JP Morgan has rolled out JP Morgan Ethos Investments, a new sustainable investments platform for institutions and distributors looking to create tailored environmental, social and governance (ESG) products.
The new platform aims to offer the industry's "most diverse range" of fully-customisable products for clients looking to deploy capital in ESG investments and, although it is not targeted exclusively at the structured products market, it has "certainly" been developed with this market in mind, according to Rui Fernandes (pictured), head of equities structuring and fund-linked products, Europe, Middle East and Africa at JP Morgan in London. "The JP Morgan Ethos Investments platform is dedicated to retail and institutional investors, and it's a continuation of JP Morgan's efforts in ESG, where we have done a number of transactions, as well as partnered with index providers and fund managers," said Fernandez. "These partnerships were launched essentially to provide products to investors, but we realised that there is a growing trend and demand around ESG investments. This was a good opportunity to bring together all the capabilities we have through a platform that could be opened to other partners involved in this segment, such as index providers, issuers and fund managers to facilitate the delivery of index-linked and structured products."
Through the platform investors will be able to access passive indices, actively-managed funds and bespoke portfolios, across equity, credit and fixed income, and the bank will also include green and social bonds issued by highly rated supranational and corporate entities in the platform to combine principal protection and equity-linked upside potential. "We've teamed up with S&P DJI to develop a range of climate change/low carbon indices, a very topical theme in the market," said Fernandez. "Issuers, index providers and distributors are all increasing their capabilities to serve investors with ESG investments."
The US bank's goal is to expand the platform with new partners and investments but also to increase investor interest, said Fernandez. "Typically, the way we approach our partnerships is not by launching just a syndicated deal," said Fernandez. "The aim of the platform is to provide an overview of what is available in the ESG landscape and to allow customisation for clients."
The platform was designed to combine financial performance with clients' sustainability priorities, as well as to leverage the bank's "global presence and ability to customize investments to suit particular needs".
"The starting point is today's launch of a new range of ESG indices, including the S&P Europe 350 Climate Change LVHD Index, and we are hoping to develop other indices offering exposure to other markets," said Fernandez. "This segment of the market is getting increased attention, especially after the Climate Change conference in Paris at the end of last year, and we want to be part of this and provide products that make sense. The focus at this stage is not about increasing or driving sales, but on establishing JP Morgan's platform and encouraging investment, as well as positioning the bank as a key partner in this area."
The bank is one of the largest underwriters of green bonds globally, and products offered on the platform will build on its historical cooperation with the World Bank in the green and sustainable bond market. "JP Morgan's new sustainable investments platform is a welcome addition to expanding opportunities for investors who are looking to do well financially, while supporting investments that have a positive impact," said Heike Reichelt, head of investor relations and new products, World Bank, in a statement. "This year marks an important milestone for the international community with the agreement of the Global Goals that chart a new course for development over the next 15 years. Achieving these ambitious goals will require increased partnership between the public and private sector."
Tim Throsby, global head of equities at JP Morgan also said in a statement that the bank has seen "first-hand" the rapid rise in demand for ESG based products, as clients realize that the returns can be just as rewarding as with traditional products. "In what has previously been a fragmented market, this platform is designed to allow clients to choose from a wide range of benchmark indices and bespoke portfolios across asset classes," said Throsby. We expect it to open up a whole new investment base for companies that demonstrate strong ESG credentials, and bring opportunities for investors."
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