State Street to Establish First ESG Securities Lending Commingled Cash Collateral Reinvestment Strategy

State Street Corporation announced its intention to establish its Agency Lending Program’s first Environmental, Social, and Corporate Governance (ESG) aware commingled cash collateral reinvestment strategy. The Agency Lending team of State Street Global Markets has partnered with State Street Global Advisors, the asset management business of State Street Corporation, to provide securities lending clients with a commingled cash collateral reinvestment strategy that follows short-term investment guidelines, while considering R-FactorTM, a proprietary ESG scoring system as a component in making its investment decisions, to the extent consistent with applicable law.

“The continued rise in interest in ESG principles across markets underscores client appetite for their securities lending strategies to work in synergy with their ESG strategies,” said Nadine Chakar, executive vice president and head of Global Markets at State Street Global Markets. “This move builds on State Street’s commitment to leadership and innovation in applying ESG principles to cash reinvestment for securities lending.”

The strategy is currently available only to retirement plan clients that participate in State Street’s Agency Lending Program, and not otherwise available to the public.

“The groundswell of ESG support among the institutional lender and beneficial owner community in recent years has given rise to a multiplicity of related products, but the product category for ESG-aware, commingled cash reinvestment funds remains untapped,” said Francesco Squillacioti, global head of client management – securities finance at State Street Global Markets. “This launch affords State Street’s institutional client base yet another opportunity to express their focus on ESG and reaffirm their attention to socially-responsible yet prudent investing through a securities lending program.”

“We are excited to partner with State Street Global Markets to provide investment management services for this ESG-aware securities lending commingled cash collateral reinvestment strategy. As a firm, State Street Global Advisors has firmly committed to ESG principles,” said Pia McCusker, senior managing director and global head of cash management at State Street Global Advisors. “Partnering with State Street Global Markets, one of the largest securities lending cash collateral managers in the world, is a natural and logical combination and one that supports institutional investors’ ESG goals.”

State Street has been actively involved in the ESG space for a number of years, including recently announcing that Rick Lacaille, formally the chief investment officer for State Street Global Advisors, will provide enterprise-wide leadership of the company’s ESG solutions, services and thought leadership across all of State Street’s businesses. The bank also recently introduced enhancements to its ESG Solutions, ESG Risk Analytics, which now provides clients the ability to address new global regulatory reporting requirements through a single platform.

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