Lesson 4: Sustainable saver to investor

Presented by J.P. Morgan Asset Management

An increasing number of investors believe that sustainable investing could hold the key to achieving their savings goals while effecting positive environmental and social change.


Increasingly, many of us are making a choice to spend our money more sustainably. Whether it’s buying an energy-efficient vehicle or choosing clothes with an eye on how the manufacturer treats its workers, as buyers we have the power to vote with our feet to effect positive change.

How we choose to invest our money is no different. The money you set aside each month can influence the actions of companies, and as an investor you can favour those that are moving in a positive direction over those whose values don’t align with yours. Your capital can help sustainability-focused companies develop and grow, allowing them to raise standards across the board.

Awareness around sustainable investing is increasing.In of 2021 J.P. Morgan Asset Management conducted a major survey of more than 6,000 people, and the results highlighted that sustainable investing is rising up the agenda. Although only around one in 10 investors is currently engaged in sustainable investing, levels of awareness are higher among the young and among current investors, where around a quarter consider themselves to be well informed about the subject.

EXHIBIT 1: GRAPHIC SHOWING HOW INFORMED SAVERS ARE AROUND SUSTAINABLE INVESTING

Importantly, almost half of this better-informed group believe that in the future people will only invest in companies that are sustainable. This echoes increasingly widespread concerns that investments in companies that don’t take environmental, social or governance (ESG) factors seriously, such as high polluting companies and those with poor human rights records, could come under increased scrutiny as investors look to protect their long-term returns.

The survey offered a snapshot of which ESG themes matter most to today’s investors. While there is concern around all major sustainability issues, the environment tops the agenda, while pollution and human rights are also priority areas.


EXHIBIT 2: GRAPHIC SHOWING DESIRED IMPACTS OF SUSTAINABLE INVESTING


How savers can invest in sustainable companies

By providing the opportunity to help shape a better future for us all, sustainable funds can help savers do good while also targeting an attractive long-term return on their money. Asset managers can exert considerable influence on the companies in which they invest, so choosing a manager with strong sustainable credentials is crucial and with strong investment stewardship teams, which are able to engage actively with the boards of major companies to drive positive change.

As an example of the scale of this engagement and influence, J.P. Morgan Asset Management’s investment stewardship team attends around 500 meetings dedicated to ESG topics each year, and in 2020 voted at around 8,000 shareholder meetings in 80 markets globally. J.P. Morgan’s stewardship specialists and portfolio managers engage with companies to encourage best practice, drive positive change, and ultimately create long-term shareholder value for our clients and investors.


Investing for a low-carbon world

The JPM Carbon Transition Global Equity UCITS ETF (JPCT) has been designed to help clients manage the risks of climate change and contribute to the solutions, while taking advantage of the opportunities presented by the transition to a low carbon economy.

JPCT is a global equity ETF, which is in line with the European Commission’s Climate Transition Benchmark. The benchmark requires at least a 30% reduction in carbon emissions and at least a 7% year-on-year rate of self-decarbonisation. JPCT invests in companies that are most transition-ready: We take overweight positions (bigger than the benchmark position) in companies that we think are taking the necessary steps to ensure they are reducing their carbon emissions. We go underweight (take smaller positions than the benchmark position) in those companies that we think are most at risk, as they are failing to prepare their businesses for the transition to a low carbon economy.

By investing in JPCT, you can invest in building a more sustainable future, while at the same time benefiting from investing in forward-looking companies and avoiding the risk of being left behind as the economy transitions.



Take that step to building a more sustainable future and invest today! (Capital at risk)

With investment, your capital is at risk.

This article should not be read as personal financial advice. Individual investors should make their own decisions or seek independent advice.


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