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J.P. Morgan Asset Management

PRI reporting framework 2020

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Organisational Overview
Basic information [OO 01 - 09] Asset class implementation gateway indicators [OO 10 - 12] Peering questions [OO LE 01 - HF 01]
Strategy and Governance
Investment policy [SG 01 - 04] Objectives and strategies [SG 05 - 06] Governance and human resources [SG 07 - 08] Promoting responsible investment [SG 09 - 11] Outsourcing to fiduciary managers and investment consultants [SG 12] ESG issues in asset allocation [SG 13 - 15] Asset class implementation not reported in other modules [SG 16 - 17] Innovation [SG 18] Communication [SG 19]
Indirect – Manager Selection, Appointment and Monitoring
Selection [SAM 02 - 03] Appointment [SAM 04] Monitoring [SAM 05 - 07] Outputs and outcomes [SAM 08 - 09]
Direct - Listed Equity Incorporation
ESG incorporation in actively managed listed equities [LEI 01 - 10] Implementation processes [LEI 01 - 10] (A) Implementation: Screening [LEI 04 - 06] (B) Implementation: Thematic [LEI 07] (C) Implementation: Integration of ESG factors [LEI 08 - 10] Outputs and outcomes [LEI 12 - 13]
Direct - Listed Equity Active Ownership
Overview [LEA 01] Engagement [LEA 02 - 08] Outputs and outcomes [LEA 09 - 11] (Proxy) voting and shareholder resolutions [LEA 12 - 21]
Direct - Fixed Income
ESG incorporation in actively managed fixed income [FI 01 - 12] Implementation processes [FI 01 - 03] (A) Implementation: Screening [FI 04 - 06] (B) Implementation: Thematic [FI 07 - 09] (C) Implementation: Integration [FI 10 - 12] Fixed income - Engagement [FI 14 - 16] Outputs and outcomes [FI 17 - 18]
Direct – Private Equity
Overview [PE 01 - 02] Fundraising of private equity funds [PE 03 - 04] Pre-investment (selection) [PE 05 - 08] Post-investment (monitoring) [PE 09 - 13] Outputs and outcomes [PE 14 - 15] Communication [PE 16]
Direct - Property
Overview [PR 01] Fundraising of property funds [PR 02 - 03] Pre-investment (selection) [PR 04 - 06] Selection, appointment and monitoring third-party property managers [PR 07] Post-investment (monitoring and active ownership) [PR 08 - 14] Overview [PR 08] Property monitoring and management [PR 09 - 10] Property developments and major renovations [PR 11] Occupier engagement [PR 12 - 13] Community engagement [PR 14] Outputs and outcomes [PR 15 - 16]
Direct - Infrastructure
Overview [INF 01 - 02] Fundraising of infrastructure funds [INF 03 - 04] Pre-Investment (Selection) [INF 05 - 09] Selection, appointment and monitoring of third-party infrastructure operators [INF 10] Post-investment (monitoring and active ownership) [INF 11 - 16] Overview [INF 11] Infrastructure Monitoring and Operations [INF 12 - 14] Infrastructure Maintenance [INF 15] Stakeholder engagement [INF 16] Outputs and outcomes [INF 17 - 18] Communication [INF 19]
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Confidence building measures [CM1 01 - 07]
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You are in Direct - Listed Equity Active Ownership » (Proxy) voting and shareholder resolutions

(Proxy) voting and shareholder resolutions

LEA 12. Typical approach to (proxy) voting decisions

12.1. Indicate how you typically make your (proxy) voting decisions.

Approach

Based on

12.2. Provide an overview of how you ensure that your agreed-upon voting policy is adhered to, giving details of your approach when exceptions to the policy are made.

JPMAM retains ISS as its voting agent to implement the JPMorgan Asset Management voting policy, and uses research from ISS and Glass Lewis as an input in evaluating how a proxy should be voted. We have the ability to 'tag' certain votes in the ISS system, to allow them to be subject to extra scrutiny, for example if engagement is ongoing, or if the company has been flagged as an 'ESG outlier', or if an analyst or portfolio manager has requested it be reviewed in more detail. Certain votes or issues are flagged as 'refer' items, to allow extra scrutiny, for example mergers or acquisitions, or major disposals, or where we are considering a vote against management. A decision to vote against management or abstain, or to override the recommendations of our voting agent or our proxy voting policy, is always documented, along with a rationale for that decision. Depending on the market, except where a holding is de minimis, we endeavour to inform the company of our decision in advance, in order to give them the opportunity to discuss the issues with us prior to voting.

A decision to review a vote can be triggered by a pre-determined set of parameters requested from JPMAM from our service provider (size of holding, vote against management, or M&A or capital raising), or concerns from the analyst or portfolio manager, or where a company has been identified as an 'ESG outlier' or lagging its peers, or has been unresponsive in our request to engage. A decision to override our proxy voting policy, is documented, along with a rationale for that decision.

Overall responsibility for the formulation of voting policy rests with the applicable Proxy Committee or a Proxy Voting Working Group, whose role is to review JPMAM's corporate governance policy and practice in respect of investee companies, and to provide an escalation point for voting and corporate governance issues. The Committee is composed of senior analysts, portfolio managers and corporate governance specialists. Our proxy voting activity in the US and EMEA is audited by our independent auditor as part of the ISAE 3402 review, and oversight of our broader engagement process is also verified in accordance with AAF 01/06 as part of the monitoring stipulated by our UK investment trusts.

