Coordinator: Welcome to the Center for Investment Excellence, a production of JP Morgan Asset Management. The Center for Investment Excellence is an audio podcast that provides educational insights across asset classes and investment themes.

Samantha Azzarello: Good morning, everyone. Thank you for joining us today. My name is Sam Azzarello, and I'm a Global Market Strategist here at JPMorgan Asset Management. Today I am really pleased to be joined by the Global Head of Sustainable Investing, Jennifer Wu. Jennifer has an amazing and multifaceted background in risk analytics, technology, obviously sustainable investing, but she brings a wealth of experience to our firm and I'm really excited that we are here to talk about ESG in light of COVID today.

Also on the call is our Head of Strategy and Business Development, Ben Hesse. Ben is really interesting as well, because his job is to look around what's the corner, right? What's coming around the corner? What's next? Tethering us to the future in terms of what do we expect with trends and all sort of happenings in our industry.

So we're going to be talking about how COVID-19 has affected the ESG agenda, and as I like to say, nothing stops a wave. And if we think about the wave that's come upon us with respect to ESG investing, stakeholder capitalism, and sustainable investing more broadly, there's really a lot to unpack. So I'm going to start the call today by sharing updates on the market, and then we're going to turn things over to Jennifer and Ben.

So before we dive into ESG, I just want to talk about the labor market report, because that's big news. That happened on Friday, and goodness knows, I was thinking about it, our team was thinking about it well into the weekend, because there's a lot there.

So, many of you are likely aware, but in May, instead of further job losses, what did we see? We actually saw 2.5 million hires. And in fact, the unemployment rate fell from 14.7% to 13.3. So, off of that, I mean that seems good, and that is good, I will take any silver lining type of news that I can get right now when it comes to the economy. But we just want to put these things in perspective, because in the previous two months we lost 22 million jobs.

So, as my boss David Kelly put it in his note this morning, it's like falling off a cliff and then bouncing off a trampoline, right? So, just a little bit of perspective.

And the reason why I think we need a bit of perspective, because yes, it was good, or a bit of positive news, I should say, but the reason we needed a bit of perspective is because, if you have allowed for adjustments, which the BLS, the Bureau of Labor Statstics, had basically called for when they were asking those who were serving the general public, if they had adjusted things the way that they feel it should have been measured, the unemployment rate would have been 5% higher, okay? We would have been closer to 17%.

And when I mean adjustments, I'm just really talking about a little bit of confusion, which I think is fair. So, many workers who were furloughed, they're not working -- they technically aren't making any pay, they don't have a job, they consider themselves employed. That's neither here nor there, but there's a few other examples of these types of things, just because we're in confusing times. So, given those adjustments, it's a bit of a red herring, the unemployment rate likely would have been higher.

One other point, and I don't want to sound like a bear, I don't want to sound like a bull, we're somewhere in the middle, we're feeling cautious. But let's just note that in 2008 the unemployment rate peaked at 10%. So, arguably, and obviously, you know, that's higher, the unemployment rate right now. And the labor market has a lot more room for it to feel and things to get back to, you know, "normal."

Why do I say this? Why am I kind of fixated on this idea of the labor market report? Well, as many of you know, there's a big dispersion between what's happening in the market in terms of a V-shaped recovery being perfectly priced in, and then what's happening on the economy or the real side, in terms of more let's say cautious expectations of either a U-shaped recovery or maybe even a swoosh, like a shape that's just a little bit less pronounced in terms of recovery.

So, more to go there, right? We have to look for more data and see how things unfold in the summer. I do think Q3 is going to be really important for all of us. But regardless of the short run, the next six to nine months, we know there's a lot of long-run implications from everything that's happening now. And that's why our conversation with Ben and Jennifer is really, really timely.

Two things I want to mention with respect to long-run implications before I turn it over to Ben. A theme we've been talking about ad nauseum with clients is around quality. Quality is really interesting because I don't think it can be done particularly well passively, I don't think it can be done particularly well as just like a factor screen.

