Exclusionary screening
Do you know what's in your portfolio? Are you investing in companies that don't meet your values or standards? We can answer these questions and more.
Environmental, social and governance integration
ESG investing means considering environmental, social and governance issues and risks during the investment process. In addition to helping you align your portfolio with your sustainable investing goals, it’s also just good, smart investing. That’s because these factors may affect a company’s financial performance—not just have a positive societal impact. At J.P. Morgan Private Bank, we integrate ESG analysis into our approach and evaluation of all investment opportunities. It’s becoming business as usual.
Watch Marisa Buchanan, Director of Sustainable Finance at J.P. Morgan Chase, introduce the approach of ESG Integration.
Marisa Buchanan: The growth in sustainable investing is really being driven by a number of factors. One important one is that I think investors increasingly realize that ESG issues, these are environmental, social, and governance issues, are really important for the companies in which they invest, and that focusing on ESG issues can be important in terms of managing risks but it can also be important in terms of identifying companies that may be positioning themselves for good, strong, long-term performance.
Secondly, I think attitudes about investing are really changing. I think the notion that investing is something that is separate from the mission of an organization has really been shifted, and I think the next generation has had a real strong influence on that trend.
What we've seen on many of these campuses is that students have been influential in getting schools just to really open a broader dialog around where their investments are being made, the impacts that these are having more broadly, and are really starting to create a new conversation around how endowments should be managed.
While relevant ESG issues may differ for different companies and sectors 00:59:38, there are a few that investors commonly look at. These can be things like air pollution, climate change and water. They can also be issues like community relations and labor issues as well as issues with respect to corporate governance
We see some investors using it as a way to identify companies that they may want to avoid because they think these companies may be exposed to higher risk due to these ESG issues. We also see a number of investors starting to use ESG integration as a way to identify the types of companies that they really want to invest in because they think they're best-in-class performers.
If you're investing in a company that's in the power sector let's say a power company could face a number of environmental, social, and governance issues, things like impending regulations on air pollution, climate change, issues like water, as well as how that company as a whole is being managed from a governance perspective and really thinking about these risks and how they're going to respond proactively to them.
There are many different ways that investors can think about integrating ESG issues into their investment process. We like to think about it as really good fundamental due diligence and analysis. So when an investor is doing their due diligence and looking at all of the financial factors and issues that inform one's investment decision it's also important to look at some nonfinancial factors, some of these environmental, social, and governance factors.
For those institutions that are really interested in learning more about this, the best place to really start is with education. So one, really getting up to speed on the spectrum of sustainable investing and what the different strategies look like, and then secondly I think really looking to create a dialogue with the right stakeholders and people within your organization and also outside of your organization to think about your organization's goals and your missions.
There are a number of great resources out there. There are some third-party organizations, some nonprofit organizations that are producing research and insights that may be valuable. J.P. Morgan itself also has a wealth of knowledge and resources and we're here to really work with our clients and help them in any way that we can.
On screen:
Black text on a white screen.
Text on screen:
Opinions expressed are those of the speakers and may differ from those of other JPMorgan employees and affiliates. Neither JPMorgan nor any of its affiliates can represent that the statements or opinions expressed today will materialize.
This is not an investment research video. The views and strategies described may not be suitable for all investors. This video is not intended as personal investment advice or as a solicitation or recommendation. If you are considering any investment or strategy, you should speak with your JPMorgan representative before investing. Past performance is no guarantee of future results.
Please read important information at the end of the presentation.
INVESTMENT PRODUCTS:
• NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
On screen:
This video begins with Marisa Buchanan, a dark-haired brown-eyed woman in an open office space with plush chairs. She wears a bright red shirt.
Text on screen:
Marisa Buchanan. Executive Director, JPMorgan Director of Sustainable Finance.
