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Jupiter Asset Management

PRI reporting framework 2020

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ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

13.1. Indicate whether the organisation carries out scenario analysis and/or modelling, and if it does, provide a description of the scenario analysis (by asset class, sector, strategic asset allocation, etc.).

Describe Scenario analysis has been conducted to understand the potential impacts of demographic trends on long-term economic growth and the effects this may have on government bond prices.
Describe Climate scenario analysis has been selectively conducted at a portfolio level within our sustainable fund range and at a stock specific level within our generalist fund range. Our intention is to further develop our approach as we move towards full compliance with the TCFD recommendations over time.

13.2. Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation of assets between sectors or geographic markets.

We do the following

13.3. Additional information. [OPTIONAL]

Geographic allocations in our global funds are influenced by many investment considerations including ESG risks. We also consider ESG factors when determining sector weightings, both for equity and fixed income portfolios. As bondholders, our fixed income team also use duration management as a tool to express views on ESG risk factors, investing in bonds with longer or shorter term maturities depending on our views on possible downside risk or the time horizon over which we think identified ESG risk factors may materialise. For example, in the oil and gas exploration sector we typically prefer short duration instruments such as bonds with maturities of less than five years which in our view reduces our exposure to energy transition risk. This is in keeping with our unconstrained active management approach to seeking out the best opportunities for clients.


SG 13 CC.

13.4 CC. Describe how your organisation is using scenario analysis to manage climate-related risks and opportunities, including how the analysis has been interpreted, its results, and any future plans.

Describe

We are developing our approach to scenario analysis. We have focused our scenario modelling on three areas so far:

1. Global Sustainable Equity Fund: A number of published transition scenarios and associated target pathways were reviewed, including six different IEA scenarios, four IPCC scenarios, the International Renewable Energy Agency (IRENA) REmap, the Greenpeace Advanced Energy [R]evolution, and the Deep Decarbonization Pathways Project. Since greenhouse gas emissions from the energy sector represent roughly two-thirds of all anthropogenic greenhouse gas emissions, the main focus of these scenarios is on future energy mixes. The scenarios provide limited analysis of a cross-sector approach that is needed for decarbonisation, such as the role of efficient buildings, electric vehicles, sustainable transport, efficient industrial processes and heating and cooling. As the fund does not have any direct exposure to the energy sector, the three scenarios that were selected have more emphasis on the role that the non-energy sector needs to play.

2. We have used the methodology provided by the Transition Pathway Initiative (TPI), a global, asset-owner led initiative, as an engagement tool in order to assess the preparedness of selected investee companies for the transition to a low carbon economy.

3. In our fixed income team, the consideration of demographic factors which may influence the allocation of government debt purchases.

Describe

We are developing our approach to scenario analysis. We have focused our scenario modelling on three areas so far:

1. Global Sustainable Equity Fund: A number of published transition scenarios and associated target pathways were reviewed, including six different IEA scenarios, four IPCC scenarios, the International Renewable Energy Agency (IRENA) REmap, the Greenpeace Advanced Energy [R]evolution, and the Deep Decarbonization Pathways Project. Since greenhouse gas emissions from the energy sector represent roughly two-thirds of all anthropogenic greenhouse gas emissions, the main focus of these scenarios is on future energy mixes. The scenarios provide limited analysis of a cross-sector approach that is needed for decarbonisation, such as the role of efficient buildings, electric vehicles, sustainable transport, efficient industrial processes and heating and cooling. As the fund does not have any direct exposure to the energy sector, the three scenarios that were selected have more emphasis on the role that the non-energy sector needs to play.

2. We have used the methodology provided by the Transition Pathway Initiative (TPI), a global, asset-owner led initiative, as an engagement tool in order to assess the preparedness of selected investee companies for the transition to a low carbon economy.

3. In our fixed income team, the consideration of demographic factors which may influence the allocation of government debt purchases.

Describe

We are developing our approach to scenario analysis. We have focused our scenario modelling on three areas so far:

1. Global Sustainable Equity Fund: A number of published transition scenarios and associated target pathways were reviewed, including six different IEA scenarios, four IPCC scenarios, the International Renewable Energy Agency (IRENA) REmap, the Greenpeace Advanced Energy [R]evolution, and the Deep Decarbonization Pathways Project. Since greenhouse gas emissions from the energy sector represent roughly two-thirds of all anthropogenic greenhouse gas emissions, the main focus of these scenarios is on future energy mixes. The scenarios provide limited analysis of a cross-sector approach that is needed for decarbonisation, such as the role of efficient buildings, electric vehicles, sustainable transport, efficient industrial processes and heating and cooling. As the fund does not have any direct exposure to the energy sector, the three scenarios that were selected have more emphasis on the role that the non-energy sector needs to play.

2. We have used the methodology provided by the Transition Pathway Initiative (TPI), a global, asset-owner led initiative, as an engagement tool in order to assess the preparedness of selected investee companies for the transition to a low carbon economy.

3. In our fixed income team, the consideration of demographic factors which may influence the allocation of government debt purchases.

