by Michael Connor
BNY Mellon, a large New York-based asset management and securities services company, intends to increase the use of data regarding environmental, social and governance (ESG) factors “to help identify companies that will outperform in the future, based on their environmental or social responsibility,” according to the firm’s 2009 corporate social responsibility (CSR) report.
“Historically, fiduciary responsibility such as the role performed by investment committees and trustees has often been defined exclusively in financial terms, such as maximizing returns to provide for retired employees,” the firm said. “However, there is growing discussion that the way in which those returns are achieved is just as important.”
BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, operating in 34 countries and serving more than 100 markets. It has $22.3 trillion in assets under custody or administration and $1.1 trillion under management.
The firm said that, historically, it has supported just a handful of common, client-requested ESG “screens” – companies involved in alcohol, tobacco and gambling, for example – “but this has been enhanced in 2009 to include more than 20 controversial business issues,” with more data to be added in 2010.
In a report that uses guidelines set by the Global Reporting Initiative (GRI), an international organization that promotes reporting standards on ESG issues, BNY Mellon Chairman and Chief Executive Officer Robert P. Kelly said: “Corporate social responsibility is fundamental to our culture. Our report not only demonstrates how we connect with our employees, communities and the environment globally, but also how we hold ourselves accountable for monitoring and measuring the impact and effectiveness of our CSR initiatives.”
BNY Mellon resulted from the 2007 merger of Bank of New York and Mellon Financial Corporation. In its list of CSR achievements for 2009, the company cited substantial improvement in “employee engagement” levels since the merger. It said it also initiated a pilot supply chain review program that involved either self-assessments or reviews of CSR reports by BNY Mellon suppliers that represented about 50 percent of the company’s 2008 spending.
Mr. Kelly said that despite an “extraordinarily challenging” 2009 business environment – in which BNY Mellon reported a loss, with total shareholder return trailing both the company’s peer group and the S&P Financial index – the firm made “good progress” on other priority issues. In June, BNY Mellon paid off more than $3 billion in loans made to it by the U.S. Treasury under the Troubled Assets Relief Program (TARP). The repayment represented a 12 percent annualized return to taxpayers, the company said.