JPMorgan Asset Management joined an investor group that’s pressing the world’s biggest emitters of greenhouse gases to change their ways as part of a broader expansion of its sustainable investment efforts.
The money manager, which oversees $2 trillion of assets, said in a statement Tuesday that it has become a signatory to Climate Action 100+, a group that includes AllianceBernstein, Legal & General Investment Management and UBS Asset Management. JPMorgan also said it will develop a proprietary model for rating companies’ performance on environmental, social and governance issues, and it will increase its engagement with companies on key topics such as climate risks.
The initiative is part of a broader climate-related push by JPMorgan Chase & Co. The biggest U.S. bank said Monday that it will no longer advise or lend to companies that get the majority of their revenue from the extraction of coal.
JPMorgan Asset Management’s announcement is reminiscent of BlackRock’s move last month to put climate issues at the center of its strategy, a move that also saw BlackRock join Climate Action 100+. Large asset managers are facing growing calls from shareholders and activists to use their resources to fight climate change and pressure companies to transition their businesses for a low-carbon future.
Jennifer Wu, JPMorgan Asset Management’s global head of sustainable investing, said today’s announcement is the culmination of years of work behind the scenes, not least by the firm’s investment team, which has been exploring how to insert ESG issues into the investment process for some time.
“If you look from the outside at our product range and what’ve put out publicly, you could easily draw the conclusion that JPMorgan seems to be behind, but in reality the primary focus for us has been on research and figuring out how ESG really works across portfolios,” Ms. Wu said in a phone interview. “We might have been less vocal in the past, but that is because we have been spending a lot of time doing the work and we are now in a position where we want to contribute to sustainable investing and we want to share our insights.”
The asset manager said its new ESG scoring system is intended to help the firm’s investment managers better identify future ESG risks and opportunities, and aid them in portfolio construction. Its eight-person stewardship team will focus on engaging companies where the asset manager believes ESG considerations “can play a critical role in creating value for its clients,” such as management of human capital and climate concerns, JPMorgan said.
Ms. Wu, who joined last year from BlackRock, said the firm is also exploring creating more sustainable finance products.
“The focus for us has been around research on ESG and now we are at the stage where we are ripe for innovation,” she said.