A family with deep roots in philanthropy wants to integrate social considerations into its investment portfolio.
Jung-Hwa and his wife, Joon, always had a strong commitment to philanthropy. They were particularly interested in promoting workplace health and safety, and community development—key themes reflected in the management of their family businesses.
Between their inherited wealth and Jung-Hwa’s successful business ventures in Korea, they were able to establish a family foundation. Keenly aware of growing sustainability trends in Asia, they wanted to maximize their social impact by being more intentional in how the foundation’s capital would be managed.
Their J.P. Morgan team worked with them to better understand the foundation’s mission, risk profile, time horizon and target returns. The team arranged a series of educational sessions with the foundation’s investment committee to review sustainable investing approaches. Philanthropy professionals at J.P. Morgan also joined these sessions and shared how other clients have approached investing with a philanthropic mindset. Collectively, they determined that ESG considerations should be integrated into the foundation’s portfolio to help align its capital activities and values.
Jung-Hwa and Joon wanted to start immediately. Their J.P. Morgan team evaluated ESG implications on all investments and created a thoughtful implementation plan. The team conducted ongoing discussions with the foundation’s investment committee, making adjustments along the way as needed to help achieve the dual objectives of social considerations while staying focused on their returns.
All case studies are shown for illustrative purposes only, and are hypothetical. Any name referenced is fictional, and may not be representative of other individual experiences. Not all products and services are offered at all locations. Information is not a guarantee of future results.
Sustainable investing (“SI”) and investment approaches that incorporate environmental social and governance (“ESG”) objectives may include additional risks. SI strategies, including ESG SMAs, mutual funds and ETFs, may limit the types and number of investment opportunities and, as a result, could underperform other strategies that do not have an ESG or sustainable focus. Certain strategies focused on particular sectors may be more concentrated in particular industries that share common factors and can be subject to similar business risks and regulatory burdens. Investing on the basis of sustainability/ESG criteria can involve qualitative and subjective analysis and there can be no assurance that the methodology utilized, or determinations made, by the investment manager will align with the beliefs or values of the investor. Investment managers can have different approaches to ESG or sustainable investing and can offer strategies that differ from the strategies offered by other investment managers with respect to the same theme or topic. ESG or sustainable investing is not a uniformly defined concept and scores or ratings may vary across data providers that use similar or different screens based on their process for evaluating ESG characteristics. Additionally, when evaluating investments, an investment manager is dependent upon information and data that may be incomplete, inaccurate or unavailable, which could cause the manager to incorrectly assess an investment’s ESG/ SI performance.
J.P. Morgan takes a global approach to sustainable investing and the solutions offered through our sustainable investing platform meet our internally defined criteria for a sustainable investment. The evolving nature of sustainable finance regulations and the development of jurisdiction-specific legislation setting out the regulatory criteria for a “sustainable investment” or “ESG” investment mean that there is likely to be a degree of divergence as to the regulatory meaning of such terms. This is already the case in the European Union where, for example, under the Sustainable Finance Disclosure Regulation (EU) (2019/2088) certain criteria must be satisfied in order for a product to be classified as a “sustainable investment”. Any references to “sustainable investing”, “SI” or “ESG” in this material are intended as references to our internally defined criteria only and not to any jurisdiction-specific regulatory definition.