Our Sustainable Investing Summit and Roundtable series explored how a sustainable approach can help mitigate investment risk, drive long-term growth and a positive impact
BRG – JPMPB – Sustainable Investing Summit Event Update – Transcript
Oliver:
I couldn't be more excited and delighted than to welcome all of you, our global audience, today for SIS 2020. 74% of you told us you wanted to invest sustainably, but you didn't know where to start, or how to do it. So, today, we're going to make sustainable investing a reality.
Sir Ronald Cohen:
We have to shift to stakeholder capitalism. We can no longer worry about shareholders, and, and neglect everyone else. So, "you begin to look at companies in terms of both their environmental and social performance, and their profit. And that will change the rules of the game."
Sir David King:
We know that sea levels will rise very, very significantly, perhaps, 30 to 40 cm by mid- century, just 30 years' time.
By which time, regions of South East Asia, for example, will no longer be livable. Cities like Calcutta, Mumbai underwater.
Mark Carney:
The key component is the private sector. Um, and this has been the big, big shift. You've seen, um, leading companies in the financial sector and the real economy, um, making commitments, and making real progress, um, towards net zero that gives, uh, a momentum to this.
Nicole Poindexter:
Because of the low cost of deploying solar technology, and some methodologies that we've really focused on to be incredibly low cost, including building local teams, we can actually be profitable while we are serving the least wealthy and the most vulnerable people in the world.
Daryn Dodson:
We can really look at the 10-year process that we can take our investors and our managers on to reduce their bias, so they can unlock their impact and their returns. And not create an artificial drag for our sector of impact investing, as it has a chance to be one of the dominant ways in which investors invest around the world.
Jennifer Wu:
Just by looking at oil and gas sector, right, we already know that some companies are fast embracing, you know, green energy and future proofing of their business model. Some of the others are not. And that difference is starting to be priced-in by the market. So, I think the message to investor is: get in early.
Jeremy Johnson:
I think that 10 years from now we're gonna look at those things as, actually, most well-run companies have a purpose on Earth, that a thing that they care about that goes above and beyond just existing as a company.
Lance Schiff:
If you're looking at equities, no matter what, equity markets were down in the middle of COVID. So, everything was down in price, but relative to markets, whether or not you're looking at Europe, or you're looking at emerging markets, or you're looking at the United States. You know, taking an ESG perspective versus a non-ASG ... ESG perspective, you consistently saw out performance.
Ben Thornley:
Impact, is really, uh, has built upon and stands on the shoulders of ESG practice. That good ESG practice is fundamentally an important aspect of, of impact also.
Oliver Gregson:
Whether it's investing in line with your values, or growing your portfolio more effectively, we believe, at J.P. Morgan, that through our sustainable investment platform we can help you invest with intent, aligning your portfolio to your principles. We believe the power of sustainable investing to mitigate investment risks, and to drive both long-term growth and positive impact.
It's why at last year's summit I quoted Carl Sagan, who said, whatever you do, "Don't sit this one out. Do something." The risks are simply too great, and the opportunities simply too huge.
BRG – JPMPB – Sustainable Investing Summit Event Update – Text Alternative Script
Side note:
Legal disclosures appear.
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This information is provided for informational purposes only. We believe the information contained in this video to be reliable; however we do not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage arising out of the use of any information in this video. The views expressed herein are those of the speakers and may differ from those of other J.P. Morgan employees, and are subject to change without notice. Nothing in this video is intended to constitute a representation that any product or strategy is suitable for you. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees to you. You should consult your independent professional advisors concerning accounting, legal or tax matters. Contact your J.P. Morgan team for additional information and guidance concerning your personal investment goals.
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J.P. Morgan.
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Sustainable Investment. Summit & Roundtable Series 2020.
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A man with short hair and wearing a business suit, Oliver Gregson.
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Oliver Gregson, Head of the UK & Ireland, J.P. Morgan Private Bank.
Oliver:
I couldn't be more excited and delighted than to welcome all of you, our global audience, today for SIS 2020.
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Six days of Insight, Strategy...And unparalleled access to today's top financial minds.
Oliver:
74% of you told us you wanted to invest sustainably, but you didn't know where to start, or how to do it.