Ms. Buchanan:
The growth in sustainable investing is really being driven by a number of factors. One important one is that I think investors increasingly realize that ESG issues, these are environmental, social, and governance issues, are really important for the companies in which they invest, and that focusing on ESG issues can be important in terms of managing risks but it can also be important in terms of identifying companies that may be positioning themselves for good, strong, long-term performance. Secondly, I think attitudes about investing are really changing. I think the notion that investing is something that is separate from the mission of an organization has really been shifted, and I think the next generation has had a real strong influence on that trend. What we've seen on many of these campuses is that students have been influential in getting schools just to really open a broader dialog around where their investments are being made, the impacts that these are having more broadly, and are really starting to create a new conversation around how endowments should be managed.
On screen:
Text appears on a white screen.
Text on screen:
A wide spectrum of sustainable investing strategies.
On screen:
A close-up of Ms. Buchanan.
Ms. Buchanan:
While relevant ESG issues may differ for different companies and sectors there are a few that investors commonly look at. These can be things like air pollution, climate change and water. They can also be issues like community relations and labor issues as well as issues with respect to corporate governance We see some investors using it as a way to identify companies that they may want to avoid because they think these companies may be exposed to higher risk due to these ESG issues. We also see a number of investors starting to use ESG integration as a way to identify the types of companies that they really want to invest in because they think they're best-in-class performers. If you're investing in a company that's in the power sector let's say a power company could face a number of environmental, social, and governance issues, things like impending regulations on air pollution, climate change, issues like water, as well as how that company as a whole is being managed from a governance perspective and really thinking about these risks and how they're going to respond proactively to them.
On screen:
Text appears on a white screen.
Text on screen:
Making ESG issues a part of the due diligence process.
On screen:
A close-up of Ms. Buchanan.
Ms. Buchanan:
There are many different ways that investors can think about integrating ESG issues into their investment process. We like to think about it as really good fundamental due diligence and analysis. So, when an investor is doing their due diligence and looking at all of the financial factors and issues that inform one's investment decision it's also important to look at some nonfinancial factors, some of these environmental, social, and governance factors.
On screen:
Text appears on a white screen.
Text on screen:
Getting started.
On screen:
A close-up of Ms. Buchanan.
Ms. Buchanan:
For those institutions that are really interested in learning more about this, the best place to really start is with education. So one, really getting up to speed on the spectrum of sustainable investing and what the different strategies look like, and then secondly I think really looking to create a dialogue with the right stakeholders and people within your organization and also outside of your organization to think about your organization's goals and your missions. There are a number of great resources out there. There are some third-party organizations, some nonprofit organizations that are producing research and insights that may be valuable. JPMorgan itself also has a wealth of knowledge and resources and we're here to really work with our clients and help them in any way that we can.
On screen:
Fade to black text on a white screen.
Text on screen:
IMPORTANT INFORMATION ABOUT YOUR INVESTMENTS AND POTENTIAL CONFLICTS OF INTEREST
Conflicts of interest will arise whenever JPMorgan Chase Bank, N.A. or any of its affiliates (together, “JPMorgan”) have an actual or perceived economic or other incentive in its management of our clients’ portfolios to act in a way that benefits JPMorgan. Conflicts will result, for example (to the extent the following activities are permitted in your account): (1) when JPMorgan invests in an investment product, such as a mutual fund, structured product, separately managed account or hedge fund issued or managed by JPMorgan Chase Bank, N.A. or an affiliate, such as JPMorgan Investment Management Inc.; (2) when a JPMorgan entity obtains services, including trade execution and trade clearing, from an affiliate; (3) when JPMorgan receives payment as a result of purchasing an investment product for a client’s account; or (4) when JPMorgan receives payment for providing services (including shareholder servicing, recordkeeping or custody) with respect to investment products purchased for a client’s portfolio. Other conflicts will result because of relationships that JPMorgan has with other clients or when JPMorgan acts for its own account.
Investment strategies are selected from both JPMorgan and third-party asset managers and are subject to a review process by our manager research teams. From this pool of strategies, our portfolio construction teams select those strategies we believe fit our asset allocation goals and forward-looking views in order to meet the portfolio's investment objective.
