In Brief

JP Morgan adds double materiality ESG data service

The firm developed the new capability with data company Datamaran

JP Morgan has launched an investment research platform offering an ESG integration process based on financial and impact materiality, also known as double materiality.

The company has developed the ESG Discovery platform with ESG data vendor Datamaran and with input from JP Morgan’s equity research team.

Proprietary materiality assessment models have been constructed by the group based on data from corporate disclosures, mandatory regulations, voluntary policy initiatives and online media.

These sources provide signals on sentiment and anticipate which emerging topics are positioned to have an impact on financial markets.

According to Datamaran, the platform offers timely, high-quality information on material ESG risks and opportunities at both a company and sector level on an ongoing basis.

Functionality is split in to four main areas:

  • Company profiles show materiality scores of 35 ESG themes for a specific company and as well as views on how the company manages most material themes.
  • Thematic screening screens companies based on their management of a specific ESG theme across sectors.
  • Sector analysis displays materiality of 35 ESG themes for a specific sector.
  • Cross-sector analysis allows the investor to compare the materiality of 35 ESG themes across sectors.

Available to JP Morgan clients, ESG Discovery is intended to look beyond ratings to underlying drivers and make the asset manager’s work in this area searchable in one place through time.

Sophie Warrick, head of EMEA equity research and co-head of global ESG research at JP Morgan, said: “ESG Discovery will provide JP Morgan’s sector analysts with the unique ability to assess ESG issues according to a clients’ own ESG priorities, providing in-depth, fundamental and forward-looking opinions on ESG performance, which are increasingly important to our clients.”

She noted the use of a double materiality approach better serves clients’ needs by “addressing a broad range of ESG investment strategies, from ESG integration to impact investing.”

Datamaran’s CEO Marjella Lecourt-Alma also commented on the need for this dual perspective: “Looking at material risks from both a financial and wider sustainability perspective is becoming standard practice for investors and companies, and they both need a credible, robust and tech-enabled process to achieve that.”

This story first appeared on ESG Clarity Intelligence.

Putnam hires ESG leader from BofA

Jackie VanderBrug will help expand the company's sustainability efforts

Putnam Investments has hired a sustainable investment leader from Bank of America and Merrill Lynch for a new high-level role at the firm.

Jackie VanderBrug has been appointed Putnam’s head of sustainability strategy, reporting to CEO Robert Reynolds, the company announced today. Most recently, VanderBrug was head of sustainable and impact investment strategy in the chief investment office at Merrill and Bank of America Private Bank, a position she has held since 2018.

VanderBrug is on the company’s operating committee and “will lead a host of key ESG-focused business functions, such as stewardship, engagement and partnerships, and ESG strategy and integration,” Putnam stated. She will work alongside the company’s other sustainability-focused leaders: Katherine Collins, head of sustainable investing; and Catherine Saunders, head of corporate sustainability.

VanderBrug “will play an integral role in further expanding our firm’s focus in the critical realm of sustainability,” Reynolds added in the announcement. “At a time when ESG-related questions are rising in complexity and intensity, we are focused on further strengthening our investment-centric approach to these issues.”

Like other fund providers, Putnam has been expanding the ESG-themed products in its lineup.

This year, the firm has prepped or launched several ESG ETFs, and next year it plans to repackage its existing RetirementReady target-date series as the Putnam Sustainable Retirement Funds.

Alliance to End Plastic Waste members accused of ‘greencrowding’

Household names that have pledged to end plastic waste are 'barely making a dent'

Members of the Alliance to End Plastic Waste (AEPW) have been called out for being the biggest users of single-use plastic, while falling well short of meeting their own recycling targets.

Non-profit think tank Planet Tracker analyzed the 65 current AEPW members that have pledged “to end plastic waste in the environment and protect the planet” and found that in the first three years of a five-year target they have “barely made a dent” by only achieving just 0.04% of recycling targets.

