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Solutions

Sustainable Investing

We Believe ESG Factors Are Pre-Financial Indicators

They have the power to shape a company’s financial viability and investors’ returns.

For more than 30 years, sophisticated and progressive ESG investors have chosen us for innovative solutions fit to withstand future market ebbs and flows. We help them by bringing clarity to investment opportunities and risks resulting from financially relevant environmental, social, and governance factors.

Our ESG Expertise

3 of the Top 10 Largest ESG Index Funds Managed Globally1

$193.2B AUM in Sustainable Investment Strategies2

Best Application of ESG & Smart Beta Manager3

Past performance is no guarantee of future results.

  • 1 Source: eVestment. Data as of 6-30-2023. Universe for comparison consists of 138 total passive equity products within “All ESG Universe.” 
  • 2 As of 09-30-2024. 
  • 3 Asia Asset Management's Best of the Best Awards 2023 were decided based on nominations submitted via an online survey and decided at the discretion of the publication's judging panel. See complete disclosure 3 at bottom of page.

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BUILDING SUSTAINABLE FUTURES

Portfolios Fit for the Future

As long-term investors, we craft portfolios to fit the needs of investors — today and in the future. More importantly, we recognize that when managed well, ESG factors can position a company for success but, when mismanaged, they can result in significant risks.

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BUILDING SUSTAINABLE FUTURES

Begins with a Clear View

Consistent with our risk-aware philosophy, we evaluate companies using ESG criteria coupled with quantitative research. This brings into focus the factors — or “pre-financial indicators” — that can impact their financial viability and clients’ long-term risk-adjusted returns.

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BUILDING SUSTAINABLE FUTURES

Requires Advocacy in Action

As early sustainability adopters and active industry advocates, we’ve worked hard to drive transparency in sustainable financial reporting and positive economic and societal change.

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BUILDING SUSTAINABLE FUTURES

Combines Active Stewardship with ESG Analysis

As one of the world’s largest investment managers, we appreciate our voice has influence. By combining ESG analysis with stewardship, we purposely and actively engage with companies we invest in to ensure sustainable practices and raise ESG standards — and use our proxy voting power to drive change.

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Northern Trust ESG Vector ScoreTM

Bring Greater Clarity to ESG Risk Assessment

We've spent more than three decades guiding some of the world's most progressive invetors on their sustainable inveting journeys, but we couldn't find a tool that could bring the clarity to ESG-related risk assessment that we needed.

So, we built one.

Learn More

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Four-step approach

Rigorous Analysis Brings Opportunities & Risk into Focus

Financially relevant ESG information has the power to impact a company’s performance and, ultimately, investors’ long-term risk-adjusted returns. That’s why we employ rigorous analysis — and a four-step investment approach — to uncover this crucial information.

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Step One: Analyze

Bringing Clarity to ESG Investing

We analyze business-related ESG issues — financially material and industry-specific factors — that can shape short- and long-term results. Key to our process is our proprietary framework of measurable ESG targets and decades of practical experience building ESG portfolios.

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Step Two: Measure

Key to Performance: Priorities & Progress

We use external best-in-class ESG data4, proprietary research, analytics, and exclusionary screens to select key performance indicators to measure how well publicly traded companies perform on business-relevant, financially material ESG issues and topics.

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Step Three: Monitor

Separating the Leaders from the Laggards

We continually assess the sustainability performance of the securities in our ESG portfolios. We develop a comprehensive view — separating the leaders from the laggards — and flag companies that require additional research or targeted engagement.

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Step Four: Engage

Active Stewardship: The Power of Persuasion

Stewardship is an integral part of our investment process. We take an active ownership approach, identifying long-term risks that potentially affect shareholder value and engaging on substantive issues — those that can affect business on many levels.

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Related Products

Quality ESG World Strategy

Designed to outperform by investing in high-quality companies that are well positioned to manage their ESG risks & opportunities relative to their industry peers. This strategy tracks the MSCI World Net TR Index & provides exposure to global stocks.

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Quality ESG World Ex-U.S. Strategy

Designed to outperform by investing in high-quality companies that are well positioned to manage their ESG risks & opportunities relative to their industry peers. This strategy tracks the MSCI World Ex U.S. Net Index & provides exposure to global Ex-U.S. stocks.

