Sustainable Investing: where principles and portfolios align

We believe in the power of sustainable investing to drive both long term growth and positive impact. Sustainable investing is one way we help you invest with intention to achieve your goals and the future you envision.

Debunking 5 myths about sustainable investing

Sustainble investing has spurred a great deal of excitement, but also some confusion. Here we take on some misconceptions about its nature, purpose and even its definition.

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Jessica Matthews, Global Head of Sustainable Investing for J.P. Morgan Private Bank, describes the four approaches that can help you align your investments with you goals and values.

Ms. Matthews: Sustainable investing has been an area of increasing interest to clients in the past couple years with investors who view investments as a way that they can further align with their philanthropic or social or environmental goals. So what is sustainable investing? Investors hear a whole litany of different terms that can be somewhat confusing: the so-called alphabet soup of impact investing, ESG, SRI, responsible investing, MRI.

We at J.P.Morgan use the term sustainable investing as the broad umbrella term to describe approaches that align with financial and social and environmental goals, and four different areas or approaches that can be used either individually or in concert across the entire portfolio.

The first is exclusionary screening or negative screening where investors can choose a specific issue area or sector that they'd like to exclude from the portfolio, like tobacco, weapons, or gambling.

The second is environmental, social and governance integration or ESG integration. This is where investors can choose to align their portfolio with ESG principles, and that can be done in a way that is both aligned with investors' values, so investors might want to choose the best actors along environmental standards, or it might really be from a more risk-mitigation or return-enhancing standpoint. For example, an investor might say, "We're worried about climate change and we'd like to be thinking about exposures in our portfolio."

The third is thematic investing, and as it sounds, investors might chose a specific issue area or theme that they want to tilt the portfolio towards. This can include funds that are environmentally focused, gender-diversity funds, or community development funds, all with a specific theme or issue area that a client is driving towards.

The last is impact investing, and this is primarily found in the private capital markets. And an important distinguishing feature of impact investing is that the investments are made with intentionality. That means intentionality towards creating a certain social or environmental outcome.

So how do we work with clients? Pulling it all together, there are several different steps we take if a client indicates that they'd like to explore a sustainable investing portfolio. Often the first step is actually just starting with education. Clients really want to bring us in to help them level set and understand what the space looks like and what these different approaches are that they could take. Second, we work with clients to develop their goals, asking several key questions like what are you trying to accomplish with your sustainable investing program?

And are there certain issue areas that you want to tilt towards or perhaps remove from the portfolio? And with implementation, we're really seeking to customize a portfolio along the lines of those goals that those clients described to us.

We can do this across the entire portfolio, or if clients desire, we can just do it in certain parts of the portfolio in a more incremental way. But ultimately, our goal is to work with clients to implement both their financial objectives and their social and environmental objectives, and we really feel like we can do this in concert with each other.

We feel like we're well positioned at J.P.Morgan to help you achieve your sustainable investing goals. Please feel free to call your J.P.Morgan advisor for more information.

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Opinions expressed are those of the speakers and may differ from those of other J.P. Morgan employees and affiliates. Neither J.P. Morgan nor any of its affiliates can represent that the statements or opinions expressed today will materialize.

This is not an investment research video. The views and strategies described may not be suitable for all investors. This video is not intended as personal investment advice or as a solicitation or recommendation. If you are considering any investment or strategy, you should speak with your J.P. Morgan representative before investing. Past performance is no guarantee of future results.

Please read important information at the end of the presentation.

INVESTMENT PRODUCTS:

• NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

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A JPMorgan Chase and Company logo appears. Next, Jessica Matthews, a woman with dark hair and brown eyes, stands by a wall-sized window overlooking a tree and a city street.

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Jessica Matthews. Global Head of Sustainable Investing, J.P. Morgan Private Bank.

Ms. Matthews:

Sustainable investing has been an area of increasing interest to clients in the past couple years with investors who view investments as a way that they can further align with their philanthropic or social or environmental goals. So, what is sustainable investing? Investors hear a whole litany of different terms that can be somewhat confusing: the so-called alphabet soup of impact investing, ESG, SRI, responsible investing, MRI.

