Simple and efficient ESG integration for your clients’ portfolios

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As the demand for environmental, social and governance-focused investments has grown, so has the need for accurate and reliable data. FlexShares CORE ESG ETFs use the Northern Trust Vector Score to measure the magnitude of ESG issues that could impact current financial performance and use a forward-looking assessment of directional risk on how a company may handle future issues.

In the next webcast, Simple and efficient ESG integration for your clients’ portfolios, Crystal McClenthen, Head of Product Strategy at Northern Trust Asset Management, and Michael Natale, Head of Intermediate Distribution, will discuss the importance of combining the two in order to give investors the ESG impact of an asset’s value on the long term.

For example, the recent launch FlexShares ESG & Climate US Large Cap Core Index Fund (FEUS), FlexShares ESG & Climate Developed Markets ex-US Core Index Fund (FEDM), FlexShares ESG & Climate Investment Grade Corporate Core Index Fund (FEIG), and FlexShares ESG & Climate High Yield Corporate Core Index Fund (FEHY) can help investors access the ESG theme.

The four new climate ETFs are in addition to FlexShares’ existing ESG offerings, the FlexShares STOXX US ESG Select Index Fund (ESG) and the FlexShares STOXX Global ESG Select Index Fund (ESGG). The new range of funds aims to help investors improve the overall ESG scores of their portfolios and reduce carbon risk while maintaining core exposure to equities and fixed income securities. The funds use the Northern Trust ESG Vector Score and a carbon risk rating to hedge ESG risks and capitalize on sustainable opportunities.

The ESG Vector Score methodology developed by Northern Trust Asset Management (NTAM) seeks to identify the business issues related to ESGs most likely to impact a company’s financial performance and a portfolio’s return on investment. The rating methodology is based on a framework established by the Sustainable Accounting Standards Board (SASB) which seeks to identify industry leaders in sustainability and mitigate sustainability risks before impacting the financial statements of the business and portfolio performance.

As climate change is a major concern of many investors and regulators around the world, each basic strategy in the ESG ETF suite also includes a particular focus on carbon risk. In partnership with Institutional Shareholder Services (ISS), each company is screened using a carbon risk assessment methodology to determine its current carbon emissions, efforts to reduce its carbon footprint, and potential exposure to carbon risk. compared to other companies in its sector. Using these ratings, each strategy in the suite aims to reduce overall carbon emissions and carbon reserves relative to its parent index, while also targeting an overall improvement in its carbon risk rating.

“Drawing on our experience in managing quantitative and sustainable strategies, we are delighted to combine our exclusive exclusion selection, our ESG and climate-related data, as well as well-defined portfolio construction constraints to deliver sustainability profiles. solid in a suite of basic strategies. These funds remain true to the traditional core approach while meeting the growing demand for investments that target conscientious corporate governance, low environmental impact and socially responsible business practices, ”according to FlexShares.

Financial advisors interested in learning more about ESG strategies can register for the Wednesday October 6 webcast here.


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