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Source: Sustainable Investment Summit 2019 Audience Polling.
Oliver:
So, today, we're going to make sustainable investing a reality.
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A woman with long dark hair participates in the Summit remotely, from her home.
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Jessica Matthews, Global Head of Sustainable Investing, J.P. Morgan Private Bank.
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A man with silver hair and glasses, Sir Ronald Cohen, speaks remotely from an office.
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Sir Ronald Cohen, Chairman of the Global Steering Group for Impact Investment and the Portland Trust.
Sir Ronald:
We have to shift to stakeholder capitalism. We can no longer worry about shareholders, and, and neglect everyone else. So, "you begin to look at companies in terms of both their environmental and social performance, and their profit. And that will change the rules of the game."
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Climate.
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A man with glasses and headphones speaks remotely from a room with bookshelves.
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Sir David King, Founder and Chair, Center for Climate Repair Cambridge.
Sir David:
We know that sea levels will rise very, very significantly, perhaps, 30 to 40 cm by mid- century, just 30 years' time.
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(Source: Climate Central, Flooded Future, October 2019 www.climatecentral.org.
Sir David:
By which time, regions of South East Asia, for example, will no longer be livable. Cities like Calcutta, Mumbai underwater.
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A man with brown hair participates in the 2020 Summit, Nicolas Aguzin, speaks remotely.
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Nicolas Aguzin. Chief Executive Officer, International Private Bank, J.P. Morgan.
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A man with salt-and-pepper hair, Mark Carney, speaks remotely from his home.
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Mark Carney, UN Special Envoy on Climate Action and Finance, and Prime Minister Johnson's Finance Advisor for COP26.
Mark Carney:
The key component is the private sector. Um, and this has been the big, big shift. You've seen, um, leading companies in the financial sector and the real economy, um, making commitments, and making real progress, um, towards net zero that gives, uh, a momentum to this.
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One quarter of global Fortune 500 companies have adopted carbon neutral targets, or will by 2030.
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Source: Natural Capital Partners Deeds Not Words - The Growth of Climate Action in The Corporate World September 2019.
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A New Wave of Clean Energy.
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Ilaria Calabresi, Sustainable Investing Lead EMEA, Asia and Latin America, J.P. Morgan Private Bank and Geoffrey Eisenberg, Partner at Ecosystem Integrity Fund, listen (remotely) to an executive with short hair and brown eyes, Nicole Poindexter.
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Nicole Poindexter, Chief Executive Officer & Founder, Energicity Corp.
Nicole:
Because of the low cost of deploying solar technology, and some methodologies that we've really focused on to be incredibly low cost, including building local teams, we can actually be profitable while we are serving the least wealthy and the most vulnerable people in the world.
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There isn't a trade-off between creating impact and achieving an attractive financial return.
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A multiple split-screen shows close-ups of dozens of diverse individuals.
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Diversity: Will There Be Change?
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A woman with dark hair and brown eyes, Tiffany Lewis, participates in the Summit remotely.
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Tiffany Lewis, Executive Director, J.P. Morgan Asset Management.
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A man who keeps his head shaved and wears his beard in a goatee, Daryn Dodson, speaks remotely.
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Daryn Dodson, Managing Director, Illumen Capital.
Daryn:
We can really look at the 10-year process that we can take our investors and our managers on to reduce their bias, so they can unlock their impact and their returns. And not create an artificial drag for our sector of impact investing, as it has a chance to be one of the dominant ways in which investors invest around the world.
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65% of investors say gender diversity is important in manager selection. But only 25% actually ask about diversity during investment selection.
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Source: Harvard Business Review Institutional Investors Must Help Close the Race and Gender Gaps in Venture Capital August 2020.
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In the Loop: Why Consider a Circular Economy?
By 2030, the circular economy could globally yield up to $4.5 trillion in economic benefits...Saving 92 million tons of textiles in landfills...1.3 bilion tons of food waste...and 45 trillion gallons of water wasted through food production annually.
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Source: Accenture's 2015 book "Waste to Wealth."
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ESG and Sustainability: The New Normal?
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A woman with short black hair and gray blazer, Jennifer Wu, speaks remotely.
