State Street Global Advisors, the asset management business of State Street Corporation has launched of the State Street ESG Liquid Reserves Fund (the Fund) which seeks to apply financially material environmental, social, and governance (ESG) scores to the management of the Fund.
State Street says the Fund is the first money market fund to offer a portfolio composed entirely of investments that meet ESG criteria at the time of purchase.
“We’re proud to apply State Street Global Advisors’ longstanding ESG commitment to the launch of this fund, which provides the first fully ESG-focused money market fund option by incorporating sustainable investing within a cash strategy,” says Pia McCusker, global head of Cash Management at State Street Global Advisors.
The Fund uses R-Factor, State Street Global Advisors’ new ESG scoring system that draws on multiple data sources and leverages widely accepted and transparent materiality frameworks to generate a unique ESG score for issuers. In particular, R- Factor leverages the Sustainability Account Standards Board’s (SASB) and country-specific corporate governance frameworks and provides transparency into how and what State Street Global Advisors considers to be financially material ESG factors.
The Fund invests in prime money market instruments that meet State Street Global Advisors’ ESG criteria. The portfolio construction process is a multi-step method involving fundamental risk budget allocation, optimisation, and ESG assessment. The Fund, which is domiciled in the United States and registered under the Investment Company Act of 1940 (the Act), will have a floating net asset value and will be managed and operated to comply with Rule 2a-7 of the Act.
“As appetites for ESG investment opportunities continue to grow, institutional investors need options across all asset classes. There’s currently an industry-wide lack of ESG data that is financially material, consistently reported, and comparable across firms; using the R-FactorTM scoring system allows us to address this critical issue by incorporating State Street Global Advisors’ expertise,” says McCusker. “This is only the beginning for the application of R-FactorTM as we explore further ESG-related opportunities at the institutional level.”