As a general matter, we prefer JPMorgan managed strategies. We expect the proportion of JPMorgan managed strategies will be high (in fact, up to I00 percent) in strategies such as, for example, cash and high-quality fixed income, subject to applicable law and any account-specific considerations.
While our internally managed strategies generally align well with our forward-looking views, and we are familiar with the investment processes as well as the risk and compliance philosophy of the firm, it is important to note that JPMorgan receives more overall fees when internally managed strategies are included. We offer the option of choosing to exclude JPMorgan managed strategies (other than cash and liquidity products) in certain portfolios.
IMPORTANT INFORMATION
Purpose of this Material
This material is for information purposes only. The information provided may inform you of certain products and services offered by JPMorgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). The views and strategies described in the material may not be suitable for all investors and are subject to risks. This material is confidential and intended for your personal use. It should not be circulated to or used by any other person, or duplicated for non-personal use, without our permission. Please read this Important Information in its entirety.
Legal Entity and Regulatory Information
In the United States, Bank deposit accounts and related services, such as checking, savings and bank lending, may be subject to approval are offered by JPMorgan Chase Bank, N.A. Member FDIC.
JPMorgan Chase Bank, N.A. and its affiliates (collectively "JPMCB") offer investment products, which may include bank managed accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through JPMorgan Securities LLC (“JPMS”), a member of FINRA and SIPC. JPMCB and JPMS are affiliated companies under the common control of JPM. Products not available in all states.
In the United Kingdom, this material is issued by JPMorgan International Bank Limited (JPMIB) with the registered office located at 25 Bank Street, Canary Wharf, London E14 5JP, registered in England No. 03838766. JPMIB is authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. In addition, this material may be distributed by JPMorgan Chase Bank, N.A. (“JPMCB”), Paris branch, which is regulated by the French banking authorities Autorité de Contrôle Prudentiel et de Résolution and Autorité des Marchés Financiers or by JPMorgan (Suisse) SA, which is regulated in Switzerland by the Swiss Financial Market Supervisory Authority (FINMA).
In Hong Kong, this material is distributed by JPMCB, Hong Kong branch. JPMCB, Hong Kong branch is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission of Hong Kong. In Hong Kong, we will cease to use your personal data for our marketing purposes without charge if you so request. In Singapore, this material is distributed by JPMCB, Singapore branch. JPMCB, Singapore branch is regulated by the Monetary Authority of Singapore. Dealing and advisory services and discretionary investment management services are provided to you by JPMCB, Hong Kong/Singapore branch (as notified to you). Banking and custody services are provided to you by JPMIB and/or JPMCB Singapore Branch. The contents of this document have not been reviewed by any regulatory authority in Hong Kong, Singapore or any other jurisdictions. You are advised to exercise caution in relation to this document. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.
With respect to countries in Latin America, the distribution of this material may be restricted in certain jurisdictions. Receipt of this material does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. To the extent this content makes reference to a fund, the Fund may not be publicly offered in any Latin American country, without previous registration of such fund´s securities in compliance with the laws of the corresponding jurisdiction. Public Offering of any security, including the shares of the Fund, without previous registration at Brazilian Securities and Exchange Commission – CVM is completely prohibited. Some products or services contained in the materials might not be currently provided by the Brazilian and Mexican platforms.
Non-reliance
We believe the information contained in this material to be reliable and have sought to take reasonable care in its preparation; however, we do not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. We do not make any representation or warranty with regard to any computations, graphs, tables, diagrams or commentary in this material which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in it constitute our judgment based on current market conditions and are subject to change without notice. We assume no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events. Investors may get back less than they invested, and past performance is not a reliable indicator of future results.
