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J.P. Morgan Asset Management

PRI reporting framework 2020

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Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

02.4. Additional information. [Optional]

We have worked to create an investment stewardship approach that aims to improve long-term, sustainable value. We believe that the companies in which we invest should be focused on responsible allocation of capital and long-term value creation. In our view, investment stewardship is not about adhering to one set of norms or limiting our scope to one collection of standards. Nor is it about arbitrarily extending the time horizon of our portfolios. Rather, we strive to understand how factors impacting sustainability are financially significant to companies over time, understanding that the regions, cultures and organizations in which we invest differ greatly.

Identifying whether a risk or opportunity is substantial enough for us to act upon it is a key element in our approach to investment stewardship. Due to the global breadth of our investment universe, we cannot apply the same metrics or standards across the board. Instead, we need to judge securities, assets and situations in context, and decide how significant a particular event or circumstance may be, given that context. This allows us to gauge the financially material elements of a sector, industry or business model from a sustainability perspective, now and into the future.

Our focus is on future cash flows or duration of business. We view purposeful leadership at the top of a company, supported by strong corporate governance, as the key to achieving these goals. Where such attributes are lacking, we will actively engage with investee companies to improve governance.

In an ongoing effort to make our engagement more targeted, we have identified five main investment stewardship priorities(Good Governance, Alignment with the long-term, Human Capital management, Stakeholder engagement and Climate risk) that we believe have universal applicability and will stand the test of time. Within each priority area, we have identified related themes that we are seeking to address over a shorter timeframe. These themes will evolve over time, as we engage with investee companies to understand issues and promote best practice.

By cross-referencing our analysts' proprietary assessments with holdings data and an assessment of materiality versus our five priorities, we can generate target lists of companies for engagement, allowing us to track and monitor our engagement more effectively, as well as measure progress or any need to escalate our activity.

This combination of long-term priorities and evolving, shorter-term themes provides us with a structured and targeted framework to guide our investors and investment stewardship teams globally, as we engage with investee companies around the world.

Each of the regional Investment Stewardship teams participate in industry forums and conferences where ESG topics are discussed. Individual team members may also be part of a membership organization where these topics are discussed. Subject to applicable laws and regulations in the relevant jurisdictions, JPMAM works with other investors in collective engagement exercises with companies where appropriate (for example under the auspices of the UK Investor Forum and other formal and informal bodies), in order to enhance the effectiveness of our engagement. Circumstances where such collective engagement takes place include board succession planning, remuneration and Annual General Meeting -related issues, as well as broader strategy issues.

Note that, in certain jurisdictions (e.g. Japan), collaborative engagement is not permitted, and may be subject to antitrust and/or competition requirements.


LEA 03. Process for identifying and prioritising engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal staff engagements

Individual / Internal staff engagements

Collaborative engagements

Collaborative engagements

03.3. Additional information. [Optional]

We have worked to create an investment stewardship approach that aims to improve long-term, sustainable value. We believe that the companies in which we invest should be focused on responsible allocation of capital and long-term value creation. In our view, investment stewardship is not about adhering to one set of norms or limiting our scope to one collection of standards. Nor is it about arbitrarily extending the time horizon of our portfolios. Rather, we strive to understand how factors impacting sustainability are financially significant to companies over time, understanding that the regions, cultures and organizations in which we invest differ greatly.

Identifying whether a risk or opportunity is substantial enough for us to act upon it is a key element in our approach to investment stewardship. Due to the global breadth of our investment universe, we cannot apply the same metrics or standards across the board. Instead, we need to judge securities, assets and situations in context, and decide how significant a particular event or circumstance may be, given that context. This allows us to gauge the financially material elements of a sector, industry or business model from a sustainability perspective, now and into the future.

Our focus is on future cash flows or duration of business. We view purposeful leadership at the top of a company, supported by strong corporate governance, as the key to achieving these goals. Where such attributes are lacking, we will actively engage with investee companies to improve governance.  