12.3. Additional information.[Optional]

JPMAM manages the voting rights of the shares entrusted to it as it would manage any other asset. It is the policy of JPMAM to vote shares held in its clients' portfolios the best interests of those clients, based exclusively on our reasonable judgement of what will best serve the financial interests of our clients.  Where we have authority to vote, JPMAM will vote at all of the meetings called by companies in which we are invested so far as is practicable. Our primary concern at all times is the best economic interests of our clients, and the investment analyst or portfolio manager always has discretion to override the policy should individual circumstances dictate.

LEA 13. Percentage of voting recommendations reviewed (Not Applicable)

LEA 14. Securities lending programme (Private)

LEA 15. Informing companies of the rationale of abstaining/voting against management

15.1. Indicate the proportion of votes participated in within the reporting year in which where you or the service providers acting on your behalf raised concerns with companies ahead of voting.

15.2. Indicate the reasons for raising your concerns with these companies ahead of voting.

15.3. Additional information. [Optional]

We typically focus on large or material holdings (typically >2% of the issued share capital), or particularly high-profile or contentious issues, or where the company is the subject of ongoing engagement. From this year, we also routinely flag companies on our engagement Focus List, or where they have been flagged for collective engagement, for example Climate Action 100+.

LEA 16. Informing companies of the rationale of abstaining/voting against management

16.1. Indicate the proportion of votes where you, and/or the service provider(s) acting on your behalf, communicated the rationale to companies for abstaining or voting against management recommendations. Indicate this as a percentage out of all eligible votes.

16.2. Indicate the reasons why your organisation would communicate to companies, the rationale for abstaining or voting against management recommendations.

16.3. In cases where your organisation does communicate the rationale for abstaining or voting against management recommendations, indicate whether this rationale is made public.

16.4. Additional information. [Optional]

We typically focus on large or material holdings when providing feedback on our voting activity, or when a company is the subject of ongoing engagement. We disclose a list of all our voting activity publicly, but typically share voting rationales only with clients.

LEA 17. Percentage of (proxy) votes cast

17.1. For listed equities in which you or your service provider have the mandate to issue (proxy) voting instructions, indicate the percentage of votes cast during the reporting year.

Votes cast (to the nearest 1%)

98 %

Specify the basis on which this percentage is calculated

17.2. Explain your reason(s) for not voting on certain holdings

17.3. Additional information. [Optional]

For calendar 2019, we voted 98.2% of all votable resolutions. Reasons for not voting generally include shareblocking in certain markets, or where our clients have elected not to maintain POA documentation or, in certain instances, where we have been advised by our Compliance Department not to vote due to a conflict of interest.

Typical conflicts include where a JPMorgan Affiliate, or another member of the JPMC Group may be involved in a transaction, or have a material interest or relationship with, an investee company, or where JPM personnel sit on portfolio company boards, or where we are casting proxy votes in respect of 'own' funds, or in house investment trusts. In these instances, we will follow the voting recommendation of an independent third party.

Elsewhere, notably Emerging Markets, it may not always be possible to obtain sufficient information to make an informed decision in good time to vote, or there may be specific financial risks where, for example, voting can preclude participating in certain types of corporate action. In these instances, it may sometimes be in our clients' best interests to intentionally refrain from voting in certain overseas markets from time to time.

LEA 18. Proportion of ballot items that were for/against/abstentions

18.1. Indicate whether you track the voting instructions that you or your service provider on your behalf have issued.

18.2. Of the voting instructions that you and/or third parties on your behalf have issued, indicate the proportion of ballot items that were:

Voting instructions
Breakdown as percentage of votes cast
For (supporting) management recommendations
89.2 %
Against (opposing) management recommendations
8.9 %
Abstentions
1.9 %
100%

18.3. In cases where your organisation voted against management recommendations, indicate the percentage of companies which you have engaged.

22

18.4. Additional information. [Optional]

Whilst we do not systematically track or disaggregate this statistic (votes against management, where we are engaging), JPMAM voted against management or withheld votes on at least one ballot item at 3,055 companies in 2019 (versus 2,563 companies in 2018). We engaged with some 666 companies on ESG issues over the same period (not counting scheduled 1-2-1 meetings).

LEA 19. Proportion of ballot items that were for/against/abstentions

19.1. Indicate whether your organisation has a formal escalation strategy following unsuccessful voting.

19.3. Additional information. [Optional]

Whilst we do not have a formal escalation strategy, we have established clear guidelines on how we escalate our stewardship activities in order to protect our clients' interests. We endeavour to meet with the senior executives of our investee companies at least annually; in the event that we are not satisfied with either their responsiveness or strategy, we use our clients' proxy votes in order to try and bring about change. In the event that a voting issues is inconclusive or ignored, we may seek to meet with the board chair or other independent director(s), or express our concerns through the company's advisers. Where appropriate, we will hold joint engagement meetings with other investors who share our concerns. We will also consider voting against individual board directors (for example compensation committee members in relation to a compensation issue, or audit committee members where the concerns relate to an accounting issue). We also may sell out of a stock completely if we believe that is in the best interests of our clients(for example, if the company is unresponsive). Decisions to escalate will always be made on a case-by-case basis, in conjunction with the analyst and/or portfolio manager, taking into account the materiality of risk in our view, combined with the direction of travel on the issue as a result of our engagement. Catalysts can include escalating concerns over management failure in relation to strategy, or a lack of responsiveness in relation to succession planning or board composition, typically where we feel boards are not sufficiently independent, or do not have the right diversity of skills, background and experience.

LEA 20. Shareholder resolutions (Private)

LEA 21. Examples of (proxy) voting activities (Private)

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