When we talk about quality, we're really talking about companies doing it right, right? Companies getting it right. From an operational perspective but also from an ESG perspective. So we're talking about strong balance sheets, low operating leverage, good management, efficient use of capital, all these things that make for companies doing well in the long run. These are financially material, important factors. And these are the traditional ones that we look at, when we're thinking very active, very bottoms-up.

But as you're going to hear Jennifer and Ben speak to, when we think about financially materially important factors, we can go outside the realm of the balance sheet and the income statement. We can really look abroad, and that's actually when we start to move into E, S and G. G is when we think about governance, its's something that I think comes very naturally to all of us on the call, right? It makes sense, companies need to be run well. That's governance. That's, you know, plugged back in to quality, which is something we're big advocates for.

But now, you know, with E, we were starting to talk a lot more. That was that idea of the wave. Nothing stops a wave. We were talking about climate, and that fits, you know, quite well into the E, the environmental bucket. Now, in light of everything that's going on, and even before this, we're starting more to talk about the S, right, the social piece.

So there's a lot here and there's a lot that many of you might be familiar with, but we can always keep running in the space. To those of you who might be new to ESG or sustainable investing, welcome. There's going to be something on this call for everyone.

And with that, I'm going to turn it over to Ben.

Ben Hesse: Great. Thank you, Sam, for that wonderful update. Great to be here.

ESG, as you know, was already top of mind for us, and then COVID hit, and the topic became even more interesting. So we're really incredibly fortunate to have Jennifer Wu who is one of the thought leaders in the industry on this topic here at JPMorgan Asset Management to lead us into this exciting area.

So, Jennifer, great to talk to you. ESG is a confusing thing. It's hard to explain. How do you synthesize it down? I know you talk to so many of our clients. How do you explain it to them, what it is and what it's trying to achieve.

Jennifer Wu: Thank you, Ben, and thank you, Sam. Good morning everybody. It's great to be able to connect with you this way, we can't do this in person. That's a great question.

So I have definitely spoken to a lot of clients about what ESG actually means. And if I really break it down and then look at ESG, to me ESG really are just like factors. And they're like factors that you use to measure what we call the sustainability of a company. And why that is important, because (increasingly), as we're more aware of how the inputs and outputs, i.e. what company uses resources to produce products, the actual operations have an impact on the long-term financial return of our investments.

So to me, sustainability is really about the repetitiveness and the long-lasting ability of a company to generate consistent and good return. So in that context, when I think about ESG factors, I look at how E, S and G impact the inputs and outputs of a company's operation.

For example, we all know E means environmental. Say we invest in a food and beverage company. I definitely want to know how much water this company actually use and how efficient is it using water as one of the two ingredients. And why is that important? Because if it's not used efficiently, what's going to happen is that it's going to incur higher costs to produce products.

And I also want to look at how the company is potentially treating, say, wastewater. Not only because I am, you know, eco-friendly person, but I know that they, if they don't manage it well, if they mistreat and also dump wastewater unethically, this could be fined.

As we look at social, what that typically covers are what we call stakeholders. So that cuts across employees, customers, suppliers and communities. You know, we care about how a company treats its employees because, without good talent and a good health and safety working conditions, there's no way that a company can continue to run successfully, let alone profitably. And the impact of a product on a customer is really, really crucial, because if it's not managed well, it can really lead to not only loss in sales but really significant reputational damages.

And last but not least, when it comes to G, and this is really where I think of G as a foundation of all things. And it's about the foundational structure of a company. So, typical G issues include things like long-term capital allocation strategy, the effective and independence of a board, tax evasions, business ethics, etcetera. These are all critical issues not for moral reasons but they are key ingredients for a company to be successful.

So in a nutshell, the way I define ESG is that there are different factors that impact the outputs and the inputs of a company, and they impact the sustainability of a company and its ability to generate consistent and good return. And ESG really is a way for us to look beyond the traditional economic metrics such as a (turnover or inflation), that we can now systematically capture a more comprehensive set of risks and opportunities that we know really matter, impact long-term financial performance of a company, and use that through the lens of input and output, to really accurately measure the potential impact at the total portfolio level.

