Responsible
Investment (RI) facts

1 January 2020 -31 December 2020

Responsible investment

Investing in the
well-being of the world

Our vision

Responsible investing is no longer a question of why, but why not? ”

Hanneke Smits CEO,
BNY Mellon Investment Management

Responsible investing is no longer a question of why, but why not? ”

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.

20+ factors
Alcentra assess and score companies on 20+ different ESG related risk factors.

Alcentra’s ESG policy was developed in 2016 and the group was an early adopter in its use analysing sub-IG credit.

Alcentra became a signatory of the PRI in June 2018 and are subject to its reporting standards and requirements.

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

Responsible Horizons Euro Impact Bond
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

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.

€11.3bn

A+

rating in all areas of the 2020 PRI assessment*.

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 Sustainable Global Dynamic Bond Fund

BNY Mellon Sustainable Global Real Return Fund (EUR)

Source: Newton as at 31st March 2021.

*This assessment relates only to Newton Investment Management Ltd (the UK-based entity).

1983
Sustainability has been at the heart of Walter Scott’s investment process since 1983.

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

Environmental

Maintained carbon neutral emissions for the sixth consecutive year9.

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.

ENVIRONMENTAL

58% reduction in greenhouse gas emissions from 2008 Baseline10.

Resilient communities

Contributed US$33.4 m11 in annual support to communities around the world.

Environmental

Maintained carbon neutral emissions for the sixth consecutive year9.

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.

ENVIRONMENTAL

58% reduction in green house gas emissions from 2008 Baseline10.

Resilient communities

Contributed US$33.4 m11 in annual support to communities around the world.

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.

Enviromental

58% reduction in green house gas emissions from 2008 Baseline10

Resilient communities

Contributed US$33.4 m11 in annual support to communities around the world

Environmental

Maintained carbon neutral emissions for the sixth consecutive year9.

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.

ENVIRONMENTAL

58% reduction in greenhouse gas emissions from 2008 Baseline10.

Resilient communities

Contributed US$33.4 m11 in annual support to communities around the world.

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

Newton’s sustainable strategies aim to invest in sustainable sovereign bonds, and attractive companies with what managers believe to be sustainable business practices and no material, unresolvable ESG issues.

Responsible Horizons funds from Insight

Many investors are looking to achieve a positive environmental or social impact – to invest in sustainable businesses that will stand the test of time. Insight’s Responsible Horizons strategies looks to reflect long-term themes such as climate change and social inequality. They harness research powered by Insight’s proprietary Prime tool, which emphasises the best and avoids the worst performers on ESG issues.

What is ESG? A tool, not a discrete investment strategy

Examples of key Environmental, Social and Governance (ESG) factors

Environmental

A company's efficient use of natural resources, mitigation of climate risks and leveraging of innovative energy solutions.

Key Topics:

Climate change
Pollution
Circular economy
Resources efficiency
Energy usage
Biodiversity

Social

A company's effective management of relationships with key stakeholders such as employees, suppliers, customers and communities.

Key Topics:

Human rights
Conflict
Health and safety
Human capital
Inclusive investment
Supply chain
Tax
Cyber security

Governance

A company's fair and equitable oversight or management and leadership practices including ethics, corporate governance and shareholder rights.

Key Topics:

Board independence and diversity
Executive compensation
Accounting practices
Business ethics
Disclosure
Capital management

Articles

Is it too late to halt climate change?
How impact bonds are making their mark
Exploring the social side of ESG
VIEW MORE ARTICLES

Products and solutions

Sustainable Funds from Newton

Newton’s sustainable strategies aim to invest in sustainable sovereign bonds, and attractive companies with what managers believe to be sustainable business practices and no material, unresolvable ESG issues.

Responsible Horizons funds from Insight

Many investors are looking to achieve a positive environmental or social impact – to invest in sustainable businesses that will stand the test of time. Insight’s Responsible Horizons strategies looks to reflect long-term themes such as climate change and social inequality. They harness research powered by Insight’s proprietary Prime tool, which emphasises the best and avoids the worst performers on ESG issues.

policy statment

Responsible Investment Policy Statement

Our Responsible Investment Policy Statement, incorporating the investment policies and practices of our underlying investment firms, seeks to summarise and contextualise our stance. It focuses on the key elements of responsible investment: stewardship, the integration of longer-term material environmental, social and governance factors into investment research and decision-making and an understanding of the impact our investment decisions can and do have on the entities in which we invest.

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.

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; BNY Mellon Investment Management, Alcentra, 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