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Jennifer Wu, Global Head of Sustainable Investing, J.P. Morgan Asset Management
Jennifer:
Just by looking at oil and gas sector, right, we already know that some companies are fast embracing, you know, green energy and future proofing of their business model. Some of the others are not. And that difference is starting to be priced-in by the market. So, I think the message to investor is: get in early.
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Impact Investing: Fact or Fiction?
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Now, Rob Hutter, Founder & Managing Partner of Learn Capital and John Ancona, Co-Head of Private Equity, with J.P. Morgan Private Bank, listen (remotely) to an executive with short dark hair, Jeremy Johnson.
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Jeremy Johnson, Co-Founder and CEO, Andela.
Jeremy:
I think that 10 years from now we're gonna look at those things as, actually, most well-run companies have a purpose on Earth, that a thing that they care about that goes above and beyond just existing as a company.
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Portfolio Implementation: How Do I Do It?
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A man with light hair and headphones, Lance Schiff, speaks remotely.
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Lance Schiff, Portfolio Manager, J.P. Morgan Private Bank.
Lance:
If you're looking at equities, no matter what, equity markets were down in the middle of COVID. So, everything was down in price, but relative to markets, whether or not you're looking at Europe, or you're looking at emerging markets, or you're looking at the United States. You know, taking an ESG perspective versus a non-ASG ... ESG perspective, you consistently saw out performance.
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Measuring ESG and Impact: Are There Tips and Tactics?
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A man with short reddish-brown hair, Ben Thornley, speaks remotely from his home.
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Ben Thornley, Managing Partner, Tideline.
Ben:
Impact, is really, uh, has built upon and stands on the shoulders of ESG practice. That good ESG practice is fundamentally an important aspect of, of impact also.
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Oliver speaks to the viewer.
Oliver:
Whether it's investing in line with your values, or growing your portfolio more effectively, we believe, at J.P. Morgan, that through our sustainable investment platform we can help you invest with intent, aligning your portfolio to your principles. We believe the power of sustainable investing to mitigate investment risks, and to drive both long-term growth and positive impact.
On screen:
A montage shows clean bodies of water, white turbines in an offshore wind farm, and a massive waterfall in a pristine landscape.
Oliver:
It's why at last year's summit I quoted Carl Sagan, who said, whatever you do, "Don't sit this one out. Do something." The risks are simply too great, and the opportunities simply too huge.
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"Anything else you're interested in is not going to happen if you can't breathe the air and drink the water. Don't sit this one out. Do something. You are by accident of fate alive at an absolutely critical moment in the history of our planet."
- Carl Sagan.
J.P. Morgan Private Bank can help align your portfolio to your principles with compelling growth ideas that make an impact. Please contact your J.P. Morgan team for more information.
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J.P.Morgan Private Bank.
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This year has been a watershed moment for the global sustainability agenda. Not only has the coronavirus pandemic caused the greatest recession since World War II, but it has also accelerated the shift to sustainable investing and put climate change and social inequality issues in the spotlight
As part of our 2020 Sustainable Investing Summit and Roundtable series, we explored how the COVID-19 crisis has transformed the way many of us approach sustainable investing and discussed the key trends, opportunities and investment performance we’re seeing in this space. We spoke with leading industry figures about a range of issues — from our planet’s environmental challenges to the future of the circular economy. We believe in the power of sustainable investing to drive both long-term investment returns and positive impact.
Is ESG the new normal?
As we digest the ripple effects of the coronavirus pandemic, it’s clear that the emphasis on environmental, social and governance (ESG) issues is growing stronger. The radical changes caused by COVID-19 have been a wake-up call for policymakers and investors, revealing the need for a different approach to investing. In particular, the ‘S’ in ESG has become more prominent in 2020, with the current health crisis highlighting social injustices around the world.
As part of the shift towards stakeholder capitalism, investors are starting to examine businesses in terms of their environmental and social performance as well as profits. Firms are increasingly incorporating measures to combat climate change into their practices — a quarter of global Fortune 500 companies have adopted carbon neutral targets or pledged to do so by 2030.1
Companies performing highly on ESG measures tend to be more competitive, with higher profitability and better risk controls driving strong returns. There’s lots of research to suggest that incorporating material ESG factors into the investment process leads to more informed decisions and has the potential for alpha generation.
