Responsible
Investment (RI) facts
Our vision
Hanneke Smits CEO,
BNY Mellon Investment Management
Hanneke Smits CEO,
BNY Mellon Investment Management
We are trusted stewards of our clients’ assets
Creating prosperity for our clients while supporting companies we believe offer a sustainable future is a shared objective across BNY Mellon Investment Management. Using ESG data alongside conventional financial factors, our specialist investment firms analyse multiple perspectives to identify the opportunities they believe can deliver long-term value.
As one of the largest asset managers in the world we are a significant part of the financial system. We strive to respond to the most pressing global issues – social as well as financial. We are invested in the well-being of the world. To do so we engage with companies to create more effective risk management, responsible capital allocation and more sustainable business practices to generate greater benefits for our societies, economies and the environment.
Because we believe in being responsible. Because it is investing as it should be.
The Pathway to Inclusive Investment
Our global research reveals why women’s investment matters.
Our credentials
We’re ready
Our history in responsible investing dates back more than 40 years. Our investment firms are industry leaders. For decades they have been concerned with, and interested in, the repercussions diversity, the environment and labour practices can have on the profitability and longevity of the companies in which they invest. Despite the wealth of experience we possess, we recognise Responsible Investment is still in its infancy – a nascent trend consuming our industry. Here’s why we’re prepared.
Our investment firms
Our specialist investment firms have their own individual investment processes and culture. Yet we all have a core belief in common – that investing responsibly on behalf of our clients will help us to create the world and the future we all wish to see.
The value of investments can fall. Investors may not get back the amount invested. Income from investments may vary and is not guaranteed.
Developed the proprietary Prime corporate ESG ratings, which covers 9,526 different entities in total; compromising 2,943 distinct issuers of debt, and 749,125 subsidiaries of the latter.
Awarded A+ ratings across fixed income categories in the PRI survey including corporate and sovereign debt.
RESPONSIBLE INVESTMENT FUNDS
Responsible Horizons Euro Corporate Bond Fund
Fund
Source: Insight as at 31 December 2021.
Assets under management (AUM) are represented by the value of cash securities and other economic exposure managed for clients
128,178
12,862
Number of meetings Mellon held with companies from January 2021 to November 2021, across 69 countries.
Mellon leverages its “Quantamental” framework and proprietary rating system to embed ESG considerations in its investment process for its fundamentally driven equity strategies7. Using the framework enables Mellon to assess what its managers view as a company’s intrinsic value.
Mellon’s ESG rating framework bridges the gap between raw ESG data and fundamental analysis to create a nuanced picture of potentially investable companies (based on standard ESG weightings).
Source: Mellon as at 30 November 2021.
Proxy voters in the UK since 1978.
Newton Investment Management (Newton) has its own responsible investment team dedicated to carrying out ESG research.
RESPONSIBLE INVESTMENT FUNDS
BNY Mellon Sustainable Global Dynamic Bond Fund
BNY Mellon Sustainable Global Real Return Fund (EUR)
BNY Mellon Future Earth Fund
BNY Mellon Sustainable Global Dynamic Bond Fund
BNY Mellon Sustainable Global Real Return Fund (EUR)
BNY Mellon Future Earth Fund
Source: Newton as at 31st March 2021.
*This assessment relates only to Newton Investment Management Ltd (the UK-based entity).
Unique team structure means every investment manager has responsibility for ESG analysis.
A PRI signatory since 2017 with a 2020 rating of A+, A, A.
Source: Walter Scott as at 31st March 2021.
Our corporate credentials
We are committed to putting the Future FirstSM — not just to power success today, but also to help safeguard the future. At the corporate global level, we strive to contribute to sustainable economic growth that helps protect healthy markets; enhances our own business resiliency and longevity; and aims to deliver positive impact for key stakeholders, including clients, employees, shareholders and communities. We embrace this responsibility with great accountability, transparency and integrity, and it permeates every aspect of our culture.”
Todd Gibbons,
Chairman and Chief Executive Officer
GOVERNANCE
33% Women on board of directors.
Workplace equality
100% Perfect score on the Human Rights Campaign Foundation Corporate Equality Index.
Learning culture
690,000 hours of learning modules for employees given annually.
