This article is based on an interview with Corinne Neale, Global Head of Business Applications at BNY Mellon, Data and Analytics Solutions. To watch the full interview, please click here: https://youtu.be/PIWNWDFRud8

The ESG market has more than doubled in the past five years to an estimated $40 trillion but the growing challenge for investors and their advisors is defining which ESG investment strategy is right for them.

Environmental, social and governance covers by definition a vast array of investment opportunities so asset owners and money managers must define and explain their specific investment objectives.

This challenge is compounded by the fact that there are currently no accepted industry standards to which potential investors can refer. There are an increasing number of ESG strategies, definitions and data sets that investors and managers must navigate before they come to market.

BNY Mellon, as one of the world’s largest custodians, was uniquely placed to identify this emerging problem and design a solution to help clients mitigate its effects.

BNY Mellon developed and delivered in 2020 its ESG Data Analytics application, a cloud-based solution to help clients build customised ESG investment portfolios. The app also won BNY Mellon the Technology Innovation of the Year award in the Global Investor Investment Excellence awards of 2020.

Corinne Neale, Global Head of Business Applications at BNY Mellon, Data and Analytics Solutions, said the app emerged from discussions with BNY Mellon’s largest clients.

She said: “Asset owners and asset managers are telling us that, because there is no unique global standard for what sustainability really is, for the data which issuers should be publishing or for solution-labelling, it made it very difficult for them to navigate, grow investments and figure out if they had done the right thing.”

BNY Mellon’s cloud-based app is a response to this challenge, aimed at asset owners and asset managers working to define or refine their ESG strategies.

Neale said: “The focus of the application is creating clarity on investors’ ESG expectations. It was built from hundreds of discussions with clients, recognising that not everyone is on the same page with the same objectives and moving at the same pace.

“Regionally, it was clear from clients that had conducted surveys with their beneficiaries, retail clients or pension fund holders that we needed to accommodate customisation from different perspectives, objectives and pace of movement on sustainability, as well as facilitating collaboration between investors because, in a field that is growing so fast, it was critical to have a common language.”

Neale said the application was built with three purposes. First, helping investors define their ESG expectations and to do this from a data-agnostic place. Secondly, the application aligns the ESG expectations of investors to asset managers’ solutions and thirdly, the application provides transparency on investors’ ESG expectations, knowing that those will evolve rapidly over time.

That the app is hosted in the cloud reflects one of BNY Mellon’s objectives.

“The idea is to make it easy for users. We have a wide-range of clients using the application. We have asset managers who need to rapidly deploy infrastructure to accommodate a growing number of sources of data and types of data,” said Neale.

The app is also designed for asset owners, such as pension funds, mutual funds and insurance firms, some of whom are adept at ESG investing while others are less experienced.

Neale said: “We have users that say “I don’t know what part of sustainability will be important for me so I will follow the guidance of a taxonomy” or we have clients that say they want anything green. But we also have asset owners that are very specific so they might say, to align with my mission statement I need to focus on themes that are important to my beneficiaries.”

BNY Mellon built the app with a handful of large, regionally diverse asset owners and fund managers who had become frustrated with the tools available to them.

“They put their heads together to resolve this global issue and we served as the global navigator across all of those clients to enable those ideas around how do we help the market grow,” said Neale.

She added: “The fact that COVID happened within two months of us starting development was a catalyst. The sustainability application still would have been successful because of trends that had been in the market for a long time, but COVID amplified those issues and added urgency among senior executives. Now it is a CEO-level topic and this level of discussions is accelerating progress.”

Looking ahead, BNY Mellon hopes the open nature of the solution, which is accessible on the public cloud without any specific hardware or software, should ultimately help the industry address the lack of benchmarks that it has been designed to address.

Neale concluded: “We believe this application, because of its collaborative nature, has the potential to promote industry standards.”

Contact details:

https://www.bnymellon.com/us/en/solutions/asset-managers/data-analytics.html

To view the full interview with Corinne Neale, please click here: https://youtu.be/PIWNWDFRud8