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Technology and big data could drive sustainable investments

The JP Morgan Chase & Co. headquarters, The JP Morgan Chase Tower in Park Avenue, Midtown, Manhattan, New York.

Tim Clayton – Corbis | Corbis Sport | Getty Pictures

SINGAPORE — Whereas there’s “nothing new” to sustainable investing, know-how has made it simpler to state the monetary case for contemplating non-financial metrics, in keeping with JPMorgan.

“The quantity of knowledge that we’re in a position to leverage as traders to assist the dialogue that now we have with corporations is greater than ever,” mentioned Jennifer Wu, the financial institution’s international head of sustainable investing, throughout a panel session at Singapore’s FinTech Competition.

From synthetic intelligence to massive information and machine studying, the knowledge is now there to raised measure environmental components and their financial implications, she mentioned. Satellite tv for pc photographs, as an example, can now be used to look at and measure an organization’s true environmental impression, akin to air pollution ranges.

“That is one thing very highly effective,” mentioned Wu, noting a marked shift over the previous three or 4 years. “It is not one thing that we had entry to (beforehand), but it surely’s doable now.”

Exhibiting the cash

That would spell optimistic change for the sustainability agenda, which has lengthy fallen behind financial beneficial properties.

Finally, traders stay largely pushed by monetary returns, Wu famous. However the prevalence of knowledge means banks can now do a greater job of demonstrating to purchasers the potential beneficial properties and losses of such investments.

Jennifer Wu, JPMorgan’s international head of sustainable investing.


“The talk shouldn’t be a lot ‘I simply do not care’,” mentioned Wu, noting that the talk is about whether or not the assumptions are proper.

“Am I actually taking a look at a possible loss in worth in my portfolios or companies over the subsequent 5 years? Or is it extra like three years, or 10 years?,” she defined.

Coverage stays key

Nonetheless, public coverage stays essential to making sure environmental practices are appropriately applied and rolled out.

“The coverage setting issues quite a bit right here,” fellow panelist Elsa Palanza, Barclays’ international head of sustainability and ESG, mentioned.

Barclays has seen elevated curiosity for sustainable merchandise from purchasers of its company financial institution, who’re largely based mostly within the U.Okay. and Europe, the place environmental insurance policies are superior, Palanza mentioned. But requests from purchasers of its funding financial institution — which is basically centered on the U.S. — stay missing, mentioned Palanza.

“We are able to most likely fairly count on there to be some change, however we can also’t lean into that solely,” she famous, referring to the upcoming change within the U.S. administration as President-elect Joe Biden prepares to take over in January.

At present, the coverage instructions are a lot clearer and dedication from governments, policymakers, in addition to companies, are simply a lot, rather more prevalent than I might say three, 4 years in the past.

Jennifer Wu

international head of sustainable investing, JPMorgan

A lot work stays in that regard. Nonetheless, Wu mentioned she is “fairly optimistic.”

“At present, the coverage instructions are a lot clearer and dedication from governments, policymakers, in addition to companies, are simply a lot, rather more prevalent than I might say three, 4 years in the past,” she mentioned.

“Particularly this 12 months with Covid, one factor turned very clear: There’s simply a lot better appreciation for a way essential it’s that we have to be prepared for one thing that is so systemic, that’s so massive and will disrupt every part,” Wu mentioned. “I am very joyful to have, in my thoughts, much more constructive conversations with purchasers.”

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