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TRANSCRIPT
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Plan for the future you want to see.
Sustainable investing
Image source: Shutterstock
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2 | SUSTAINABLE INVESTING
Sustainable investing means looking at all the factors — not only financial — that can have an impact on a company’s ability to operate today, or in the longer term.
Sustainable investing considerations are often grouped into three categories: environmental, social and governance (ESG).
ENVIRONMENTALFactors related to
the quality and functioning of the
natural environment and natural systems.
SOCIALFactors related to
the rights, wellbeing and interests of
people and communities.
GOVERNANCEFactors related to
the way companies are managed and
overseen.
EXAM
PLES
Carbon emissions, waste management,
water stress
Cybersecurity, employee diversity,
product safety
Executive pay, board composition, ownership
structure
ILLU
STR
ATIO
N
BP’s Deepwater Horizon oil spill is perhaps the
highest-profile ESG transgression in recent history, and illustrates
the impact that environmental
mismanagement can have on company
performance. A decade on, BP’s share price has
still not recovered.
As well as the short-term share price
effect, a high-profile data privacy breach can have significant
long-term consequences for a company, damaging
customer trust, attracting regulatory scrutiny and driving
up costs.
When executive pay is based on short-term
achievements, companies can develop a culture of excessive
risk taking that damages long-term
performance. Remuneration packages
should be aligned with the company’s
long-term goals.
What is sustainable investing?
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J .P. MORGAN ASSET MANAGEMENT | 3
SUSTAINABLE INVESTING
Why invest sustainably?Sustainability is a growing concern for investors, whether to enhance risk management, capture the opportunities in a fast-changing world, or better align financial and non-financial goals.
Climate change
Data privacy
TO MANAGE A WIDER RANGE
OF RISKS
Drive positive change
Avoid the worst
polluters
Innovative technologies
New energy sources
TO PREPARE FOR CHANGING
REGULATION
TO ALIGN INVESTMENTS WITH CLIENT
INTEREST
TO CAPTURE OPPORTUNITIES
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4 | SUSTAINABLE INVESTING
SUSTAINABLE INVESTING
At J.P. Morgan Asset Management, we know that the way companies manage ESG risks and opportunities has consequences for their business results.
That’s why we incorporate ESG factors into our active investment processes across asset classes — not only in our dedicated sustainable funds, but in our traditional funds too.
ESG integration across asset classes
We define ESG integration as the systematic inclusion of financially material ESG factors in investment analysis and investment decisions, with the goal of enhancing long-term risk-adjusted financial returns.
We have been working towards ESG integration since 2016, using a consistent framework to incorporate material, relevant ESG factors in our active investment processes.
Today, our equity, fixed income, liquidity, alternative and multi-asset investment engines have formalized their ESG integration processes for active strategies. More than 200 analysts globally include ESG considerations in their research.Our dedicated sustainable solutions build on this foundation of integration.
ESG factors in investment decision making
USD 2.3 TRILLION
in ESG integrated assets under management.*
200+analysts around the globe
taking ESG factors intoconsideration in their
research.
450ESG integrated activeinvestment strategies,across asset classes.
All data as of 12/31/20 unless otherwise specified. *Data as of 3/31/21
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J .P. MORGAN ASSET MANAGEMENT | 5
Regular contact with the companies in which we invest has been vital to our active heritage, and is at the heart of our investment processes today. One of our key differentiators is access to senior management. We have long-established relationships with senior decision-makers, and are often one of the largest shareholders of a company, meaning our voice is influential.
We have defined a set of stewardship priorities that we believe can play a critical role in creating value for our clients.
Voting responsiblyEffective use of our clients’ proxy votes is critically important. We maintain detailed voting policies in each region, based on international standards of corporate governance and local market best practice.
Engaging for positive changeWe employ two branches of engagement. Our portfolio managers and analysts work with companies on improving elements of their operations and strategy that they deem to have a financially material impact on profitability over the long term. Where the issues identified relate to long-term sustainability, our investment stewardship team may conduct additional engagement. Insights gained from our engagements have been incorporated into our investment decisions, helping enhance risk-adjusted returns over time while contributing to positive change.
Promoting sustainability through investment stewardship
~8,000company meetings
a year.
Actively voting at ~500dedicated ESG engagements
a year.
80markets around
the world.
… in
All data as of 12/31/20.
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6 | SUSTAINABLE INVESTING
SUSTAINABLE INVESTING
Approaches to sustainable investing span a broad spectrum, from solutions that simply screen out companies in specific industries to those that invest with the primary goal of achieving environmental or social benefits. The right approach for you depends on your goals and values.