GENDER PAY GAP
Pay women more. Promote women higher.
Workplace equality
100% Perfect score on the Human Rights Campaign Foundation Corporate Equality Index.
Learning culture
690,000 hours of learning modules for employees given annually.
GENDER PAY GAP
Pay women more. Promote women higher.
Workplace equality
100% Perfect score on the Human Rights Campaign Foundation Corporate Equality Index.
Learning culture
690,000 hours of learning modules for employees given annually.
GENDER PAY GAP
Pay women more than 99% of what men are paid, globally.
Workplace equality
100% Perfect score on the Human Rights Campaign Foundation Corporate Equality Index.
Learning culture
690,000 hours of learning modules for employees given annually.
This Overview supplements information published in the BNY Mellon Corporate Social Responsibility Report. All data is at 31st December 2020 unless stated otherwise. Read our latest report here.
Responsible Investing Funds and Strategies
Sustainable Funds from Newton
Responsible Horizons funds from Insight
Our Responsible Investment Funds
What is ESG? A tool, not a discrete investment strategy
Examples of key Environmental, Social and Governance (ESG) factors
Environmental
Key Topics:
Pollution
Circular economy
Resources efficiency
Energy usage
Biodiversity
Social
Key Topics:
Conflict
Health and safety
Human capital
Inclusive investment
Supply chain
Tax
Cyber security
Governance
Key Topics:
Executive compensation
Accounting practices
Business ethics
Disclosure
Capital management
Articles
Products and solutions
Sustainable Funds from Newton
Responsible Horizons funds from Insight
policy statment
Responsible Investment Policy Statement
Glossary – key terms
As Responsible Investment (RI) evolves, so do the definitions. There is currently a lack of industry standardisation on responsible investing terminology and many terms are used interchangeably. To clearly define how we think about RI at BNY Mellon Investment Management, we have provided the following definitions:
Best-in-class/positive screening: a rules-based approach to preferentially tilt a portfolio towards investment in sectors, companies or projects selected for positive, or best-in-class ESG characteristics relative to industry peers.
Enterprise ESG:Enterprise ESG describes “Who we are” – it is an approach that drives the culture at BNY Mellon, informs our responsible business practices and inspires our global citizenship. By implementing responsible, sustainable practices in the way we operate the company and conduct ourselves, we contribute to sustainable economic growth that helps protect healthy markets, enhances our own business resiliency and longevity, and aims to deliver positive impact for key stakeholders.
Note: This was formerly referred to as CSR (Corporate Social Responsibility).
ESG integration: The systematic and explicit incorporation of Environmental, Social and Governance factors into financial analysis and investment decisions to seek to better manage risks and improve returns. ESG Integration is one part of the investment process, investment decisions may not be based solely on these considerations. BNY Mellon IM firms could conclude that other considerations outweigh ESG factors when making investment decisions. Firms are not required to apply “red lines”, hurdle rates or benchmarks in order to fall under this category.
Exclusionary/negative screening: A rules-based approach to remove investments from the investable universe based on a particular set of values. It could involve the exclusion of certain sectors, companies, countries or other issuers based on activities considered not investable, e.g., weapons, tobacco, animal testing, violation of human rights or controversies. Exclusion criteria (based on norms and values) can refer, for example, to product categories (e.g., weapons, tobacco), company practices (e.g. animal testing, violation of human rights, corruption) or controversies.
Impact investing12: The practice of investing with the dual objective of generating a positive, measurable and intended social and/or environmental impact alongside the potential for generating a financial return.
Philanthropy: Philanthropy involves charitable giving to a worthy cause on a large scale. Philanthropy can include donating money to a worthy cause or volunteering time, effort, or other forms of altruism. Philanthropic investing is the practice of investing based not on profit but on an altruistic desire to help others or society as a whole.
Biodiversity: The variety of plant and animal life in the world or in a particular habitat, a high level of which is usually considered to be important and desirable. Biodiversity is a measure of variation at the genetic, species, and ecosystem level.
Responsible Investment (RI): At BNY Mellon IM, RI is the umbrella term we should use to describe our full range of responsible investing styles. Our Responsible Investment approach varies by investment firm but overall is intended and designed to invest for a better future and for better returns for all. We define RI as enabling positive change through investment, regardless of the approach taken.