Ben Hesse: That's very clear, thank you. Given that definition, what are then the implications for asset management firms who want to incorporate ESG into their investment process?

Jennifer Wu: I think it's actually very important to first start with the question of intent. So, like, what are you using ESG for? There are really two typical types of intent for asset managers or investors in general to incorporate ESG.

And the first one is using ESG in such a way to generate better financial return. And the other intent is really using ESG to deliver a specific sustainability related outcome that may or may not (lead) financial return or value additive. You'll note the vocabulary that I use here, so if a firm is using ESG to enhance financial value, we call that a traditional fund that is ESG integrated. It's a fund that uses ESG to pursue certain environmental or social outcomes first before pursuing financial value. We call that a dedicated sustainable fund. And it's really important to get the vocabulary right.

So when we talk about how active management firms are incorporating ESG, I am thinking about ESG integration in the context of a traditional fund and, you know, potential implications of doing that.

So, because of these factors, and we talked a little bit some of those already, we're now able to look at how much a company is worth in a much more holistic way. So, for active management firms or investors, anything that impacts performance matters, as you know. By looking at these issues, some of which may not have a financial impact today, are likely going to have a significant financial impact sometime down the road, like product safety or customer data privacy.

The (echoes) of incorporating these factors or ESG factors into investing actually resonate perfectly with the way that we've been investing. Why? Well, we're in the business of forecasting. So we always want to know what's going to happen next. So for us at JPMorgan Asset Management, the incorporation of ESG is really about enhancing our ability to deliver better risk-adjusted return.

The other very important thing about ESG is that, traditionally, I mean, people thought of them as an investment approach only for the purpose of doing good. And the way we see it, is that it actually most is a question of timeframe.

So, yes, a company today that exploits, say, the surrounding community by way of dumping toxic waste into the local river may enjoy a higher profit margin as it doesn't need to spend money on treating waste properly. However, not only it will get caught at some time, hopefully, and therefore face a fine, and potentially even more stringent legal punishment, it also tells us a lot about the integrity of the company, which could provide clues about how they are doing other S or G issues, which could actually have a more innate financial impact.

And furthermore, if I think about ESG and how we are using ESG, with much greater transparency in the data, what we have seen is that, you know, among the public, there is likely going to be a much greater chance of, i.e. the market or us or general public to find out if something is wrong, either through, say, (aligned) NGO report or social media, if there is an incident that's related to illegal dumping of toxic wastes. Market price reacts to scandals like that, and therefore it will impact violations.

So, from our perspective, I think these ESG factors are becoming much more relevant in the near term, especially from a financial materiality standpoint, because more of these data, as well as increasing social awareness about how these ESG problems are going to impact long-term profitability, are now being factored into how we think about we can use these (unintelligible) if you like, and factors to change the way we think about valuation.

There's varying portions through - across all of our actively managed strategies to think about, you know, what are the ESG issues that matter and how does that matter, depending on the sector, markets, regions, and how do we then systematically incorporate those into our investment decision-making process.

Ben Hesse: Excellent. And this concept of implicit versus explicit language in the prospectus, what's the difference and why does it matter in terms of what the asset management companies are doing?

Jennifer Wu: Yes, that's a great question. So I guess the more we think about how these ESG factors are actually able to impact performance, the more you realize that they are actually not that different from the traditional ways of investing, what's really changed is that ESG now asks us what I call additional inputs into our valuation model and investment decision-making process.

And that process of incorporating this additional factor is very similar to how we have been doing investing for the longest time. So, for example, we've always considered the impact of, say, currency exchange rates and the fluctuations on a multinational company cash flow. We disclose that in the prospectus, that we explicitly consider exchange risk in our investment. No, we don't do that, because it's widely accepted that this is a risk and that there is a standard way of calculating and incorporating that risk into the investment process. So what I'm saying, there is already a formula written by someone, and everybody acknowledges that this is like the gold standard.

