2023 Investment Stewardship Report
Investor-led, expert-driven
April 2024

This report is as of December 31, 2023 and includes information that was obtained at an earlier date during the course of engagementswith companies or in the course of voting proxies. Such information has not been updated, verified or audited. The case studies
and examples are provided for illustrative purposes only and may not be updated in the future. While we view engagement as animportant part of understanding the risks and opportunities facing companies held in or client portfolios, such engagement may
not be effective in identifying such risks and opportunities and we do not guarantee any particular results or company performance
as a result of such engagement. The engagement statistics are approximations only and were derived from our internal research
notes to help identify engagements related to specific engagement priorities and sub-themes. Such information has not been
audited and no assurance can be made with respect to the accuracy or completeness of such information

FOR INSTITUTIONAL AND PROFESSIONAL INVESTORS ONLY – NOT FOR RETAIL USE OR PUBLIC DISTRIBUTION

Contents
3

Foreword

4

J.P. Morgan Asset Management

Part 1Engagement and voting in 2023

Part 2
Structures and practices supporting stewardship

6

Engagement in 2023: a year in review

100 J.P. Morgan Asset Management – Who we are11

Our approach to engagement

106 Governance of stewardship25

Climate change engagement and voting - 2023

112

People and resources

Natural capital and ecosystems engagement 41	117

ESG integration at J.P. Morgan Asset Management

Human capital management engagement and
47	

133

Client and beneficiary needs

54

Social stakeholder engagement and voting - 2023

Structures, processes, policies and procedures
139	

64

Governance engagement and voting - 2023

2023

voting 2023

supporting stewardship

Our approach to promoting diversity, equity,153	and inclusion

Strategy alignment with the long-term
75	

157

86

Engaging for sustainable outcomes

Appendix 2 – Global Stewardship Team
159	

88

Stewardship in Alternative markets

Appendix 3: Thought leadership publications 2023
162	

90

Proxy voting – how we utilized our rights in 2023

Appendix 4: Stewardship code mappings163	

engagement and voting - 2023

2Appendix 1 – Industry Groups

Biographies

2023 Investment Stewardship Report

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Foreword
The defining events of the decade thus far – the global pandemic,
conflicts in Ukraine and Israel, profound shifts in monetary policy,
and a persistent increase in global temperatures have challenged longestablished norms and risk-reward frameworks. The importance ofinvestment stewardship has increased as investors navigate uncertainty,
increasing risks, and emerging opportunities.
George Gatch

Against this backdrop, we are pleased to launch J.P. Morgan AssetManagement’s fourth annual Investment Stewardship Report.

Chief Executive Officer,
J.P. Morgan Asset Management

As an active investment manager and a fiduciary, we have a deeply held
conviction that in-depth research and rigorous analysis – by experts acrossfunctions, sectors and regions – are key to delivering long-term riskadjusted returns for our clients. Our approach to stewardship is alignedwith this vision, and we consider active engagement as an important
tool to maximize shareholder returns through industry participation and proxy voting across asset classes.
We leverage the power of J.P. Morgan Asset Management’s access and expertise across global markets andcontinue to deepen our commitment to fundamental research and expand the resources supporting our overall
investment stewardship programs.
We seek to deliver stronger financial outcomes, including by focusing on the most financially material
environmental, social and governance (ESG) issues that we believe impact the long-term performance ofcompanies in which we invest. Additionally, we advocate for robust corporate governance and sound businesspractices. We believe that understanding financially material ESG factors plays an important role in delivering longterm value creation for our clients. Our efforts are supported through one of the largest buy-side research networks
of approximately 300 equity and credit analysts globally, complemented by a dedicated stewardship team.
During 2023, we engaged with hundreds of companies globally to better understand and encourage them todevelop and adopt their practices to manage risk and create long-term shareholder value. Our engagement
continued to be shaped by important medium- and longer-term material financial risks and opportunities faced
by investee companies around our six stewardship priorities. These were climate change, natural capital andecosystems, human capital management, social stakeholder management, governance, and strategy alignment
with the long-term.
We engaged with companies in carbon-intensive industries on how they are navigating the risks and opportunities
associated with the energy transition – including state-owned companies and those based in the Gulf States inlight of Dubai hosting the COP28 Climate Change Conference. The stability and solvency of financial institutions
was also a major issue of discussion – and questions that the banking industry faced during the 2008 global
financial crisis were once again back in the spotlight. Also, the challenging issue of how companies manage
human rights risks, especially in supply chains for a wide range of industries, was a topic of engagement during
this period of conflict.
On behalf of J.P. Morgan Asset Management, we hope you find our report useful in understanding the importantrole our investment stewardship plays as part of managing risk and generating long-term returns for our clients.
Thank you for your continued feedback, trust and confidence.

J.P. Morgan Asset Management

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J.P. Morgan Asset Management
JPMorgan Chase & Co.

J.P. Morgan Asset & Wealth Management

JPMorgan Chase & Co. (the ‘Firm’) is a leading financial
services firm based in the United States of America(‘U.S.‘), with operations worldwide.

J.P. Morgan Asset & Wealth Management is a global
leader in asset and wealth management services.
The Asset & Wealth Management line of businessserves institutional, ultra-high net worth, high net worth
and individual clients. With combined overall client
assets of USD 5 trillion and assets under managementof USD 3.4 trillion as of December 31, 2023, we are one of
the largest asset and wealth managers in the world.