Approaches to sustainable investing
Systematic inclusion of financially material Environmental, Social and Governance factors in investment analysis and investment decisions, with the goal of enhancing long-term, risk adjusted financial returns.
ESG INTEGRATED
Exclusions may inc lude Exc lusions may inc lude sect ors such as f ossi l fue ls, sect ors such as f ossi l fue ls, weapons (al l or certain weapons (al l or certain t ypes), adult entertainment t ypes), adult entertainment and t obacc o.and t obacc o.
Tilted towards sectors, companies or projects with positive ESG characteristics; exclude certain companies based on ESG criteria.
POSITIVE TILT
Exclude certain sectors, industries or practices from the portfolio based on specific ESG criteria.
EXCLUSIONS
FUNDAMENTAL INVESTING MANAGING RISK CAPTURING OPPORTUNITY DRIVING POSITIVE CHANGE
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J .P. MORGAN ASSET MANAGEMENT | 7
This t ype of appr oach This t ype of appr oach uses research and/or uses research and/or ESG rat ings t o c ompare ESG rat ings t o c ompare c ompanies wit h t heir peers, c ompanies wit h t heir peers, invest ing in t hose wit h invest ing in t hose wit h t he most attract ive ESG t he most attract ive ESG per f ormance.per f ormance.
Invest in companies that lead their peer groups in ESG performance; exclude certain companies based on ESG criteria.
BEST IN CLASS
Invest with a thematic focus on a UN Sustainable Development Goal or other specific ESG theme.
THEMATIC
Invest with the primary goal of achieving specific, positive environmental/social benefits while also delivering a financial return.
IMPACT
FUNDAMENTAL INVESTING MANAGING RISK CAPTURING OPPORTUNITY DRIVING POSITIVE CHANGE
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Jennifer WuGLOBAL HEAD OF SUSTAINABLE INVESTING
J.P. MORGAN ASSET MANAGEMENT
We believe long-term thinking leads to sustainable business models.
We know that how companies manage the risks and opportunities surrounding ESG factors has numerous consequences
for their business results.
Image source: Shutterstock
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J .P. MORGAN ASSET MANAGEMENT | 9
SUSTAINABLE INVESTING
At J.P. Morgan Asset Management, our approach to sustainable investing builds on our long heritage of active management and the breadth and depth of our research resources. We integrate material, relevant ESG factors in our active strategies and offer a broad range of dedicated sustainable solutions.
Investing sustainably with J.P. Morgan Asset Management
All data as of 12/31/20 unless otherwise specified.* United Nations Principles for Responsible Investment (PRI) granted J.P. Morgan Asset Management an
A+ rating for the Strategy and Governance module in the 2020 Assessment released 7/20. Compliant signatories’ ESG credentials are reviewed yearly by the UN-backed PRI, and are scored in respective categories on an alphabetical scale ‘A+’ (top band) to ‘E’ (lowest band). For additional information visit www.unpri.org
** Data as of 06/20.
200+
~500
450 A+
15
analysts around the globe taking ESG factors into consideration in their research.
dedicated ESG engagements with companies every year.
ESG integrated active investment strategies, across asset classes.**
We have been a signatory to the United Nations Principles for Responsible Investing (PRI) since 2007. We are rated A+ in the United Nations PRI Assessment 2020.*
sustainable investing specialists responsible for ESG research, stewardship and product innovation.
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10 | SUSTAINABLE INVESTING
SUSTAINABLE INVESTING
Our sustainable investment capabilities are designed to align with your financial goals and values. We offer sustainable investment solutions across asset classes, from funds that screen out specific industries to funds that focus on specific sustainability themes.