RI covers a spectrum of investing styles including ESG integration; exclusionary screening; best-in-class screening; sustainable investing; and impact investing and philanthropy.
Stewardship of clients’ assets is a key component of RI and also the assessment of the environmental, social and governance profile of client portfolios (RI reporting).
RI Reporting: the assessment of the environmental, social and governance profile of client portfolios.
Screening: A rules-based approach to incorporate client values into an investment universe. Screening can be negative/exclusionary or positive/best-in-class (see separate definitions).
Stewardship: The responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries, which also provides sustainable benefits for the economy, the environment and society. Good stewardship involves structured, purposeful dialogue or engagement with companies and issuers and considered voting of shares (when applicable) on behalf of investors, to protect and enhance the value of an investment product’s holdings and to attain an investment product’s objectives. Stewardship activities include but are not limited to engagement with issuers; voting at shareholder meetings; filing of shareholder resolutions/ proposals; direct roles on investee boards and board committees; negotiation with and monitoring of the stewardship actions of suppliers in the investment chain; engagement with policymakers; engagement with standard setters; contributions to public goods (such as research); and public discourse (such as media) that support stewardship.
Sustainable investing: Sustainable investing has the objective of generating financial outperformance through investing in companies managing long-term outcomes for society and/or the environment. It encompasses stakeholder responsibility, and the potential to meet the “Triple Bottom Line” — people, planet and prosperity.
Thematic investing: Thematic investing seeks to identify the areas of major structural change in the world and drive capital accordingly, in order to align investments to areas of superior long-term growth dynamics. Thematic investing allows investors to address key environmental and social issues by investing in specific themes – such as climate, healthcare and sustainable agriculture (see also sustainable investing).
The goals are:
- No Poverty
- Zero Hunger
- Good Health and Well-being
- Quality Education
- Gender Equality
- Clean Water and Sanitation
- Affordable and Clean Energy
- Decent Work and Economic Growth
- Industry, Innovation and Infrastructure
- Reducing Inequality
- Sustainable Cities and Communities
- Responsible Consumption and Production
- Climate Action
- Life Below Water
- Life on Land
- Peace, Justice and Strong Institutions
- Partnerships for the Goals
Sustainability Disclosure Requirements (SDR): Under the UK’s SDR framework, announced in October 2021, listed issuers, asset managers and asset owners will be required to report on their sustainability risks, opportunities and impacts.
- Products which have sustainability as their objective (Article 9);
- Products which promote environmental or social characteristics (Article 8); and
- Products that do not fall into either of the above (Article 6).
- Climate change mitigation
- Climate change adaptation
- The sustainable use and protection of water and marine resources
- The transition to a circular economy
- Pollution prevention and control
- The protection and restoration of biodiversity and ecosystems
Triple Bottom Line: The triple bottom line is a sustainability framework that measures a business’s success in three key areas: profit, people, and the planet.
Glossary – key terms
As Responsible Investment (RI) evolves, so do the definitions. There is currently a lack of industry standardisation on responsible investing terminology and many terms are used interchangeably. To clearly define how we think about RI at BNY Mellon Investment Management, we have provided the following definitions:
Best-in-class/positive screening: a rules-based approach to preferentially tilt a portfolio towards investment in sectors, companies or projects selected for positive, or best-in-class ESG characteristics relative to industry peers.
Enterprise ESG: the quality of a company’s overall economic, social and environmental impact on society from its operations. A company pursuing positive enterprise ESG operates in ways that enhance the economy, society and the environment, rather than detracting from them (alternatively referred to as Corporate Social Responsibility, CSR).
ESG integration: the systematic and explicit incorporation of Environmental, Social and Governance factors into financial analysis and investment decisions to better manage risks and improve returns.
Exclusionary/negative screening: a rules-based approach to remove investments from the investable universe based on a particular set of values. It could involve the exclusion of certain sectors, companies, countries or other issuers based on activities considered not investable. Exclusion criteria (based on norms and values) can refer, for example, to product categories (e.g., weapons, tobacco), company practices (e.g. animal testing, violation of human rights, corruption) or controversies.
