ESG integration

ESG factors matter

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

As a result, we believe assessing financially material 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

In assets we categorise as ESG integrated under our governance process, we systematically assess financially material ESG factors in our investment decisions, across asset classes and regions, with the goal of mitigating risk and improving the long-term returns of the investments we make on behalf of our clients. ESG integration does not change a strategy’s investment objective, exclude specific types of companies or constrain a strategy’s investable universe.

ESG factors are integrated in our active investment processes in a manner consistent with each investment style. We use a common framework to evaluate and approve the ESG integration approach for each investment group, and conduct ongoing monitoring. 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.