Our sustainable investment solutions
ALTERNATIVESJPM Macro Opportunities FundJPM Strategic Income Opportunities FundJPM Total Return Fund
ASSET ALLOCATIONJPM Diversified FundJPM Global Allocation FundJPM Income Builder FundJPM Investor Balanced FundJPM Investor Conservative Growth FundJPM Investor Growth & Income FundJPM Investor Growth FundJPM SmartRetirement SeriesJPM SmartRetirement Blend SeriesJPM SmartRetirement Income FundJPM SmartSpending Series
FIXED INCOME TAX EXEMPTJPM California Tax Free Bond FundJPM High Yield Municipal FundJPM Intermediate Tax Free Bond FundJPM Municipal ETFJPM New York Tax Free Bond FundJPM Short-Intermediate Municipal Bond FundJPM Tax Aware Real Return FundJPM Tax Free Bond FundJPM Ultra-Short Municipal FundJPM Ultra-Short Municipal Income ETF
FIXED INCOME TAXABLEJPM Core Bond FundJPM Core Plus Bond ETFJPM Core Plus Bond FundJPM Corporate Bond Fund
JPM Carbon Transition U.S. Equity ETFJPM Sustainable Municipal Income Fund
THEMATIC
ESG INTEGRATED
JPM U.S. Sustainable Leaders Fund
BEST IN CLASS
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J .P. MORGAN ASSET MANAGEMENT | 11
JPM Corporate Bond Research Enhanced ETFJPM Emerging Markets Debt FundJPM Emerging Markets Strategic Debt FundJPM Floating Rate Income FundJPM Global Bond Opportunities FundJPM Government Bond FundJPM High Yield FundJPM High Yield Research Enhanced ETFJPM Income FundJPM Inflation Managed Bond FundJPM International Bond Opportunities ETFJPM Limited Duration Bond FundJPM Mortgage-Backed Securities FundJPM Short Duration Bond FundJPM Short Duration Core Plus FundJPM Ultra-Short Income ETFJPM Unconstrained Debt Fund
INTERNATIONAL EQUITYJPM Emerging Markets Equity Core ETFJPM Emerging Markets Equity Fund1
JPM Europe Dynamic FundJPM International Equity FundJPM International Focus FundJPM International Growth ETFJPM International Hedged Equity FundJPM Intl Research Enhanced Equity FundJPM International Value Fund
MONEY MARKETJPM California Municipal Money Market FundJPM Federal Money Market FundJPM Institutional Tax Free Money Market FundJPM Liquid Assets Money Market FundJPM Managed Income FundJPM Municipal Money Market FundJPM New York Municipal Money Market Fund
JPM Prime Money Market FundJPM Securities Lending Money Market Fund JPM Tax Free Money Market FundJPM U.S. Government Money Market Fund JPM U.S. Treasury Plus Money Market Fund
U.S. EQUITYJPM Equity Focus FundJPM Equity Income FundJPM Equity Premium Income ETFJPM Equity Premium Income FundJPM Growth Advantage FundJPM Hedged Equity Fund SeriesJPM Intrepid Value FundJPM Large Cap Growth FundJPM Large Cap Value FundJPM Market Expansion Enhanced Index Fund JPM Mid Cap Equity FundJPM Mid Cap Growth FundJPM Mid Cap Value FundJPM Realty Income FundJPM Research Market Neutral FundJPM Small Cap Blend FundJPM Small Cap Core FundJPMorgan Small Cap Equity Fund1
JPM Small Cap Growth Fund1
JPM Small Cap Value FundJPM SMID Cap Equity FundJPM Tax Aware Equity FundJPM U.S. Equity FundJPM U.S. GARP Equity Fund2 JPM U.S. Large Cap Core Plus FundJPM U.S. Research Enhanced Equity Fund JPM U.S. Small Company FundJPM U.S. Value FundJPM Value Advantage Fund
ESG INTEGRATED
1 These funds are offered on a limited basis, please see prospectus for more details.2 As of February 1, 2021, the JPMorgan Intrepid Growth Fund has been renamed to JPMorgan U.S. GARP Equity Fund.
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Investors should carefully consider the investment objectives and risks as well as charges and expenses of the JPMorgan ETF before investing. The summary and full prospectuses contain this and other information about the ETF. Read the prospectus carefully before investing. Call 1-844-4JPM-ETF or visit www.jpmorganETFs.com to obtain a prospectus.
Contact JPMorgan Distribution Services, Inc. at 1-800-480-4111 for a prospectus. Carefully consider the fund’s objectives, risks, charges and expenses of the mutual fund before investing. The prospectus contains this and other fund information. Read it carefully before investing.
Investing on the basis of sustainability/ESG criteria involves qualitative and subjective analysis. There is no guarantee that the determinations made by the adviser will align with the beliefs or values of a particular investor. Companies identified by an ESG policy may not operate as expected, and adhering to an ESG policy may result in missed opportunities.
J.P. Morgan ETFs and J.P. Morgan Funds are distributed by JPMorgan Distribution Services, Inc., which is an affiliate of JPMorgan Chase & Co. Affiliates of JPMorgan Chase & Co. receive fees for providing various services to the funds. JPMorgan Distribution Services, Inc. is a member of FINRA.
J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co., and its affiliates worldwide.
Telephone calls and electronic communications may be monitored and/or recorded. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our privacy policies at https://www.jpmorgan.com/privacy.
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Copyright 2021. JPMorgan Chase & Co. All rights reserved.
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