(Where we are endowed) with ESG and these ESG factors is that we're actually busy writing these formula. And it's not just the active managers. It's the broader investor community and even some (unintelligible).

So, like the example I gave earlier around water usage, that formula, and we call it transmission mechanism, we basically have written that. And the way we do it, if you look at, say, how water usage for a food and beverage company, how that impacts the operating cost, which is line item in the income statement, and thereby impacting the earnings of a company, so what we are doing with incorporating ESG factors into our valuation model is to find that transmission mechanism.

We look at how different ESG factors impact which part of the company's financial statement and how. And once we have that transmission mechanism, we call this particular ESG factor financially material. An incorporation of that as part of the research is what we call ESG integration.

So if I look at the future, the consideration of many of these ESG factors in the investment process are actually going to become like second nature. It will look no different to how we consider, say, inflation risk. (Unintelligible) not even mention ESG integration anymore, but until then, because of the questions that we still have and where the market is at, around (what) ESG factors are actually financially material, and how are they material to different asset classes, these are also being developed and worked on by practitioners like ourselves.

We want to make sure that we provide the language in the prospectus, let our clients know that, hey, this is what we are doing. We're explicitly considering these new factors, with the sole purpose to really deliver better risk-adjusted return. And we think it's important to disclose that because what if (unintelligible) our clients. And also, we're actually very proud of this, because it's very hard to do and it's a very important piece of work that we have undertaken.

It's not easy, and we view that as one of our key differentiators as an asset manager powered by our longstanding active research heritage. And of course, we're always happy to provide additional information to our clients. But the bottom line is that I hope now you understand that, when we say in the prospectus that a fund is ESG integrated, it means that we're using a new input called ESG and we're doing a bunch of analyses, looking at how this particular factor is impacting the cash flow, the risk credit rating, as well as the overall financial return profile of the portfolio. We use that and incorporate it into our investment process, with a single goal, to drive better financial values, and nothing else.

Ben Hesse: That's very clear. And how do you measure ESG?

Jennifer Wu: This is a very difficult question, Ben. If someone asks me, how much, say, additional return was I able to generate because I explicitly consider currency risk, I can probably give you a number but it's probably not going to be so accurate. And the reason that, because at the portfolio level, there's so many different factors that we combine and we think about, so it's quite hard to (unintelligible) (AP) attribution of different factors.

I mean, we still have problems with risk attribution in our most traditional ways of investing, right? And this is something that as a community we're still trying to solve more. However, there are definitely ways of doing it, and here at JPMorgan I think we basically just in the last 10 months going through this exact process. So we reviewed every investment engine across our global platform to measure and assess the level of integration of ESG.

As I mentioned earlier, this is still an evolving (field), so we understand that the approach might be different even within our own firm, but we wanted to be really specific. The way that we went about (unintelligible) to measure ESG integration is by really asking every team three questions. How did you consider ESG? What did you consider? And how does that impact your portfolio and performance?

And we basically used a proprietary, you know, homegrown 10-point metric to really measure the level of ESG integration based on the evidence that the difference are able to present to us.

So, on the "How did you consider ESG?" for example. We looked at how ESG has been considered at every key step of the investment process. So, from how an analyst is thinking about what are the ESG factors that matter to this company that I invest in, because of its sector and region? And how is that impacting my evaluation model?

And then we look at how that recommendation from the analyst goes to the PM, the portfolio manager, and whether that impacts the portfolio manager's portfolio construction or buy-and-sell decision-making. We also look at how it's being monitored at the risk management level as well as how it's documented in our system. So, all in all what we want to see is that ESG needs to be explicitly considered and it needs to be a part of the entire process.

The second question that we ask all teams to be able to demonstrate to us that they are integrating ESG is, what is it that you are actually considering? What ESG factor? Because we know that it really depends on the team. So we care about what are the factors that each team considers and uses, where do they get this data, and also the key differences across teams. And through that process, we were able to really look for best practices and share these best practices with the different teams. What we were not doing is to effectively impose one model of integrating ESG on one particular team.