13.5 CC. Indicate who uses this analysis.

13.6 CC. Indicate whether your organisation has evaluated the potential impact of climate-related risks, beyond the investment time horizon, on its investment strategy.

Please explain the rationale

To date we have not formally assessed the impact of these risks beyond our investment time horizon. At the asset level, our focus has been the analysis of material ESG factors which affect the long-term sustainability of the businesses in which we invest. We have also assessed a range of climate related risks and opportunities affecting our business over the short term (three years or less) and medium term (3-5 years). This will continue to be the focus of our efforts alongside developing the climate change strategy outlined in SG 01.10 CC. We will look to develop and augment our climate risk evaluation capabilities over the long term using the expertise of our specialist environmental investment strategy and idea sharing with other institutions via our IIGCC membership.

13.7 CC. Indicate whether a range of climate scenarios is used.

13.8 CC. Indicate the climate scenarios your organisation uses.

Provider
Scenario used
IEA
IEA
IEA
IEA
IEA
IRENA
Greenpeace
Institute for Sustainable Development
Bloomberg
IPCC
IPCC
IPCC
IPCC
Other
Other
Other

SG 14. Long term investment risks and opportunity

14.1. Some investment risks and opportunities arise as a result of long term trends. Indicate which of the following are considered.

14.2. Indicate which of the following activities you have undertaken to respond to climate change risk and opportunity

Specify the AUM invested in low carbon and climate resilient portfolios, funds, strategies or asset classes.

Total AUM
trillions billions millions thousands hundreds
Currency
Assets in USD
trillions billions millions thousands hundreds

Specify the framework or taxonomy used.

ECOLOGY FUND - This is a thematic environmental equities strategy which seeks to invest in companies offering environmental or social solutions.

GLOBAL SUSTAINABLE EQUITIES FUND - The fund aims to generate long-term capital appreciation and income by investing in stocks belonging to companies which stand to benefit from the transition to a sustainable economy. The fund invests in companies that are considered to be aligned to challenges identified by the UN Sustainable Goals for 2030 Agenda. The managers take the view that this not only positively impacts the global sustainable development agenda but also provides a source of investment out-performance in the long-term with a lower risk profile than the traditional equity funds.

GLOBAL ECOLOGY DIVERSIFIED FUND - The fund aims to generate long-term capital appreciation and income by investing in a mixture of stocks and fixed income securities (e.g. bonds) belonging to companies which stand to benefit from the transition to a sustainable economy. The fund invests in companies that are considered to provide solutions to challenges identified by the UN Sustainable Goals for 2030 Agenda.

14.3. Indicate which of the following tools the organisation uses to manage climate-related risks and opportunities.

14.4. If you selected disclosure on emissions risks, list any specific climate related disclosure tools or frameworks that you used.

We submit our corporate carbon data to CDP on an annual basis and we are supporters of the recommendations of TCFD.

14.5. Additional information [Optional]


SG 14 CC.

14.6 CC. Provide further details on the key metric(s) used to assess climate-related risks and opportunities.

Metric Type
Coverage
Purpose
Metric Unit
Metric Methodology
Weighted average carbon intensity
          reporting for clients
        
          
        
          
        
Carbon footprint (scope 1 and 2)
          reporting for clients
        
          
        
          
        
Portfolio carbon footprint
          reporting for clients
        
          
        
          
        
Total carbon emissions
          reporting for clients
        
          
        
          
        
Carbon intensity
          reporting for clients
        
          
        
          
        
Exposure to carbon-related assets
          reporting for clients
        
          
        
          
        

14.8 CC. Indicate whether climate-related risks are integrated into overall risk management and explain the risk management processes used for identifying, assessing and managing climate-related risks.

Please describe

We have a formal framework for risk management, which is designed to identify and quantify all risks to our business including climate-related risks. We collate our global environmental data and produce quarterly reports on our direct environmental impact, allowing the identification of climate change risks and opportunities related to our direct operations (consumption and waste).

The Board has ultimate responsibility for the risk strategy of the Group and for determining an appropriate risk appetite as well as the tolerance levels within which the Group must operate. The Board meets regularly throughout the year and will discuss climate-related issues and how they impact Jupiter as and when they arise.

The Audit and Risk Committee, chaired by a Non-Executive Director, and attended by all members of the Executive Committee, together with the Director of Compliance and the Head of Risk, oversees the risk and control framework within the Group and the independent monitoring and reporting of risk and controls, including climate change risks.

Risks are prioritised by the Risk Committee, which reviews the Group’s primary risk exposures (with consideration of impact and likelihood assessment and the effectiveness of existing controls) in the context of the Board’s tolerance thresholds to ensure that the governance arrangements within the Group are effective in the mitigation of risk.

The Risk and Finance Committee is made up of senior members of the organisation including the CFO, COO, Group General Counsel and Head of Risk. The committee reports into the Executive Committee and the Board, providing support on the establishment, implementation and maintenance of adequate risk management policies and procedures.

