JP Morgan Asset Management’s investment stewardship specialists undertook 500 engagement discussions with 402 portfolio companies globally last year.
Engagement with 96 of these companies focused on at least two ESG factors. The team engaged 427 times on governance issues, 166 times on social issues and 110 times on environmental issues.
The stewardship team also met with regulators, exchanges, non-governmental organisations and other industry bodies to understand a wide range of regional and sector-specific issues and promote best practices.
Furthermore, the firm’s investment teams conducted several thousand meetings with companies that regularly addressed ESG issues.
‘Our integrated approach to stewardship involves active participation between the investment and stewardship groups, with shared meetings and collaboration on issues,’ said Andrew Robbens, an investment specialist in its international equity group.
JP Morgan’s key objective is to drive positive change by encouraging companies to set ambitious yet realistic targets. ‘We are long-term investors – many of our engagements aren’t single conversations,’ added Robbens. ‘They formed part of long-running discussions covering months or, in some cases, years.’
One example of an engagement activity that JP Morgan undertook was in relation to a UK utilities company held in several of their equity and fixed income strategies. Over recent years, the company has had a good track record of protecting its balance sheet and ratings. However, since appointing a new management team in 2019, and with the changes a new board introduced, JP Morgan engaged to discuss how it was also promoting diversity in the workplace. The utilities company believes diversity will drive better results, and its board has set an ambitious ESG strategy despite experiencing challenging operating performance. This includes a target, by 2030, of having attracted and developed 100,000 people with essential science, technology, engineering and mathematics (STEM) skills, and aims to have women make up 40% of its workforce. The company has also introduced a support scheme for workers with caring responsibilities, helping them balance their jobs with time spent supporting family members. JP Morgan will continue engaging with the company to monitor how it will achieve its ambitious target to have a 40% female workforce but believes that the company has a model to build the workforce for its future, helping staff develop vital skills and creating a more inclusive workforce to ensure the company delivers for its customers.
Actively voting is also an important element when it comes to engagement and influencing change. For example, in 2020, JP Morgan voted for the remuneration report at a large, UK-listed bank after the chair of the remuneration committee confirmed in an engagement meeting that the pension allowance for the CEO and CFO would be reduced and aligned with the wider workforce starting on January 1, 2020. In 2019, JP Morgan had opposed the binding remuneration policy vote, due to the remuneration committee’s refusal to incorporate their feedback regarding concerns around executive pension arrangements.