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.