Letter from
Ron O’Hanley

President and Chief Executive Officer


 

As State Street’s CEO, I am honored to introduce our Corporate Responsibility (CR) Report. Each year we summarize how we are performing against the environmental, social and governance (ESG) metrics we have set for ourselves in order to build a more sustainable and inclusive business for our stakeholders.
 

As both a servicer and a manager of global investments, our singular focus is on long-term value creation.This is because the investors we serve have long-term goals, liabilities and needs they must address. That is why our asset management business has been stressing ESG issues in its engagement with portfolio companies and in its investment risk frameworks. Our data and analytics business has also increased their efforts around developing solutions to help companies better understand their ESG exposures.
 


Our singular focus is on long-term value creation.
 

Not surprisingly, we apply the insights we gain from working with global institutional investors to our own ESG priorities as a company. After all, if these issues are important to us as investors, they should be important to us as a high-performing company as well. We believe that effectively managing our ESG priorities is critical to our ability to generate long-term value for our shareholders.

Incorporating ESG into Our Business Strategy

We believe that ESG is central to our business strategy. Therefore, in the same way our stewardship team within State Street Global Advisors called on companies to incorporate sustainability into their long-term strategies, we plan, starting in 2019, to include these topics as part of our overall annual report in order to demonstrate their strategic importance.

Moreover, we are evolving how we report on ESG issues. In 2018, our board of directors committed to monitor material ESG risks to our business, just as Global Advisors had asked their portfolio companies to do. That commitment, in turn, requires that the board has the necessary information to fulfill its new mandate. We conducted an internal analysis last year to create a comprehensive framework for considering the material ESG issues for our business and to ensure that we are using metrics and categories that are most relevant to our investors.

Reporting What Matters to Investors

As a result of this analysis, we are evolving our ESG reporting practices toward the frameworks created by the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD). These are reporting frameworks that are investor-led and are designed to provide our shareholders with the information that matters most to them.
 


We are evolving our ESG reporting practices toward frameworks that are investor-led and provide our shareholders with the information that matters most to them.
 

Developed with extensive market input, SASB standards are used by companies and investors to implement principles-based frameworks, including integrated reporting and the recommendations of the TCFD. SASB has worked closely with other organizations seeking to advance reporting and corporate disclosure on sustainability issues, and complements earlier initiatives such as the Global Reporting Initiative (GRI) and the International Integrated Reporting Committee.

Under the SASB framework we will begin to report key material information around five pillars: environment, social capital, human capital, business model and innovation, and leadership and governance. Since SASB’s requirements do not cover all of the issues required by the TCFD, which we joined in 2017, we are also including a separate section of this report to cover that information.

This transition will involve a multiyear process, but we believe it will lead to a more transparent and stronger integration of sustainability issues into our business strategy. It will also help us better demonstrate and articulate our commitment to sustainability to our stakeholders: clients, employees, shareholders and our broader communities. This framework will also be flexible enough for us to include new metrics as our business evolves.

As we continue to help our clients understand how to incorporate ESG considerations across their entire value chains, we believe adopting best practices around ESG data, analytics and reporting for ourselves will help us set an example for other companies to track the material issues that will help them drive more sustainable futures

Promoting the UN Global Compact and Sustainable Development Goals

As a signatory to the United Nations Global Compact since 2014, we are also focused on how we can promote the UN’s Sustainable Development Goals (SDGs). We have focused on five specific SDGs where we believe we can make a significant impact: gender equality, affordable and clean energy, climate action, and two of which are the focus of our State Street Foundation and corporate citizenship activities — quality education and decent work, and economic growth. You can read about our progress against these goals in the third section of our 2018 CR report.

Given our role as a leader in the financial services industry, as a trusted partner to our clients, and as a responsible corporate citizen, it is important for us to be transparent about our approach to all of these issues. I sincerely hope that the information in the pages that follow demonstrate not only the value of our initiatives, but the influence we have on effecting positive change in the broader societies in which we operate.