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Quality ESG U.S. Strategy

Designed to outperform by investing in high-quality companies that are well positioned to manage their ESG risks & opportunities relative to their industry peers. This strategy tracks the Russell 100 Index & provides exposure to U.S. Large Cap Stocks.

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FlexShares STOXX U.S. ESG Select Index Fund

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX USA ESG Select KPIs Index (the "Underlying Index").

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FlexShares ESG & Climate U.S. Large Cap Core Index Fund

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust ESG & Climate U.S. Large Cap Core Index (the “Underlying Index”).

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    Contact Us

    Interested in learning more about our solutions?

    About Sustainable Investing

    At Northern Trust Asset Management (NTAM), we define Sustainable Investing as encompassing all of NTAM’s investment strategies and accounts that utilize values based and norms based screens, best-in-class and Environmental, Social & Governance (ESG) integration, or thematic investing that may focus on a specific ESG issue such as climate risk. NTAM’s Sustainable Investing includes portfolios designed by NTAM as well as those portfolios managed to client-defined methodologies or screens. As the data, analytical models and aforementioned portfolio construction tools available in the marketplace have evolved over time, so too has NTAM. NTAM’s Sustainable Investing encompasses strategies and client assets managed in accordance with client specified responsible investing terms (historically referred to as Socially Responsible), as well as portfolios that leverage contemporary approaches and datasets, including ESG analytics and ESG thematic investing.

    ESG Investing Risk is the risk stemming from the ESG factors that the Fund applies in selecting securities. The use of ESG factors in securities selection may affect the Fund’s exposure to certain companies or industries and cause the Fund to forego certain investment opportunities. The Fund’s performance results may be lower than the broader equity market or than other funds that do or do not use ESG factors, scores, or screens in their securities selection process, or use a different ESG methodology. Information used by the Fund to evaluate ESG factors, including data provided by the Fund’s third-party vendor, may not be readily available, complete or accurate, which could negatively impact the Fund’s ability to accurately determine companies’ ESG ratings, which in turn could negatively impact the Fund’s performance. Currently, there is a lack of common industry standards relating to the development and application of ESG criteria which may make it difficult to compare the Fund’s principal investment strategies with the investment strategies of other funds that apply certain ESG criteria or that use a different third-party vendor for ESG data.

     

    The Fund’s assessment of a company, based on the company’s level of involvement in a particular industry or ESG controversy or the company’s ESG ranking or rating, may differ from that of other funds or an investor. Information used by the Fund to evaluate ESG factors may vary across providers and issuers as ESG is not a uniformly defined characteristic. ESG standards differ by region and industry, and a company’s ESG practices or data providers’ assessment of a company’s ESG practices may change over time. As a result, the companies in which the Fund invests may not reflect the beliefs and values of any particular investor and may not be deemed to exhibit positive or favorable ESG characteristics if different metrics were used to evaluate them. Regulatory changes or interpretations regarding the definitions and/or use of ESG criteria could have a material adverse effect on the Fund’s ability to invest in accordance with its investment policies and/or achieve its investment objective. 

     

    About the Rankings and Awards shown above.
    Past performance is not indicative of future results.

     

    1 Source: eVestment. Data as of 6-30-2023. Universe for comparison consists of 138 total passive equity products within “All ESG Universe.”

     

    2 As of 09-30-2024.

     

    32023 Best of the Best Awards — Asia Asset Management announced the winners of the “2023 Best of the Best Awards” in January 2023. Asia Asset Management, an industry magazine for asset managers, pensions and institutional investors in Asia, recognizes outstanding companies involved in asset management and pensions in Asia. There are four categories: performance, country, regional and ASEAN. Performance is selected by quantitative evaluation by period, and others by both quantitative and qualitative evaluation methods. NTAM was awarded the regional awards for Best Application of ESG, Best Institution for Diversity, Equity and Inclusion, and Best Smart Beta Strategy. Best Application of ESG was awarded based on the integration of firm ESG policies and strategies and the research methodology used. Best Institution for Diversity, Equity and Inclusion was awarded based on our firm’s positioning within DEI, achievements to date and plans for the future. Best Smart Beta Strategy was awarded based on how strategies are put together (transparent construction, diversification, and low cost) and how they have performed over the past three years.

     

    4Best-in-class ESG is industry terminology referring to an investment approach that selects companies that are leaders in implementing ESG.

     

     

    For Institutional Investor Use Only

    Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Northern Trust Asset Management Australia Pty Ltd, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.