com or follow us on Twitter @NorthernTrust. Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A, incorporated with limited liability in the U.S.