Skip to main content
logo
  • Products
    Overview

    Funds

    • Performance & Yields
    • Liquidity
    • Ultra-Short
    • Short Duration
    • European Domiciled Product Offering

    Solutions

    • Cash Segmentation
    • Separately Managed Accounts
    • Managed Reserves Strategy

    Fund Information

    • Regulatory Updates
  • Insights
    Overview

    Liquidity Insights

    • Liquidity Insights Overview
    • Audio Commentaries
    • Case Studies
    • ESG Resources for Liquidity Investors
    • Leveraging the Power of Cash Segmentation
    • Cash Investment Policy Statement
    • China Money Market Resource Centre

    Market Insights

    • Market Insights Overview
    • Eye on the Market
    • Guide to the Markets
    • Market Updates

    Portfolio Insights

    • Portfolio Insights Overview
    • Currency
    • Fixed Income
    • Long-Term Capital Market Assumptions
    • Sustainable investing
    • Strategic Investment Advisory Group
  • Resources
    Overview
    • MORGAN MONEY
    • Global Liquidity Investment Academy
    • Account Management & Trading
    • Announcements
  • About us
    Overview
    • Diversity, Equity & Inclusion
    • Corporate and Social Responsibility
  • Contact us
  • English
  • Role
  • Country
MORGAN MONEY LOGIN
Search
Menu
Search
You are about to leave the site Close
J.P. Morgan Asset Management’s website and/or mobile terms, privacy and security policies don't apply to the site or app you're about to visit. Please review its terms, privacy and security policies to see how they apply to you. J.P. Morgan Asset Management isn’t responsible for (and doesn't provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the J.P. Morgan Asset Management name.
CONTINUE Go Back
  1. Choosing a climate risk metric

  • LinkedIn Twitter Facebook

Choosing a climate risk metric

Why J.P. Morgan Asset Management uses weighted average carbon intensity in its fund reporting

07-08-2019

Four broad metrics exist to measure an investment portfolio’s carbon footprint—an important starting point in understanding a portfolio’s exposure to climate risks. Of the four, we’ve chosen the one we think is best to monitor and manage climate risks and opportunities in investment portfolios. Weighted average carbon intensity lets us understand, and disclose to clients, our portfolios’ exposure to climate change-related risk.1

It builds on three other MSCI metrics, described below. What we find makes weighted average carbon intensity most useful is that it’s fairly simple to calculate; it’s not sensitive to share price movements (since it’s not based on equity ownership); it can be measured across asset classes, including fixed income; and at the portfolio level it enables simple attribution analysis and portfolio decomposition.2

We choose weighted average carbon intensity as our preferred metric, but there are caveats. Weighted average carbon intensity relies on carbon footprint analysis, an important starting point that itself has limitations. It applies only one lens and is backward-looking—it doesn’t encompass company policies and other forward-looking information that may change. Excluded from weighted average carbon intensity analysis are short positions, sovereigns, derivatives, securitized products and bonds issued by trusts.

MSCI metrics may not fully reflect future economic reality. Our ESG specialists collaborate closely with our research analysts to understand when that may be the case, and where appropriate we engage with companies to improve disclosure and enhance policies. Where we think climate risk may be material, we review fossil fuel exposure, disclosed reduction targets going forward and other relevant information.

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures,” Task Force on Climate-related Financial Disclosures (2017), pp. 42–44.


 

1It is also recommended by the Task Force on Climate-related Financial Disclosures (“Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures” (2017), pp. 36-37).
2Note that for certain portfolios focused on sustainability, the metric normalized carbon emission data per dollar invested may be a better indicator of impact.
0903c02a8265a69e

  • Environmental Social And Governance
J.P. Morgan Asset Management

  • Investment stewardship
  • About us
  • Contact us
  • Privacy policy
  • Cookie policy
  • Sitemap
J.P. Morgan

  • J.P. Morgan
  • JPMorgan Chase
  • Chase

READ IMPORTANT LEGAL INFORMATION. CLICK HERE >

The value of investments may go down as well as up and investors may not get back the full amount invested.

Copyright 2023 JPMorgan Chase & Co. All rights reserved.