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Mellon Investments Corporation

PRI reporting framework 2019

Export Public Responses

You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes

Implementation processes

LEI 01. Percentage of each incorporation strategy

01.1. Indicate (1) which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities and (2) the breakdown of your actively managed listed equities by strategy or combination of strategies (+/- 5%)

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied
43 %
Percentage of active listed equity to which the strategy is applied
1 %
Percentage of active listed equity to which the strategy is applied
54 %
Percentage of active listed equity to which the strategy is applied
2 %
Total actively managed listed equities 195%

01.2. Describe your organisation’s approach to incorporation and the reasons for choosing the particular ESG incorporation strategy/strategies.

Mellon has made the deliberate decision to imbed ESG analysis throughout its investment processes rather than segregating these efforts in a separate team or division.  The result is firm-wide, bottom up integration with a mandate from the firm’s senior management. 

We integrate ESG considerations into our investment processes in three ways: research expertise, solutions and product strategies.

Research expertise: Our research expertise is the foundation for our investment processes.  Each analyst and portfolio manager is responsible for identifying material, relevant ESG considerations in their space and applying these insights appropriately.  In this way, ESG research is an integral part of our investment process.   We believe that carving out ESG considerations as a separate and distinct step detracts from the rigor of our analysis and has the potential to skew or increase risk.  Consequently, as part of their investment process, our analysts actively pursue information, including ESG-related and extra-financial information that will strengthen their investment theses. We rely on their expertise to determine the extent and consequences of ESG risks and opportunities within their coverage universes or portfolio construction mandates. For systematic and indexed portfolios, ESG information may also be included as a risk component and/or in our corporate engagements.

Solutions: We recognize that ESG integration is defined differently by different investors.  Many issues, including expanded regulation, changes in public sentiment, geopolitical unrest, macro trends, demographic shifts, increased severe weather events, increased data access, as well as their combined underlying drivers, will shape corporate behavior and impact markets.  Some of our clients want to promote or avoid specific causes or activities in their investments.  We work with them to create portfolios that reflect their unique perspectives on ESG issues while also addressing their financial objectives.  We pride ourselves on our ability to partner with our clients to meet and help them evolve their specific objectives.

Product Strategies: In areas where our research or solutions lead us to differentiated ESG approaches that have potential for broader appeal than a single client, we create specific products around these ideas.  For example, our Carbon Efficiency Strategy grew out of a client’s desire to lower exposure to current carbon emissions while still approximating the return and risk profile of their indexed portfolio.  This strategy, open to other investors, targets a tracking error to the index of less than 0.50% while reducing the exposure to carbon by over 50%.  The design of this strategy deliberately and thoughtfully incorporates flexibility around underlying benchmark, tracking error and carbon reduction targets to facilitate customization should a client have differing benchmark and carbon reduction/tracking error objectives.

Our passively managed funds are the beneficiaries of our engagement and proxy voting activities.


01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]

LEI 02. Type of ESG information used in investment decision (Private)

LEI 03. Information from engagement and/or voting used in investment decision-making (Private)

(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by


A variety of exclusive and inclusive screens have been implemented in our long-standing index strategies, enhanced index strategies, and active equity and fixed income strategies. Some examples of our implementations include sustainability, socially responsible investing, nuclear decommissioning, and other criteria dictated by individual client investment policies.

Screened by


Please refer to our qualitative response above.

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

Mellon offers investment advisory services tailored to meet clients’ individual investment goals. Mellon works with clients to create investment guidelines mutually acceptable to both the client and the firm. When creating investment guidelines, clients may impose specific investment restrictions in certain individual securities or types of securities.  Mellon does not offer its own screened portfolios.  Rather, we employ client-directed screens.

LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]

LEI 06. Processes to ensure fund criteria are not breached (Private)

(B) Implementation: Thematic

LEI 07. Types of sustainability thematic funds/mandates

07.1. Indicate the type of sustainability thematic funds or mandates your organisation manages.

07.2. Describe your organisation’s processes relating to sustainability themed funds. [Optional]

(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the ESG factors you systematically research as part of your investment analysis and the proportion of actively managed listed equity portfolios that is impacted by this analysis.

ESG issues

Proportion impacted by analysis




Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]

Each investment professional is responsible for recognizing material, relevant ESG considerations and applying those insights appropriately in their areas.  In this way, each of our active investments have ESG imbedded in the research.

Our indexed equity funds are the beneficiaries of the ESG engagement work and proxy voting we do both at the BNY Mellon collective and the Mellon specific levels.

LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on a robust analysis.

09.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your integration strategy.

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

09.4. Indicate how frequently you review internal research that builds your ESG integration strategy.

09.5. Describe how ESG information is held and used by your portfolio managers.

09.6. Additional information.[Optional]

Active equity analysts routinely record their ESG insights in the shared database which is updated as often as new material, relevant information is available but no less than annually.

LEI 10. Aspects of analysis ESG information is integrated into (Private)