The Direct Infrastructure strategy's PPM explicitly states that investing focus on material ESG matters is central to the design and ongoing decision-making required to execute our investment strategy, philosophy and objectives. The strategy's PPM also sets forth the strategy's full ESG policy and states that J.P. Morgan Investment Management Inc., as the strategy's investment adviser and a signatory to the PRI, has adopted several ESG related policies and processes and views active management of material ESG matters as an integral part of its broader responsibility as a global financial institution to its clients, counterparties and communities.
The strategy's policy states that it recognizes that management of material ESG issues can have a significant impact on the long-term operational performance of the companies in which it invests. We believe that well-managed companies with an environmentally sustainable and socially responsible way of operating significantly de-risk their business model, and therefore, deliver better performance and achieve greater cost efficiencies and profitability. These issues are integral to the businesses in which the strategy invests.
In developing its ESG policy, the strategy gave consideration to a range of codes and standards, including the Principles for Responsible Investment, and the requirements of the Investment Adviser's Anti-Bribery and Corruption Policy and Code of Conduct, as well as the input of the independent Board of Directors of the strategy and its Investors.
The policy states:
The strategy will, to the best of its ability:
- Actively incorporate the United Nation Principles for Responsible Investing (the "Principles") into its business practices where appropriate.
- Report its progress against the Principles to Investors, portfolio companies and other relevant stakeholders.
- Participate in appropriate benchmarking regarding Fund-level sustainability practices.
- Ensure ESG risks and opportunities are evaluated as part of acquisition opportunities diligence and discuss those risks and opportunities with the Investor Committee and the Board of Directors.
- Ensure its portfolio company boards and management teams have appropriate access to best practices ESG materials.
- Review this policy's effectiveness and implementation on a regular basis, and report relevant findings, progress and recommendations to the Direct Infrastructure strategy's independent Board of Directors.
In addition, the strategy will, to the best of its ability, require that the companies in which the strategy invests:
- Comply with applicable regulations and appropriate best practice governing operations, the protection of human rights, occupational and public health and safety and the environment.
- Adhere to the highest standards of ethical conduct to avoid negligent, corrupt business practices or practices involving conflicts of interest.
- Regard implementation of ESG engagement activities as an integral part of how to do business and recognize that their ESG activities are of an ongoing nature and encourage continual improvement in ESG performance.
- Instruct their employees and relevant subcontractors, as appropriate, in the identification and management of ESG risks and opportunities, and provide them with appropriate support and assistance.
- Identify ESG risks and opportunities as part of the evaluation of growth opportunities and manage ESG risks and opportunities following acquisitions, including those arising through supply chains if applicable.
- Support and encourage employees to help community organizations and activities.
- Provide for the assignment of and accountability for ESG responsibilities to senior managers.
- Ensure appropriate disclosure to, and encourage dialogue on ESG issues with, stakeholders as appropriate.