Impact investing12: the practice of investing with the dual objective of generating a positive, measurable and intended social and/or environmental impact alongside generating a financial return
Philanthropy: involves charitable giving to a worthy cause on a large scale. Philanthropy can include donating money to a worthy cause or volunteering time, effort, or other forms of altruism. Philanthropic investing is the practice of investing based not on profit but on an altruistic desire to help others or society as a whole.
Responsible Investment (RI): RI is investing for a better future and for better returns for all. We define RI as enabling positive change through investment, regardless of the approach taken. RI covers a spectrum of investing styles including ESG integration; exclusionary screening; best-in-class screening; sustainable investing; impact investing and philanthropy. Stewardship of clients’ assets is a key component of RI and also the assessment of the environmental, social and governance profile of client portfolios (RI reporting).
RI Reporting: the assessment of the environmental, social and governance profile of client portfolios.
Screening: a rules-based approach to incorporate client values into an investment universe.
Stewardship: is the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries, which also provides sustainable benefits for the economy, the environment and society. Good stewardship involves structured, purposeful dialogue or engagement with companies and issuers and considered voting of shares (when applicable) on behalf of investors, to protect and enhance the value of an investment product’s holdings and to attain an investment product’s objectives. Stewardship activities include but are not limited to engagement with issuers; voting at shareholder meetings; filing of shareholder resolutions/proposals; direct roles on investee boards and board committees; negotiation with and monitoring of the stewardship actions of suppliers in the investment chain; engagement with policymakers; engagement with standard setters; contributions to public goods (such as research) and public discourse (such as media) that support stewardship.
Sustainable investing: is about the generation of financial outperformance through investing in companies managing long-term outcomes for society and/or the environment. It encompasses stakeholder responsibility, or the “Triple Bottom Line” – people, planet and prosperity.
Thematic investing: In order to align investments to areas of superior long-term growth dynamics, thematic investing seeks to identify the areas of major structural change in the world and drive capital accordingly. Thematic investing allows investors to address key environmental and social issues by investing in specific themes – such as climate, healthcare, sustainable agriculture.
Contact us
Please refer to the prospectus and the KIID before making any investment decisions. Documents are available in English and an official language of the jurisdictions in which the Fund is registered for public sale. Go to fund-centre.
1Source: BNY Mellon Investment Management, incorporating engagement figures from Newton, Walter Scott and Insight as at 31 December 2020.
2UN PRI = UN Principles of Responsible Investment. Source; ARX, Insight, Mellon, Newton, Siguler Guff, and Walter Scott—are PRI signatories, with Insight signing as a founder member from 2006, followed shortly thereafter by Newton. Between them, these firms oversee over 80% of BNY Mellon’s total assets under management.
3Source: BNY Mellon, For Scope 1 and Scope 2 greenhouse gas emissions, including our data centers, as well as Scope 3 business travel emissions.
4As at the 30 September 2021.
5Insight Investment uses impact bonds as an umbrella term for fixed income issuances the proceeds of which are dedicated solely to projects intended to meet environmental or social criteria. This encompasses the universe of bonds referred to as green or sustainable as well as more specific outcome-oriented issuances such as blue, gender and transition bonds.
6Source: Mellon as at 30 November 2021.
7With the exception of stable value and cash.
8As at the 30 September 2021.
9For Scope 1 and Scope 2 greenhouse gas emissions including our data centers, as well as Scope 3 business travel emissions. As at 31 December 2020.
10Since 2008, excluding data centers. For source data, please see: www.bnymellon.com/globalimpact.
11Includes value of pro bono volunteerism, in kind donations, grants and charitable sponsorships made by BNY Mellon and employee donations to charities that qualify for our matching program.
12Insight Investment uses impact bonds as an umbrella term for fixed income issuances the proceeds of which are dedicated solely to projects intended to meet environmental or social criteria. This encompasses the universe of bonds referred to as green or sustainable as well as more specific outcome-oriented issuances such as blue, gender and transition bonds.
Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA), BNY Mellon Fund Managers Limited (BNYMFM), BNY Mellon Fund Management (Luxembourg) S.A. (BNY MFML) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA, BNY MFML or the BNY Mellon funds.
392355 EXP 12 July 2022