A very simple example I can give you is what we have seen is that there is a particular social issue with regards to a company related to (unintelligible) scandal. What we saw is the decision made by the equity portfolio manager is that it will impact stock price because the market is likely going to react to it. Hence, it prompts as a decision to, you know, effectively sell at the equity portfolio manager level. Whereas, if we look at the fixed income portfolio manager, (he or she) actually may make a very different decision because, you know, the transmission mechanism, as I said earlier, is whether this particular incident or issue would impact the credit rating of this particular issue, (a formal) issue, that the portfolio manager holds.

And if the answer is no, then yes, the portfolio manager would have considered ESG and measured it, but the impact of this ESG factor on the portfolio construction decision-making is minimal. So that would be an entirely different decision that the portfolio manager would make. And these are the kind of things that we're looking for, like, how do you think about ESG and how do you actually use that to make decisions?

And the final piece is, you know, on the what, right? So, what impact does that have? And because we went down the level of looking for individual examples, wasn't able to really aggregate these individual examples at a portfolio level, to, you know, effectively say, okay, this is the likely impact of our portfolio as a result of ESG integration.

So, all in all for us, I think as JPMorgan Asset Management, the key to measuring ESG integration is to really focus on the comprehensiveness of how to explicitly consider as well as the consistency in how it's been implemented across the entire investment process.

Ben Hesse: That's great. And Jennifer, how did ESG perform through COVID?

Jennifer Wu: Yes. I think across the board what we've seen is that companies that have really good ESG attributes, like Sam said earlier, have proven to be much more resilient. As I look at our traditional strategies, i.e. strategies that are ESG integrated, we can see how ESG integration definitely helped us to hedge against some of those shocks. Either companies have higher cash reserve that they could actually use in time like this, and/or companies that were already equipped with a good way to provide all of their employees to work remotely, back to a very robust business resiliency and risk management framework. That's already been put in place way before the pandemic.

So we were also able to see how in crises like this, you know, many of the dedicated sustainable strategies actually perform even stronger, given that a lot of them have a higher concentration in their portfolio on the companies that have the best what we call ESG profile.

So, for example, our Global Bond Opportunity Sustainable Strategy has generated top quintile performance in the global unconstrained category, because of the specific focus on high ESG performing issuers.

And it's true that, if you look at the market, some of these dedicated sustainable products have only outperformed because they explicitly exclude poor-performing sectors such as energy. And this is what you can see in a lot of those passive ESG (EPS). And the outperformance is not because of thoughtful research on which ESG factor actually deliver better risk mitigation (unintelligible).

So I think all in all, ESG definitely has performed really well and I'd say mainly it's because of how these companies have proven to be much more resilient. And I think for investors, there are really two key lessons learned from this pandemic that I want to share with you. The first one is, you know, in this uncertain world that we currently live in, it's incredibly hard to predict what the next crisis might look like, when that could happen, and what's going to be the impact.

It's therefore I think very important to ensure that, in your portfolio, both traditional economic metrics as well as these non-traditional factors such as ESG, that are financially material, are all taken into consideration thoughtfully when making investment decisions and constructing portfolio. Because companies that use resources more efficiently, very well-managed, human capital as well as suppliers,and companies focused on sound governance structure, they will have a better chance of weathering the next storm. So you want to make sure that financially material ESG factors are being explicitly considered by your asset manager.

And a second lesson learned that I want to share is that, you know, there are some long-term shifts in the supply and demand in the market as a result of the pandemic, and we want to focus on those, because potentially we can benefit from some of those new, emerging investment opportunities. And they may have an impact on, say, asset allocation decisions.

So, for example, it is expected that there's going to be a renewed focus on localization of sourcing and supply chain. This will help the climate change agenda to reduce, you know, greenhouse emissions. And it's going to help with the social agenda by potentially increasing local employment.