Risks, Considerations and Additional Information
There may be different or additional factors which are not reflected in this material, but which may impact on a client’s portfolio or investment decision. The information contained in this material is intended as general market commentary and should not be relied upon in isolation for the purpose of making an investment decision. Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document is intended to constitute a representation that any investment strategy or product is suitable for you. You should consider carefully whether any products and strategies discussed are suitable for your needs, and to obtain additional information prior to making an investment decision. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by JPM and/or its officers or employees, irrespective of whether or not such communication was given at your request. JPM and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions. Contact your JPMorgan representative for additional information concerning your personal investment goals. You should be aware of the general and specific risks relevant to the matters discussed in the material. You will independently, without any reliance on JPM, make your own judgment and decision with respect to any investment referenced in this material.
JPMorgan may hold a position for itself or our other clients which may not be consistent with the information, opinions, estimates, investment strategies or views expressed in this document. JPM or its affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer.
References in this report to “JPMorgan” are to JPM, its subsidiaries and affiliates worldwide. “JPMorgan Private Bank” is the brand name for the private banking business conducted by JPM.
If you have any questions or no longer wish to receive these communications, please contact your JPMorgan representative.
© 2018 JPMorgan Chase & Co. All rights reserved
END
We evaluate ESG characteristics alongside traditional financial criteria. This allows us to identify opportunities with superior risk controls and long-term, sustainability-oriented drivers of performance.
Deciphering the acronym ESG
Let’s start with unpacking what each of the factors means.
- Environmental: Evaluating the way a company uses its resources and sets policies to limit its environmental impact and protect the environment. Waste disposal and recycling efforts. Carbon emission and pollution. Water usage. Companies with comprehensive environmental policies, practices and performance generally receive higher ESG ratings.
- Social: Evaluating a company’s policies and practices toward employees, suppliers, customers and communities. Human rights. Employment and pay equality. Health safety and quality standards. Employee relations. Labor conditions. Community development. And more.
- Governance: Evaluating a company’s corporate policies and procedures. Board composition. Diversity. Executive compensation. Business ethics and reputational issues. Exposure to bribery or corruption. These are all essential tenets of sound corporate governance.
It can be difficult to quantify the exact financial benefits of ESG integration. But several studies have shown that companies with highly rated ESG practices carry less risk and can generate better performance than peer companies that have less focus on ESG factors.* We have the skills and expertise to help you integrate ESG considerations into your portfolio to achieve these benefits.
* Sources: Callan Investments, 2016 ESG Interest and Implementation Survey; University of Oxford and Arabesque Partners, From the Stockholder to the Stakeholder, March 2015; J.P. Morgan, ESG—Environmental, Social & Governance Investing: A Quantitative Perspective of How ESG Can Enhance Your Portfolio, December 2016.
-
-
Environmental, social and governance integration
In addition to helping you align your portfolio with your sustainable investing goals, ESG integration is also just good, smart investing. We can help you utilize this popular investment approach.
-
Thematic investing
If you’re looking to support a specific social or environmental issue within your portfolio, thematic investing opportunities may be a good fit.
-
Impact investing
Impact investing may be the most exciting of all the sustainable investing strategies. It‘s intended to generate measurable positive social or environmental impact alongside financial return. Learn more.
We take a global approach to sustainable investing and the solutions offered through our Sustainable Investing Platform meet our internally defined criteria for a sustainable investment. Though we consider our internal criteria to be very thorough and selective, the evolving nature of sustainable finance regulations and the development of jurisdiction-specific legislation setting out the regulatory criteria for a “sustainable investment” mean that there is likely to be, in future, a degree of divergence as to the regulatory meaning of a “sustainable investment”. In particular, in the European Union, the Sustainable Finance Disclosure Regulation (EU) (2019/2088) (“SFDR”) prescribes certain criteria for a product to be classified as “sustainable” or having a “sustainable investment objective”. For further information on our products which promote environmental and/or social characteristics or have a sustainable investment objective within the meaning of Article 8 and/or 9 of the SFDR, please see our SFDR Art 8 and 9 Product Disclosures, available at: link.
