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Investing for a changing world

PHOTO: J.P. MORGAN ASSET MANAGEMENT

Sustainability is gaining interest here in Singapore and around the world, and is increasingly driving decisions at all levels of the economy1. For investors, sustainable investing means looking at all the factors – not only financial – that can have an impact on a company’s ability to operate today, or in the longer term.

Ms Tomomi Shimada, Asia-Pacific sustainable investment lead strategist at J.P. Morgan Asset Management, shares some perspectives of our investment approach that reflects not only investors’ financial goals but also their values and beliefs2.

Sustainable investing and what it means to you

Consumers are increasingly opting for more sustainable choices in their daily lives, from reusable shopping bags to plant-based meat substitutes1. Companies are factoring sustainability into their long-term investment plans, such as incorporating goals to achieve net-zero carbon emissions and reduce waste. And governments around the world are making policy decisions to support and encourage the transition to a low-carbon economy.

To facilitate the transition, Singapore is putting in place structures to catalyse sustainable financing3, including establishing taxonomies and policies on climate-related financial disclosures, developing high-quality carbon credit markets, incorporating environmental, social and governance (ESG) data, harnessing innovation and technology to support a green finance ecosystem and actively promoting green investments.

Our clients are also increasingly demanding their assets be managed in ways that target ESG factors, as illustrated below. Therefore, the pressure on companies and investment portfolios to act sustainably will only increase further.

Source: J.P. Morgan Asset Management, at June 30, 2019. For illustrative purposes only. The opinions and views expressed here are as at the date of publication. They are subject to change and are not to be taken or construed as investment advice. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk. Investments involve risks, not all investments are suitable for all investors.

Sustainable investing with you

In general, sustainable investing funds can help investors manage the risks associated with ESG factors, capture the opportunities and contribute to positive change. The investment strategies2 can focus on incorporating ESG factors while seeking to enhance risk-adjusted returns (i.e. ESG integration), as well as align values. Some of the strategies also have clear sustainability objectives and aim to drive sustainability outcomes.

We know that the way companies manage ESG risks and opportunities has consequences for their business results. That is why we incorporate ESG factors into our active investment processes across asset classes – not only in our dedicated sustainable funds, but also in our traditional funds.

Our priorities4 include:

Some investable themes for the sustainability agenda

As investors, we are committed to finding high-conviction investable ideas2. We believe that a long-term theme, such as sustainability, requires taking a long-term view, and we invest in companies only after thorough research that incorporates detailed ESG analysis while employing discipline on valuation.

Following the 26th United Nations Climate Change Conference of the Parties in Glasgow, climate and environmental topics are top of mind for many investors1.

  • Within climate, the challenge of cutting carbon emissions has moved high up on the sustainability agenda as one of the largest and most pressing themes. The global effort to limit the rise in temperatures will take several decades of transition and require trillions of dollars of new investment across a wide range of economic activities.
     
  • Decarbonisation requires significant investment in the development and deployment of renewable energy sources. And decarbonisation will result in a general shift towards electrification, a trend that will drive growth across many industries. Electric vehicles will be one of the most visible signs of this change.
     
  • Electrification and other efficiency innovations will also spur activity in other types of infrastructure, such as commercial and residential buildings, where more efficient construction will help drive down energy consumption.
     
  • Improvements in efficiency will impact sectors ranging from infrastructure to agriculture. Technology will have a large role to play in making many industries more sustainable.

Conclusion

Transitioning to a sustainable and inclusive economy requires an enormous investment. We remain committed to growing our sustainable investing capabilities significantly in the coming years, and to help investors make better sustainable investing choices. By taking ESG factors into account in our investments, we – and our clients – can enable capital flows to the companies which are building a more sustainable future.

  • Click here to learn more about JPMorgan Funds - Global Bond Opportunities Sustainable Fund

Provided for information only based on market conditions as at date of publication, not to be construed as investment recommendation or advice. Forecasts, projections and other forward-looking statements are based upon current beliefs and expectations, and may or may not come to pass. They are for illustrative purposes only and serve as an indication of what may occur. Given the inherent uncertainties and risks associated with forecasts, projections or other forward statements, actual events, results or performance may differ materially from those reflected or contemplated.

1. Source: J.P. Morgan Asset Management, “Selecting stocks for an environmentally sustainable future”, December 2021.

2. For illustrative purposes only based on current market conditions, subject to change from time to time. Not all investments are suitable for all investors. Exact allocation of portfolio depends on each individual’s circumstance and market conditions.

3. Source: “Green Finance Action Plan”, Monetary Authority of Singapore, data as at January 2022.

4. Source: J.P. Morgan Asset Management. As at January 2022.

This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. It does not constitute investment advice, or an offer to sell, or a solicitation of an offer to buy any security, investment product or service. Informational sources are considered reliable but you should conduct your own verification of information contained herein. Investments involve risks. Investments in funds are not deposits and are not considered as being comparable to deposits. Past performance is not indicative of future performance and investors may not get back the full or any part of the amount invested. Dividend distributions, if any, are not guaranteed and are made at the manager’s discretion. Fund’s net asset value may likely have high volatility due to its investment policies or portfolio management techniques. The value of the units in the scheme and the income accruing to the units, if any, may fall or rise. Funds which are invested in emerging markets, smaller companies and financial derivative instruments may also involve higher risks and are usually more sensitive to price movements. Any applicable currency hedging process may not give a precise hedge and there is no guarantee that any hedging will be successful. Investors in a currency-hedged fund or share class may have exposure to currencies other than the currency of their fund or share class. Investors should make their own investigation or evaluation or seek independent advice prior to making any investment. Please refer to the Singapore Offering Documents (including the risk factors set out therein) and the relevant Product Highlights Sheet for details at https://am.jpmorgan.com/sg/en/asset-management/per/. Issued by JPMorgan Asset Management (Singapore) Limited (Co. Reg. No. 197601586K). All rights reserved.

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