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A forest of evergreens appears, along with text.

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THE RANGE OF TERMINOLOGY:

Environmental, Social, and Governance (ESG)

Responsible Investing

Impact Investing

Socially Responsible Investing (SRI)

Green Investing

Community Investing

Mission Related Investing (MRI)

Values Based Investing

Double/Triple Bottom Line Investing

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A close-up of Ms. Matthews.

Ms. Matthews:

We at J.P. Morgan use the term sustainable investing as the broad umbrella term to describe approaches that align with financial and social and environmental goals -

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Sustainable Investing - Investment approaches that incorporate financial as well as social and environmental objectives.

Ms. Matthews:

And four different areas or approaches that can be used either individually or in concert across the entire portfolio. The first is exclusionary screening or negative screening where investors can choose a specific issue area or sector that they'd like to exclude from the portfolio, like tobacco, weapons, or gambling.

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Exclusionary Screening - Avoid investing in companies and sectors that do not align with your values.

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ESG Integration - Integrate environmental, social and governance issues into your investing approach.

Ms. Matthews:

The second is environmental, social and governance integration or ESG integration. This is where investors can choose to align their portfolio with ESG principles, and that can be done in a way that is both aligned with investors' values, so investors might want to choose the best actors along environmental standards, or it might really be from a more risk-mitigation or return-enhancing standpoint.

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Trees tower over a clear river. Next, a large wall of solar panels.

Ms. Matthews:

For example, an investor might say, "We're worried about climate change and we'd like to be thinking about exposures in our portfolio."

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Thematic Investing - Investing according to your interest in specific sectors or innovations

Ms. Matthews:

The third is thematic investing, and as it sounds, investors might chose a specific issue area or theme that they want to tilt the portfolio towards.

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A montage shows: a massive dam; young girls working together on computers; and construction workers building a house.

Ms. Matthews:

This can include funds that are environmentally focused, gender-diversity funds, or community development funds, all with a specific theme or issue area that a client is driving towards.

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Impact Investing - Invest in specific companies, organizations or funds that are doing work you want to support

Ms. Matthews:

The last is impact investing, and this is primarily found in the private capital markets. And an important distinguishing feature of impact investing is that the investments are made with intentionality. That means intentionality towards creating a certain social or environmental outcome.

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In a J.P. Morgan building, an executive looks over a report. Next, a client consults with an advisor in a spacious office, overlooking a metropolitan city. Next, two men in business suits shake hands. Next, a group of executives meet in a conference room. Then, a close-up of Ms. Matthews.

Ms. Matthews:

So how do we work with clients? Pulling it all together, there are several different steps we take if a client indicates that they'd like to explore a sustainable investing portfolio. Often the first step is actually just starting with education. Clients really want to bring us in to help them level set and understand what the space looks like and what these different approaches are that they could take. Second, we work with clients to develop their goals, asking several key questions like what are you trying to accomplish with your sustainable investing program?

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What are you hoping to accomplish through your sustainable investing program?

Ms. Matthews:

And are there certain issue areas that you want to tilt towards or perhaps remove from the portfolio?

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What areas in the sustainable investing space would you be interested in exploring?

Ms. Matthews:

And with implementation, we're really seeking to customize a portfolio along the lines of those goals that those clients described to us.

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In a stylish corporate lobby, two J.P. Morgan executives shake hands with two clients. Then, a close-up of Ms. Matthews.

Ms. Matthews:

We can do this across the entire portfolio, or if clients desire, we can just do it in certain parts of the portfolio in a more incremental way. But ultimately, our goal is to work with clients to implement both their financial objectives and their social and environmental objectives, and we really feel like we can do this in concert with each other. We feel like we're well positioned at J.P. Morgan to help you achieve your sustainable investing goals. Please feel free to call your J.P. Morgan advisor for more information.

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J.P. Morgan.

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There’s often a misperception that you have to sacrifice returns if you want your investments to be aligned with your values. But with the right tools and advice, you can achieve both your financial and sustainable investing goals.

Jessica Matthews

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