Planet Tracker’s report of the findings, Barely Credible, also detailed how eight of the world’s top 20 single-use plastic waste makers are members of the AEPW, and 92% of all the current AEPW members did not publicly support the Business Statement for a Legally Binding UN Treaty on Plastic Pollution earlier this year.

Members include PepsiCo, ExxonMobil, Shell, Veolia, Procter & Gamble, Total and Mitsubishi Chemical Holdings.

There were further findings in the report such as two-thirds (68%) of the AEPW’s founding members also being members of the American Chemistry Council (ACC). That group recently campaigned against a tax on plastics in the US and opposes the Break Free from Plastics Pollution Act.

Planet Tracker also highlighted as more members have joined the AEPW, its plastic waste target has remained unchanged, meaning the average waste target per member has declined 56% between 2019 and 2021 – from 107Kt to 47Kt annually.

“Our findings lay out a clear picture of a coalition that is greencrowding – a sophisticated form of greenwashing that sees global corporates hide behind an appealing group title in order to justify moving at the pace of the lowest common denominator,” Thalia Bofiliou, senior investment analyst (plastics) at Planet Tracker, stated.

John Willis, director of research at Planet Tracker, added: “Ending plastic waste is a worthy aim … But it must be meaningful. For an organization called the Alliance to End Plastic Waste, a minimum aspiration should be to remove the plastic waste it produces itself.

“Instead, many members are choosing to invest heavily in the expansion of plastic production, while failing to fund even meager recovery and recycling targets through the coalition.

“The major plastic producers in the AEPW do not even remove or recycle 99.99% of their own plastic waste. So whilst the number of projects may be eye-catching, we must look at the data, which clearly demonstrates that collectively the alliance has barely made a dent.”

Planet Tracker’s report also highlighted the $1.5bn pledge by the AEPW members over a five-year period represents “only a fraction of their members’ financial capacity” and calls for further commitments including:

  1. Set meaningful targets for the removal and recovery of plastic waste that take account of the magnitude of the global plastic waste problem.
  2. Set bold targets for investment levels for members that will support meaningful plastic waste solutions rather than diverting cashflow to continued facility expansion.
  3. Recognize that virgin plastic production is a major part of the plastic pollution problem.
  4. Provide transparent, measurable and audited progress reports so that AEPW executives can be held to account, especially when missing inadequate targets.
  5. Members, strategic partners and supporters of the Alliance, which includes well-known consultants such as Bain & Company, BCG, IBM and McKinsey & Company, should conduct due diligence to question their exposure to reputational risk via the AEPW. 

ESG Clarity contacted AEPW for comment and the organization responded to say it disagrees with the Planet Tracker report and claimed it contains a number of factual inaccuracies – “especially the unsubstantiated, third-party data at its heart” – which
has caused them to reach a variety of incorrect conclusions.

It also said AEPW is working to integrate greater transparency into its
reporting framework and developing a set of certifiable impact metrics to better track and
measure the outcomes of the AEPW portfolio.

“Ending plastic waste in the environment is an ambitious endeavour that requires collective
intelligence, underpinned by a diverse network of stakeholders, resources and action,” a spokesperson commented. “We remain committed to fulfilling our mission by enabling the transition towards a global circular economy for plastic.”

Fund groups back PRI call for global sustainability disclosure

Investment firms among 65 companies to endorse statement from $121trn group

Calvert, Newton Investment Management and GAM Investments are among investment firms supporting a call from PRI for more uniformity in sustainability standards.

Today, 65 companies, investors and professional accounting firms endorsed a statement developed by the Principles for Responsible Investment. Those groups include the World Business Council for Sustainable Development and International Federation of Accountants – which combined represent $121.3trn in assets under management. The PRI statement calls for better alignment between how different regulatory bodies around the world are asking for sustainability to be reported.

The statement said it recognizes the efforts made by the International Sustainability Standards Board (ISSB), the US Securities and Exchange Commission, and the European Commission together with the European Financial Reporting Advisory Group, to address the need to enhance and evolve corporate reporting to include and consider sustainability information.

