J.P. Morgan Asset Management has developed a proprietary 10-point metric scoring system to measure three dimensions – research and investment management, documentation, and monitoring – and now has more than $1.7 trillion in assets under management ESG integrated – 90 per cent of global client AUM.
“Integrating ESG into investment decision-making brings about a process that is not very different from how investment decisions have been made historically: looking into the future, factoring in potential risks and opportunities around companies’ revenue growth trajectories, and investing accordingly, based on the sustainability of those business models,” said global head of sustainable investing Jennifer Wu.
“The difference is that, along with applying traditional financial metrics, we now also access and utilise a set of factors that can help us make even better investments.”
To receive ESG integrated status under the methodology, investment teams are required to receive an aggregate score of at least 30 points and at least a two on a scale of one to five for each metric, which include breadth of third-party ESG data, due diligence, and risk management.
JPMAM believes that ESG factors are starting to impact the financial performance of companies and that rising awareness of climate change has spurred a “paradigm shift” in consumer behaviour and regulatory scrutiny.
Today we have access to the greatest data transparency and most advanced analytical capabilities in history,” Ms Wu said. “We believe systematically integrating ESG information into our investment process, where material and relevant, will contribute to achieving an enhanced financial return, through better-informed investment decisions and strengthened risk management.
“ESG integration aimed at achieving sustainable risk-adjusted returns is about using research, insights and data to inform investment decisions.”