We also believe that there's likely going to be an acceleration in the development and deployment of AI and robotics in healthcare delivery. So that a patient can still have an operation during a pandemic, without increasing his or her chances of getting infected through significantly.

So, does that create an opportunity for certain types of dedicated sustainable strategies to outperform even more? I think so. And what I'm trying to say here is that we can almost start to think of sustainable strategies or ESG funds as like a separate asset class, so that we can see how they will benefit as a result of this shift in our world and some parts of our economy.

Ben Hesse: Really interesting. And you mentioned resiliency. How is ESG perhaps uniquely positioned to help investors look at a firm's culture?

Jennifer Wu: Yes. So, ESG factors in my mind really have the ability to identify the long-term sustainability of a company's operation. They're nationally focused on issues that are more longer term, and sometimes they focus on issues that are what we call more qualitative by nature, like resiliency and culture. That's a great example.

So, a company can provide, say, the best compensation and benefits program for their employees. But if the culture is to promote, always putting process before clients, or discourage inclusiveness, we actually believe that its business performance is not going to be long-lasting. As we all know, short-termism is problematic and it generally results in unethical behavior. They will also likely lose the ability to retain and attract talent.

So these seemingly qualitative ESG factors are actually having, you know, the more that we delve into this, we could actually see how these issues do have an impact on company's performance.

And these are not traditional metrics that we learn at school when studying finance or economics. But they are factors that impact the traditional metrics that we learn about at school. And many thanks to data and research, we're now actually measuring these factors and we're able to identify their transmission mechanism.

So, for example, at JPMorgan Asset Management we use data from Glassdoor quite extensively to understand how the culture of a firm is like. And we also consider signal that we get from these alternative data sources that helps us to understand the culture of a firm, we use that in conjunction with other (FMG) factors, such as labor management, product safety, and also senior management or board effectiveness, in order to fully assess how these factors combine together and how they may impact the future profitability or even the credit worthiness of a company. So it is very much focusing on the resiliency of a company, as well as some of those more subtle qualitative features of a company that do have, you know, financial impact in the long run.

So the answer is absolutely yes, ESG is very uniquely positioned to look at these set of issues.

Ben Hesse: That's great. And Jennifer, I know you talk to a lot of investors. What percentage of investors think that ESG's performance through COVID was just a function of being overweight technology and underweight energy?

Jennifer Wu: Yes, I think that has been some of those first reactions as we enter into lockdown globally and then seeing how oil price dropped as a result of that, and energy as a sector really suffered from the fluctuation and volatility in the oil market. But I hope by now you start to get a sense about how much more there is to ESG than just energy or technology, right?

Because when ESG first became a hot topic in the market, the general understanding was that ESG reflects values, moral or ethical values. And the issue really is only for investors that look to inject these values of theirs into portfolios, and they're willing to sacrifice return. So the expression of this type of investment objective was often by way of excluding a whole sector, like energy, that does not align with, you know, a client's particular set of values.

But what's really happened over the course of the last two to three years is there started to be a better understanding of how these ESG factors actually is not just about an expression of values, but you could actually view them as any other quantifiable factors to identify risks that we had either never thought about or we just couldn't measure before. So, for instance, how a company is treating its employees or customers, right? If it doesn't do it well, not only it impacts negatively on the employees and customers, it also hurts the financial performance of the company because of the many transmission mechanisms that we talked about.

But the market was only just getting to understand which of these issues are not just values based but actually value driven. So we saw in the last two to three years there became greater understanding of, oh, how these ESG issues may actually impact performance, but many third-party rating agencies started to create these ESG ratings based on their views of what are the ESG issues that matter, be it for financial value or, you know, ethical values alignment reasons. And then they also formed these ratings based on what companies disclose.

Well, it certainly makes our life as an investor much easier to have a single score as opposed to analyzing, say, 75 different ESG factors. There's two main problems with these scores. So the first one is they don't always make a distinction between, you know, which ESG issue actually helps to give you better financial performance and which of these ESG issues are actually more values driven. And that makes our life as a portfolio manager very difficult to really integrate ESG if we are managing, say, a traditional fund, as it may contain, these ratings, they contain something that could hurt performance.

