Technology could help sustainable investing turn the nook, says JPMorgan

SINGAPORE — While there’s “nothing new” to sustainable investing, expertise has made it simpler to state the monetary case for contemplating non-financial metrics, in response to JPMorgan.

“The amount of data that we’re able to leverage as investors to help the dialogue that we have with companies is more than ever,” mentioned Jennifer Wu, the financial institution’s world head of sustainable investing, throughout a panel session at Singapore’s FinTech Festival.

From synthetic intelligence to large knowledge and machine studying, the data is now there to raised measure environmental components and their financial implications, she mentioned. Satellite photographs, as an illustration, can now be used to look at and measure an organization’s true environmental influence, comparable to air pollution ranges.

“That’s something very powerful,” mentioned Wu, noting a marked shift over the previous three or 4 years. “It’s not something that we had access to (previously), but it’s possible now.”

That could spell constructive change for the sustainability agenda, which has lengthy fallen behind financial positive factors.

Ultimately, traders stay largely pushed by monetary returns, Wu famous. But the prevalence of knowledge means banks can now do a greater job of demonstrating to purchasers the potential positive factors and losses of such investments.

“The debate is not so much ‘I just don’t care’,” mentioned Wu, noting that the debate is about whether or not the assumptions are proper.

“Am I really looking at a potential loss in value in my portfolios or businesses over the next five years? Or is it more like three years, or 10 years?,” she defined.

Still, public coverage stays necessary to making sure environmental practices are appropriately carried out and rolled out.

“The policy environment matters a lot here,” fellow panelist Elsa Palanza, Barclays’ world head of sustainability and ESG, mentioned.

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

“We can probably reasonably expect there to be some change, but we also can’t lean into that entirely,” she famous, referring to the upcoming change in the U.S. administration as President-elect Joe Biden prepares to take over in January.

Much work stays in that regard. However, Wu mentioned she is “pretty optimistic.”

“Today, the policy directions are much clearer and commitment from governments, policymakers, as well as corporations, are just much, much more prevalent than I would say three, four years ago,” she mentioned.

“Especially this year with Covid, one thing became very clear: There’s just much greater appreciation for how important it is that we need to be ready for something that’s so systemic, that is so big and could disrupt everything,” Wu mentioned. “I’m very happy to have, in my mind, a lot more constructive conversations with clients.”