In an ongoing effort to make our engagement more targeted, we have identified five main investment stewardship priorities that we believe have universal applicability and will stand the test of time (Good governance, Alignment with the long-term, Human Capital management, Stakeholder engagement and Climate risk). Within each priority area, we have identified related themes that we are seeking to address over a shorter timeframe. These themes will evolve over time, as we engage with investee companies to understand issues and promote best practice.

By cross-referencing our analysts' proprietary assessments with holdings data and an assessment of materiality versus our five priorities, we can generate target lists of companies for engagement, allowing us to track and monitor our engagement more effectively, as well as measure progress or any need to escalate our activity.

This combination of long-term priorities and evolving, shorter-term themes provides us with a structured and targeted framework to guide our investors and investment stewardship teams globally, as we engage with investee companies around the world.


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal staff engagements
Collaborative engagements

04.2. Additional information. [Optional]

This year, we have identified ~150 names, based on the themes we have identified, for targeted engagement. This is in addition to the ~700 names we engage with each year as part of our ongoing ESG monitoring and stewardship activity. Whilst this is still the minority of our overall engagement activity, we expect this proportion to increase over time.

Where we enter into collaborative engagements (where permissible and/or appropriate), for example under the auspices of the UK Investor Forum, we always endeavour to have agreed objectives and/or outcomes wherever possible.


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate whether you monitor and/or review engagement outcomes.
Individual / Internal staff engagements
Collaborative engagements
Indicate whether you do any of the following to monitor and/or review the progress of engagement activities.
Individual / Internal staff engagements
Collaborative engagements

05.3. Additional information. [Optional]

Historically, we have not systematically monitored engagement outcomes, except in certain cases, for example in our Sustainable Fund range. From this year, we have identified a firmwide target list for engagement, including objectives and milestones, which will allow us to monitor the progress of our engagements in a more systematic way, as well as provide meaningful feedback loops for Analysts and Portfolio Managers to ensure progress (or lack thereof) is reflected in our investment process.


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]

We have established clear guidelines on how we escalate our engagement 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 may seek to meet with the chairman 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 may also use our proxy votes in order to try and bring about management change.We may also to sell out of a stock completely if we believe that is in the best interests of our clients (for example, if a 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 for further engagement 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 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation`s engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

Collaborative engagements

07.2. Indicate the practices used to ensure that information and insights gained through engagements are shared with investment decision-makers.

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

07.4. Additional information. [Optional]

Insights from ESG engagements are recorded on the same central research platform (Spectrum) used by our sector analysts and portfolio managers. We have also developed a 'tagging' facility within the database to allow analysts or portfolio managers to flag regular one-to-one meetings where ESG issues have been discussed.

From this year, we have identified a firmwide target list for engagement, including targets and milestones, which will allow us to monitor the progress of our engagements in a more systematic way, as well as provide meaningful feedback loops for Analysts and Portfolio Managers to ensure progress (or lack thereof ) is reflected in our investment process.

We also undertake targeted ESG engagement on behalf of certain ESG-interested institutional clients. These engagements are tracked on a database and follow a list of companies, aims and objectives identified by our clients and their specialist ESG advisors, and the outcomes are shared with that client on an ongoing basis.


LEA 08. Tracking number of engagements

08.1. Indicate whether you track the number of your engagement activities.

Type of engagement
Tracking engagements
Individual/Internal staff engagements​

Collaborative engagements

08.2. Additional information. [Optional]

JPMAM has over 1,000 investment professionals, including over 200 career analysts, tasked with monitoring and engaging with companies and constructing our clients' portfolios. We undertake several thousand company visits and one-to-one meetings each year, as well as several hundred meetings specifically to discuss ESG issues. Insights from ESG engagements are recorded on the same central research platform used by our sector analysts and portfolio managers (Spectrum). We have also developed a 'tagging' facility within the database to allow analysts or portfolio managers to flag regular one-to-one meetings where ESG issues have been discussed. This allows us to track the number of our engagements fully across the firm.


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