Responsible
Investment (RI) facts
Our vision
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.
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 corporate credentials
Todd Gibbons,
Chairman and Chief Executive Officer
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.
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.
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
Explaining the ES&G of responsible investment
The terms Responsible Investment and, particularly, environmental, social and governance ‘(ESG)’ have arguably been seen, used and mentioned within the investment industry more in the past two years than ever before in response to the Covid-19 pandemic. And while ESG itself has become an increasingly familiar acronym to investors, the environmental, social and governance issues that lie at its foundation are now seen as a key focus when analysing or investing in a company.
Articles
Resources
Investor Zone
Welcome to BNY Mellon’s free online service, Investor Zone – The smarter way to manage your investments.
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 investing4: 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.
1For Scope 1 and Scope 2 green house emissions including our data centers, as well as Scope 3 business travel emissions. As at 31 December 2020.
22. Since 2018, excluding data centers. Source: BNY Mellon 2020 Enterprise ESG Report.
3Includes value of pro bono volunteerism, grants and charitable sponsorships made by BNY Mellon and employee donations that qualify for our matching program. December 2020.
4Insight 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.
The value of investments can fall. Investors may not get back the amount invested.
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