Key takeaways:
Consumers are increasingly opting for more sustainable choices in their daily lives, from reusable shopping bags to plant-based meat substitutes1.
Companies are factoring sustainability into their long-term investment plans, such as incorporating goals to achieve net-zero carbon emissions and reduce waste. And governments around the world are making policy decisions to support and encourage the transition to a low-carbon economy.
From consumers to policymakers, many economic actors are backing sustainability, and this is creating a powerful portfolio opportunity.2
Why E, S and G matter in investing3?
ESG considerations are affecting consumer preferences and public attitudes. When making investment decisions, ESG factors are playing an increasingly crucial role.
How can investors capitalise on this trend? We share a few essential reasons that can help investors understand the growing importance of ESG investments in portfolios.
Interested but not fully reflected in investment decisions
Source: CFA Institute, 18.06.2020. Provided to illustrate macro trends, not to be construed as offer, research or investment advice.
1. ESG creates significant opportunities for those at the forefront of change
Increased capital flows into the energy transition
Source: Bloomberg NEF, BP Statistical, Eurostat, Lazard, METI, J.P. Morgan Asset Management. Storage, electrification, other includes hydrogen, carbon capture and storage, energy storage, electrified transport and electrified heat. Data are as of 30.06.2021. Provided to illustrate macro trends, not to be construed as offer, research or investment advice. Currency is in US dollars.
2. ESG is changing the nature of investment flows
Share of total net flows into sustainable strategies
Source: J.P. Morgan Asset Management, Morningstar. Data as of 30.06.2021. Provided to illustrate macro trends, not to be construed as offer, research or investment advice.
Conclusion
Incorporating ESG criteria into investing is as much about doing well as it is about doing good. Through sustainable solutions, investors can allocate their investments to asset classes, companies and regions that are taking positive steps to addressing these global issues.
Provided for information only based on market conditions as of date of publication, not to be construed as investment recommendation or advice. Forecasts, projections and other forward looking statements are based upon current beliefs and expectations, may or may not come to pass. They are for illustrative purposes only and serve as an indication of what may occur. Given the inherent uncertainties and risks associated with forecast, projections or other forward statements, actual events, results or performance may differ materially from those reflected or contemplated.
Investments involve risks. This includes illustrations of macro trends which may or may not come to pass. Investors should seek professional advice before investing.
JPMAM defines ESG integration as the systematic inclusion of financially material ESG factors (alongside other relevant factors) in investment analysis and investment decisions. In actively managed assets deemed by J.P. Morgan Asset Management to be ESG integrated under our governance process, we systematically assess financially material ESG factors including sustainability risks in our investment decisions with the goals of managing risk and improving long-term returns.
1. Source: J.P. Morgan Asset Management, “Selecting stocks for an environmentally sustainable future”, December 2021.
2. For illustrative purposes only based on current market conditions, subject to change from time to time. Not all investments are suitable for all investors. Exact allocation of portfolio depends on each individual’s circumstance and market conditions.
3. Source: J.P. Morgan Asset Management, “ESG Explained - 7 Essentials You Need to Know”, September 2021.
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