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Measuring ESG risk

State Street partners with Harvard Business School professor to measure ESG risk

George Serafeim

State Street Associates LLC, the academic research arm of State Street Corp. (STT), Boston, is teaming up with George Serafeim, a professor of business administration at Harvard Business School, to boost the financial services firm's environmental, social and governance research efforts.

Mr. Serafeim and State Street will focus on practical ESG solutions that State Street's clients, including institutional investors, can implement into their investment portfolios, the firm said in a news release.

Specifically, Mr. Serafeim aims to help State Street create a market infrastructure to help clients understand how the market is pricing ESG risks and opportunities, such as those related to climate change and governance issues at companies, he explained in a phone interview.

"How (are these factors) influencing the pricing of many securities and the integration of those opportunities and risks in their portfolio?" Mr. Serafeim said.

The initial focus on the partnership with Mr. Serafeim will be to help portfolio managers, CIOs and analysts determine how to measure ESG criteria, as well as which ones are material in their investment process, said William Kinlaw, a senior vice president and head of State Street Associates, Cambridge, Mass.

"Interested clients include pensions, (sovereign wealth funds), mutual funds and institutional asset managers, for example," he wrote.

State Street Corp. had $31.6 trillion in assets under custody and administration, and $2.5 trillion in assets under management as of Dec. 31.