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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]
Confidence building measures
Confidence building measures [CM1 01 - 07]
Export Public Responses
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You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » Implementation processes

Implementation processes

FI 01. Incorporation strategies applied

Indicate (1) Which ESG incorporation strategy and/or combination of strategies you apply to your actively managed fixed income investments; and (2) The proportion (+/- 5%) of your total actively managed fixed income investments each strategy applies to.
SSA
0 Screening alone
0 Thematic alone
95 Integration alone
0 Screening + integration strategies
5 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (financial)
0 Screening alone
0 Thematic alone
90 Integration alone
10 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (non-financial)
0 Screening alone
0 Thematic alone
90 Integration alone
10 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Securitised
0 Screening alone
0 Thematic alone
95 Integration alone
5 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%

01.2. Describe your reasons for choosing a particular ESG incorporation strategy and how combinations of strategies are used.

We expect the issuers in which we invest our clients’ money to conduct business in a sustainable manner and to demonstrate high standards. We are committed to delivering strong risk-adjusted returns for our clients, and we believe that one of the drivers of that performance over the long term is an assessment of the ESG practices of the issuers in which we invest. As such, we explicitly and systematically take into consideration relevant and material ESG issues, alongside other market risk factors, as a fundamental part of our sound risk management and a core part of our fiduciary responsibility.

In the Global Fixed Income, Currency & Commodities and Global Liquidity groups (GFICC), each sector team integrates ESG considerations throughout their investment process. Importantly, this assessment is incorporated into our existing common research framework, in which every investment decision is backed by fundamental, quantitative valuation and technical analysis. While each sector team takes a slightly nuanced approach to ESG integration – according to their existing investment process and taking into account the differences of each market – we have a consistent approach to ESG integration in GFICC which spans three pillars: proprietary research, engagement and portfolio construction.

01.3. Additional information [Optional].

Proprietary research forms the foundation of our approach to ESG integration. With over 60 dedicated research analysts, we have the expertise to make informed, judgmental decisions on the ESG profile of each issuer in which we invest. While we consider ESG data from third-party providers, this is merely a reference point and does not dictate our views.

Even though we do not have voting rights as bond investors, engagement is a key part of our approach to ESG integration. We regularly meet with company management and government officials, pressing them on topical issues and encouraging them to adopt best practices. In addition, we also aim to have a positive influence on the industry by participating in industry forums and regularly consulting with third-party providers with the aim of improving their data. We also collaborate closely with our Investment Stewardship team on firm-wide engagement efforts.

We recognise that our clients have different objectives. Therefore, we see integration as a foundation for a broader sustainable investment platform, which also includes screening, positive tilt and thematic capabilities:

  • We manage negatively screened strategies for a variety of clients and a thematic Municipal Debt strategy. In Q4 2019, we also launched an explicitly sustainable flexible global bond which incorporates positive tilt.
  • We invest in Green Bonds in traditional portfolios where prospective risk-adjusted return is attractive and have the capability to manage dedicated Green Bond portfolios for thematic investors. We have developed an internal governance process for Green Bond classification which encourages issuers to adopt common standards and improve disclosure practices.
  • In all portfolios, we adhere to legally mandated exclusions such as controversial weapons restrictions and US OFAC sanctions-based restrictions.

FI 02. ESG issues and issuer research (Private)

FI 03. Processes to ensure analysis is robust

03.1. Indicate how you ensure that your ESG research process is robust:

specify description 

          Please see response below in 3.3.

03.2. Describe how your ESG information or analysis is shared among your investment team.

03.3. Additional information. [Optional]

ESG analysis and research is visible on our centralised technology platform, Spectrum, and is reviewed on a regular basis.

Quantitative Analysis: Third-party provider ratings are displayed for each issuer in our proprietary portfolio management system, which allows investors both to customise views in order to understand portfolios’ ESG exposures at various aggregated levels (such as country, credit quality, sector and total portfolio) and to observe changes in portfolios’ ESG scores over time.

Qualitative Research:

  • The Research Notes application within Spectrum, which is the database housing all of our proprietary research, ensures that all written research reports are stored centrally and visible to investors across the platform.
  • Each research note contains a separate section for ESG, and every analyst makes a qualitative ESG assessment when conducting research.
  • Specific ESG notes or engagement reports can be tagged as such within Spectrum, allowing for a search function to enable easy access to ESG-related activity.
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