The Committee reviews the Group’s primary risk exposures (including exposure to climate change risk) in the context of the tolerance thresholds and ensures that the governance arrangements are effective in the mitigation of risk. The Committee is responsible for:

•             Reviewing the Group’s risk management framework, risk appetite statement and risk tolerance limits as proposed by the Risk Department;

•             Reviewing the effectiveness of the existing risk management policies and processes across the business, including compliance with such policies and processes and any remedial actions that may be required;

•             Reviewing the Group’s accounting, treasury and tax policies and practices as proposed by the Finance Department; and

•             Managing changes to the business (outside of core strategic and business changes) including regulatory and financial changes.

Our Stewardship Committee receives information on the environmental, social and governance risks impacting our portfolios, with a view to understanding the voting and engagement activities around these matters. Information from the Stewardship Committee is relayed to the CSR Committee, which is concerned with the wider CSR responsibilities of JFM plc and this helps to inform senior management and provide thereby helping to further enhance the senior management’s understanding of climate related risks and opportunities within our portfolios. The CSR Committee contains representatives of JFM’s Executive Committee, the Senior Independent Director and the Head of Governance & Sustainability.

14.9 CC. Indicate whether your organisation, and/or external investment manager or service providers acting on your behalf, undertake active ownership activities to encourage TCFD adoption.

Please describe

We engage with companies on behalf of all our investors and believe a change in company behaviour can be leveraged by pressure from active investors. We monitor climate risks and opportunities in our funds’ investments by hosting or attending meetings with management teams and non-executive directors to question and challenge companies about the issues we think may affect their long-term value.

We will continue actively to engage with investee companies to encourage them to respond appropriately to the TCFD recommendations, across all four dimensions of governance, strategy, risk management, and metrics/targets. We value scenario planning conducted by investee companies, recognising this as a vital tool for companies to understand how their risk exposures may develop, which in turn adds to our understanding of the risk exposures we take on behalf of our clients.

Climate change is one area where working collectively is essential to any meaningful stewardship effort. We are open to collective engagement and industry collaboration on climate change. In 2019 we joined the Institutional Investors Group on Climate Change ('IIGCC'). The IIGCC is a collective body through which European institutional investors and asset owners coordinate initiatives to tackle climate change. This coordinating role primarily encompasses direct engagement with companies, but also facilitates industry dialogue develops tools and resources to deepen understanding of investor practices on climate change and supports the implementation of related best practice. IIGCC also engages on finance and climate policy at the global, EU and national level across Europe. Our engagement with IIGCC encompasses each of these areas. In 2019 Jupiter became a member of Climate Action 100+, an investor initiative which seeks to target collective action around a selection of the world’s highest emitting companies and coordinate shareholder engagement with this subset. Joining Climate Action 100+ allows us to play a lead role in collective engagements on climate with investee companies.

Where we consider companies are highly exposed to climate risks or are systemically important carbon emitters, we will look to management to undertake steps to mitigate these risks including the following initiatives:

  • Measure and disclose full lifecycle emissions of their products and services;
  • Conduct scenario analysis to consider the long-term impacts of climate change on their business model;
  • Set long-term decarbonisation targets which are aligned with the goals of the Paris Agreement;
  • Ensure and demonstrate to shareholders that their direct lobbying activities and trade association memberships are aligned with active support for the Paris Agreement.

We use a range of data and research sources to inform our assessment of climate risks. We particularly value the methodology provided by Transition Pathway Initiative (TPI) as a forward-looking tool to assess the preparedness of carbon intensive companies for the transition to a low carbon economy. We will vote against Boards which do not meet our expectations in appropriately managing carbon risks within their businesses.

We disclose details of our TCFD engagements with investee companies, policy makers and market standard setting bodies in Jupiter’s semi-annual Stewardship Report which is available on our website.


SG 15. Allocation of assets to environmental and social themed areas

15.1. Indicate if your organisation allocates assets to, or manages, funds based on specific environmental and social themed areas.

15.2. Indicate the percentage of your total AUM invested in environmental and social themed areas.

3 %

15.3. Specify which thematic area(s) you invest in, indicate the percentage of your AUM in the particular asset class and provide a brief description.

Area

Asset class invested

97 Percentage of AUM (+/-5%) per asset class invested in the area
3 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Jupiter’s environmental team will target three thematic investment areas, listed below. Approximate current allocation to these themes across the strategies managed is expressed.

Resource Efficiency ~55%

Companies which derive revenue from the provision of technologies, products and services related to more efficient, safe and superior usage of natural environmental resources and energy.

Sustainable Infrastructure ~30%

Companies which derive revenue from the ownership, provision of assets, development and maintenance of infrastructure. The investment focus is on environmental resources, low carbon solutions, transportation, pollution abatement and waste management.

Demographics ~15%

Companies which derive revenue from the provisions of technology, products and services which enhance human wellbeing, consumer choice, communication and transportation whilst minimising environmental impacts.

15.4. Please attach any supporting information you wish to include. [OPTIONAL]



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