The ISSB, which was set up at COP26 in Glasgow last November, recently closed its consultation for feedback on its draft disclosure requirements. This was followed by a call from asset owners to go further to “ensure the consistency and appropriate granularity of disclosures, even for a global baseline.”

The SEC has also invited industry feedback on sustainability disclosure proposals. Those include an update to 2001 regulation to prohibit companies from putting a badge on products that don’t use factors in their name as primary ones in their investment processes, including ESG. It would also put funds into three different groups and require environmentally focused funds to report greenhouse gas emissions tied to their portfolios.

In light of different efforts being taken by regulatory bodies around the world, the recent PRI statement said, “current draft standards and initiatives are not technically compatible in terms of concepts, terminologies and metrics.”

It added that as these different sustainability-related disclosure requirements are refined and finalized, “we call for each initiative to pointedly avoid regulatory and standard-setting fragmentation by aligning key concepts, terminologies and metrics on which disclosure requirements are built.”

Therefore, the statement calls for a comprehensive global baseline of sustainability disclosures, which it said for investors would better allow for truly sustainable investment decisions.

The full list of firms endorsing the statement can be found here.

Pensions ahead of ESG funds on proxy votes

Defined-benefit programs have been more likely to support ESG resolutions

Public pensions are significantly more progressive when it comes to supporting shareholder resolutions that ESG-themed funds, according to analysis by Morningstar.

Last year, there was a record 34% support for ESG resolutions at US public companies. Public pensions voted in favor of ESG resolutions 90% of the time, while the ESG-focused mutual funds and ETFs supported those resolutions 85% of the time, on average, Morningstar found.

The report found six fund providers with higher rates of support for ESG votes than pensions: Amundi US (100%), Xtrackers (100%), Northern Funds (100%), Calvert (99%), American Century (99%) and TIAA/Nuveen (92%). Meanwhile, the report identified several big fund firms that lagged the ESG-focused funds average: BlackRock/iShares (74%), State Street (66%), Vanguard (51%) and Dimensional Fund Advisors (43%).

Compared with general shareholder votes, public pensions were much more likely to support resolutions around ESG governance (93% versus 43%) and worker protection (92% versus 51%), excluding vote results from company insider shareholders. The differences were less pronounced on diversity and inclusion (94% versus 73%) and climate change (86% versus 65%).

The report analyzed data from 72 ESG shareholder resolutions in 2021, with results from a sample of the biggest public pensions in the country, representing about $3.4trn in assets, according to Morningstar. The report used 2021 data, rather than from the current proxy season, as pension plans often have a lag time in reporting how they voted.

MetLife picks up fixed-income impact firm

Affirmative Investment Management has about $1.1bn in assets under management

MetLife Investment Management has made a deal to buy London-based fixed-income impact manager Affirmative Investment Management, the firm announced Monday.

The acquirer, which is the institutional asset management arm of US insurer MetLife, stated that adding Affirmative to its business “will advance MIM’s ESG investment and reporting capabilities as it seeks to deliver client solutions and long-term risk adjusted returns.”

Affirmative reports having more than $1.1bn in assets under management. The firm launched in 2014 and has supported about 2,800 projects through impact bonds in its portfolios, it states on its site. The company will be integrated with MetLife Investment Management’s investment teams following the closing of the sale, which is contingent on regulatory approval. The companies did not disclose the financial details of the pending sale.

“By combining AIM’s expertise with MIM’s commitment to sustainable investing, we will be even better positioned to provide comprehensive insight and counsel to clients and consultants on ESG considerations,” MetLife Investment Management president and MetLife CIO Steven Goulart said in the announcement. “MIM will maintain its fundamental investment processes, and AIM brings us additional capabilities to evaluate sustainability and risk considerations across our core competencies in public fixed income, private fixed income and real estate.”

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