We believe that this increased consideration of ESG factors in our investment process can help reduce risk and ensure sustainability of returns.
After asking these questions of managers throughout our due diligence process, we actively engage them on a range of issues that may include social, environmental and governance concerns. We view good environmental, social and governance practices as a pre-requisite for responsible investing, but also as a tool to help mitigate potential risks and conflicts. We work closely with our managers to help them improve on ESG factors where we believe they are lacking, providing guidance and support to help them achieve best-in-class practices.
After being examined and potentially improved during the due diligence process, these ESG factors will be reviewed by JPMAAM’s Investment Committee, and any red flags will be thoroughly discussed. ESG factors identified as part of this process are considered as part of the decision to invest in a new manager, remain invested with an existing manager, or terminate a manager.
We also partner with clients to address their specific ESG needs. Currently, specific funds, assets or types of assets are not automatically excluded explicitly on social, environmental, or ethical criteria unless specifically requested by clients orrequired by local legislation. However, JPMAAM has the ability to work with clients in a variety of ways to incorporate their ESG preferences, from exclusions-based (SRI) mandates to ESG thematic.