In addition to ESG integration becoming increasingly relevant in the investment process, we see sustainability as a potential long-term growth area for portfolios because it’s an approach that aligns with secular growth trends. Some of those that offer potentially attractive investment ideas include clean energy (the transition to renewables), sustainable consumer products and electric vehicles.
The rise of clean energy
We’re entering a new age of clean energy, offering a wealth of opportunities for both companies and investors. Renewable energy costs have now dropped to the same level as natural gas, and well below that of coal. Since 2010, utility-scale solar PV power has shown the sharpest cost decline at 82%, while onshore wind costs fell 39% and onshore wind dropped 29%.2
Governments around the world are recognising the increasing need for clean energy, and regulators are setting ambitious targets to help drive economies to adopt renewable energy sources. This is just the beginning. While less than 20% of global electricity generation is currently from renewables, that number is forecast to grow to over 50% by 2050.3
We think the combined economic pull of, and government push for, clean energy will ultimately deliver a welcome surprise to the upside – double-digit earnings growth for companies that are able to contribute to, and capitalize on, the clean energy value chain.
The importance of diversity
In a year where social injustice has been brought to the forefront of people’s minds through movements such as Black Lives Matter, it’s vital to recognize the need for more diversity within the corporate world.
Infographic showing that while 65% of investors think Gender Diversity is important in manager selection, only 25% actually ask about it when selecting investments. Only 1.3% of the investment industry's $69 Trillion AUM is controlled by diverse managers.
Transitioning to the circular economy
Currently, the world operates in a linear economy – a take-make-waste model. Global demand for natural resources is growing rapidly and is estimated to triple to 130 billion tons a year by 2050, which would amount to more than 400% the Earth’s capacity.4
The circular economy has gained momentum over recent years and could set us on the path to a more sustainable future. This concept seeks to eliminate waste by creating a closed-loop system that keeps materials in circulation by encouraging us to reuse, recycle and repair products rather than create brand new ones.
Finding circular solutions is a particularly pressing issue in the fashion and food industries. By 2030, the circular economy could yield up to $4.5 trillion in economic benefits globally, saving 92 million tons of textiles in landfills, 1.3 billion tons of food waste, and 45 trillion gallons of water wasted through food production every year.
How can you make an impact?
Investing through a sustainable lens can help drive long-term growth and align your investment portfolios with your principles. For example, investing in secular trends related to education, health and the environment can generate strong returns while also making a positive impact on the world.
In particular, education is on the precipice of a technological revolution. There’s a lot of room for growth – digital penetration in the sector is rising rapidly and is currently at similar levels to where the e-commerce industry was a decade ago. The shift to online learning presents investors with an opportunity to improve the quality and consistency of education around the world. In addition, the sector is one of the key drivers of economic growth and development.
As well as focusing on ESG integration and seizing long-term trends linked to sustainability, manager selection is key. Our global team of more than 50 investment due diligence specialists evaluates managers on both sustainability and performance measures. Our process focuses on four pillars – philosophy, people, process and performance – and is enhanced with engagement and sustainability reporting, which are elements unique to sustainable investing managers.
We can help you explore different ways to invest sustainably, such as exclusionary screening and ESG integration, as well as thematic and impact investing. These approaches can be carried out through both public markets (equities and fixed income) and private markets (private equity funds). We can also help you understand how ESG investing leads to a more efficient and effective portfolio that not only helps you achieve your long-term goals, but can also align to your principles.
Creating a more sustainable future
At J.P. Morgan Private Bank, we believe in the power of sustainable investing to drive both long-term investment returns and positive impact. Please discuss with your Advisor for more information.
1 Natural Capital Partners, Deeds not words, September 2019
2 IRENA, https://www.irena.org/newsroom/pressreleases/2020/Jun/Renewables-Increasingly-Beat-Even-Cheapest-Coal-Competitors-on-Cost
3 Bloomberg New Energy Finance, June 2019, New Energy Outlook 2019
4 www.ellenmacarthurfoundation.org/circular-economy/what-is-the-circular-economy
