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KEY RISKS
Environmental, social and governance (“ESG”) or sustainable investing strategies, including SMAs, mutual funds and ETFs, may include additional risks and can limit investment opportunities potentially underperforming other strategies that do not have an ESG or sustainable focus. Strategies focused on a specific theme or sector can be more concentrated in particular industries or sectors with common characteristics and are often subject to similar business risks and regulatory burdens. Because investing on the basis of ESG/sustainability criteria can involve qualitative and subjective analysis, there can be no assurance that the methodology utilized by, or determinations made by, J.P. Morgan, or an investment manager/adviser selected by J.P. Morgan, will align with the beliefs or values of the client. Additionally, other investment managers/advisers, including our affiliates, can have a different approach to ESG or sustainable investing and can offer varying ESG or sustainable investing strategies on the same theme or topic. ESG and sustainable investing are not uniformly defined concepts and scores or ratings may vary across data providers that use different screens or processes for evaluating ESG characteristics. Investment managers/advisers rely upon information and data that might be incomplete, inaccurate or unavailable, which could cause them to incorrectly assess an investment’s ESG or sustainable attributes.
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 difference in 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) (“SFDR”) certain criteria must be satisfied in order for an investment to be classified as a “sustainable investment.” Unless otherwise specified and where permitted by applicable law, any references to “sustainable investing” or “ESG” in this material are intended as references to our internally developed criteria only and not to any jurisdiction-specific regulatory definition.