ESG integration

ESG factors matter

Environmental, social and governance (ESG) factors are non-financial considerations that can affect the performance of investments. When companies and other security issuers manage these factors well, they are more efficient, more aligned with consumer preferences and less exposed to regulatory risk.

As a result, we believe incorporating ESG considerations in the investment decision-making process strengthens risk management and may contribute to long-term financial returns.

JP Morgan

Environmental

Issues related to the quality and functioning of the natural environment and natural systems

Examples:

• Greenhouse gas emissions

• Climate change resilience

• Pollution (air, water, noise, light)

• Biodiversity/habitat protection

• Waste management

Social

Issues related to the rights, wellbeing and interests of people and communities.

Examples:

• Workplace safety

• Cybersecurity and data privacy

• Human rights

• Local stakeholder relationships

• Discrimination prevention

Governance

Issues related to the way companies are managed and overseen

Examples:

• Independence of chair/board

• Fiduciary duty

• Board diversity

• Executive compensation

• Bribery and corruption

ESG integration across asset classes

We systematically assess financially material ESG factors in our investment decisions, across asset classes and regions, to mitigate risk and improve the sustainability of the investments we make on behalf of our clients.

ESG factors are integrated in our active investment processes in a manner consistent with each investment style. Download the ESG integration approach for your chosen investment group.

Download the full ESG integration paper

Robust oversight and monitoring

We use a common framework to evaluate and approve the ESG integration approach for each investment group, and conduct ongoing monitoring.

Find out more about ESG integration oversight

Firmwide ESG integration resources

Across investment groups, ESG integration approaches benefit from shared global knowledge and resources. In addition to the ESG insights of individual investment desks, we have developed and are implementing globally consistent, data-driven proprietary ESG scoring.

Single system

One common technology platform, Spectrum TM, enabling ESG research sharing across investment teams

Global research expertise

300+ analysts integrating ESG factors into their research

Centralised support

30+ specialists in central sustainable investing team

Principles for Responsible Investment

In 2020, the UNPRI awarded us an A+ rating for our approach to ESG Strategy and Governance, including ESG integration.

View our full scorecard

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ESG-enhanced investment stewardship

We promote sustainability through engagement with the companies in which we invest.

Find out how

ESG-focused funds

We offer a broad range of sustainable investing approaches designed to align with our clients’ financial goals and values.

See the funds

For certain strategies that the adviser determines to be ESG integrated, the adviser integrates financially material environmental, social, and governance (“ESG”) factors as part of the Fund’s investment process (“ESG Integration”). ESG Integration is the systematic inclusion of ESG issues in investment analysis and investment decisions. ESG Integration is dependent upon the availability of sufficient ESG information for the applicable investment universe. In addition, in order for an actively managed strategy to be considered ESG integrated, the adviser requires: (1) portfolio management teams to consider proprietary research on the financial materiality of ESG issues on investments; (2) documentation of the adviser’s research views and methodology throughout the investment process; and (3) appropriate monitoring of ESG considerations in ongoing risk management and portfolio monitoring. ESG determinations may not be conclusive and securities of companies / issuers may be purchased and retained, without limit, regardless of potential ESG impact. The impact of ESG Integration on performance is not specifically measurable as investment decisions are discretionary regardless of ESG considerations.

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