And then the second problem is that these rating agencies form their scores based on information published by companies. This disclosure of information is not mandatory and companies tend to cite what they want to say in these reports. What we have seen is that bigger and more what we call resourceful companies tend to have better disclosure, and tech companies are a good example, right? They generally are more resource-efficient, many of them are actually good from an ESG standpoint. As a result, they look quite good according to many of these rating agencies.

So where we are at today at JPMorgan Asset Management is that, well, the market has evolved a lot. We now know that ESG is not only just an expression of your personal values but we can actually view ESG in such a way to better mitigate risks and potentially identify new alpha opportunities. But it's not enough to use what's readily available in the market by third parties or what company discloses.

So, you know, what we're trying to do is that we're actually forming our own views about which companies have good ESG profile. And this way we can really incorporate that into our traditional fund and view the issue to generate better returns. And furthermore, we can be more precise in delivering the sustainable outcomes for clients based on their actual needs.

So for example, when we think about who are the winners as we're moving to a low-carbon economy, it is more than just renewable energy producers that will be winners. Because you know, for a company to win, or what low-carbon economy means to different sectors, winner not only needs to manage its carbon emissions but it's equally important to look at how companies manage water, waste, supply chain risks, and also how well they're positioned to tap into new investment opportunities, which could be about, you know, future of food production, if it's in agriculture, electric vehicles, or even green building and infrastructure.

So, all in all, and it's a long answer to your question, it is much, much more than just tech and energy.

Ben Hesse: (Clearly). Thank you for that. What else are you hearing from investors on this topic?

Jennifer Wu: I gave you quite a few examples, but I would say increasingly clients are asking if they can both do well and do good. And the answer is yes. You know, in the last three months, what we have consistently heard from clients especially is how there is now a greater focus on not just the E of ESG but also the S and the G in the companies that they invest in.

Why? Because at the end of the day, companies that take care of their employees and customers, companies that have the habit of thinking about how to more efficiently use their resources, and companies that have a sound governance structure, you know, they tend to be much more resilient, if you think about risk management in a more holistic way. And in a nutshell, not only you'll be investing in companies that are likely going to outperform because they can weather the storm, but these are companies that, you know, take customer data, product safety really seriously. So they're also able to produce products that have a positive outcome or impact onto the society and the environment. So it is, I think at this age that we're in, you know, totally possible to both do well and do good. And that is something that, you know, we're having more and more discussion with clients about.

Ben Hesse: Excellent. Lots of clearly very interesting client conversations happening. Jennifer, what can we expect from JPMorgan Asset Management in ESG in the coming months?

Jennifer Wu: Yes. So, all of our actively managed strategies are being ESG integrated, and I talked about what that means, right? The goal was to really use ESG factors to enhance financial return. And, you know, to create our own proprietary ESG (views) and what these factors are, we combine our sector companies level knowledge from our 200-plus investors around the world. We combine that with thematic expertise around the sustainability issues. And we leverage the power of our data science capability to tap into unconventional sources, so that we can really create a more forward-looking and alpha-seeking set of ESG factors and signals for our own investors to deliver better risk-adjusted return for our clients.

And on top of that, we also have a suite of (unintelligible) and sustainable capabilities that seek to generate sustainability related outcomes as well as financial return. So these products and strategies rank from exclusion-based only all the way to best-in-class and thematic. And what we are focusing on in the next six months is really working with clients to provide customized solutions based on their desired outcomes, to really help them achieve what they regard as both doing well and doing good. So, deliver financial value as well as sustainability outcomes. And that's going to be a key focus for us in the next six to 12 months.

Ben Hesse: That's very exciting. Thank you, Jennifer, for your incredible insights today and your leadership on this important topic for JPMorgan Asset Management. And thank you, as always, Sam, for your very timely market insights.

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