JPMorgan Chase & Co. had USD 3.9 trillion in assets and
USD 328 billion in stockholders’ equity as of December
31, 2023. The Firm is a leader in investment banking,financial services for consumers and small businesses,
commercial banking, financial transaction processing
and asset management. Under the JPMorgan andChase & Co. brands, the Firm serves millions ofcustomers in the U.S. and globally including many of
the world’s most prominent corporate, institutional andgovernment clients.1

J.P. Morgan Asset Management (JPMAM) is themarketing name for the investment managementbusinesses of JPMorgan Chase & Co. and its
affiliates worldwide. Unless otherwise noted,
the focus of this report throughout is on J.P. Morgan
Asset Management. 2
It is a leading investment manager of choice for
institutions, financial intermediaries, and individual
investors, offering a broad range of core and alternative
strategies, with investment professionals operatingin every major world market providing investment
expertise and insights to clients. J.P. Morgan AssetManagement oversees more than USD 2.9 trillion
in client assets under management globally as ofDecember 31, 2023.
For more detail, please see the section J.P. Morgan
Asset Management – Who we are.

1

2

4

This report describes J.P. Morgan Asset Management’s approach to investment stewardship. Please note that J.P. Morgan Asset Management’s
approaches are separate from JPMorgan Chase & Co. References to “we” or “our” in this document refer to J.P. Morgan Asset Management and not
JPMorgan Chase & Co.
In 2023, J.P. Morgan Asset Management acquired 100% ownership of its former China joint venture, which has now been renamed as JPMorgan AssetManagement (China) Company Limited (“JPMAM China”). Integration of JPMAM China into the global framework of J.P. Morgan Asset Management iscurrently in progress. Descriptions in this report concerning J.P. Morgan Asset Management, therefore, may not fully apply to JPMAM China at thetime of publication.

2023 Investment Stewardship Report

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Part 1Engagement and voting in 2023

J.P. Morgan Asset Management

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Engagement in 2023: a year in review
In 2023, there continued to be significant interest in the stewardship practices of the asset management industry
from clients and stakeholders worldwide. What continued to hold firm was our conviction that engagement and proxyvoting should be shaped by in-depth active research, driven by investment outcomes, and focused on the mostfinancially material issues. This allows us to be stewards of capital in the best long-term interests of our clients.
In our entire Global Stewardship Program, we engaged
1,238 companies in 50 countries across 28 sectors.
This is slightly lower than our figure from 2022 where
we engaged 1,371 companies, which is reflected in
our focus on depth of engagement as opposed tooutright volume.

We continually work to improve the transparency,
quality and impact of our stewardship reporting.
We integrate feedback from clients, peers and industry
organizations to continue to improve our program.
In the following thematic chapters, you will find threeareas of focus for improvement:

The in-depth engagements included in our Enhanced
Engagement Program continued to be the focus
of much of our time and effort. We engaged 453
companies in this program in 2023. This included
companies on our global focus list. For full details on
the Enhanced Engagement Program, please refer tothe section Our Approach to Engagement.

1.	We have expanded our case study reporting
beyond individual examples to highlight wider
sector, regional or structural trends. By placingcase studies in this context, we demonstrate how
company-specific issues interact with wider trends
and how our research-driven approach allows us
to encourage companies to develop best practices
through engagement. Examples of this include our
deep-dive on the cobalt supply chain in the Social
Stakeholder chapter; our regional spotlight on Gulf
State engagements in the Climate Change chapter;and our focus on industry-wide risks within the UK
water utility sector in the Natural Capital chapter.

While our engagement continued to be driven by
our discussions with investee companies in major
markets such as North America, Europe and the UK,
Japan and East Asia, we extended our efforts in the
Gulf States markets especially ahead of the COP28
Climate Change Conference, which took place in the
United Arab Emirates (UAE) at the end of the year.
These engagements were often with state-owned
energy or electric utilities companies on their plansto address climate transition risks. Many were solely
bondholder engagements as the issuers did not always
issue public equities.
From a thematic perspective – the top three areas ofengagement by issues were human capital, climatechange and governance. These remain unchanged
from the previous year. This year we ramped up ourwork on the theme of natural capital and ecosystems,
which we began in 2022. More details are provided
in the following sections, which report on our
engagements by each stewardship priority theme area.

6

2.	In 2023, we increased our engagement withsovereign issuers, and this report includes a casestudy highlighting engagement with the Republicof Indonesia on green sovereign debt in the Climate
Change chapter.
3.	We have expanded our disclosure on how we voteclimate-related shareholder resolutions. We haveprovided a more granular breakdown of votes
by type of resolution, which offers further insight
into how we evaluate proposals in the Climate
Change chapter.

2023 Investment Stewardship Report

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Engagement in 2023: a year in review continued
2023 Engagement in numbers

1,238

50

28

Number of companies engaged

Number of markets engaged

Number of sectors engaged

9%

62%

29%

Engagements with board directors(incl. Chair)

Engagements with senior
executives

Engagements with other company
representatives including operational
specialists and investor relations

453
of which were in our Enhanced
Engagement Program

Engagement by ESG area

Engagement by ESG theme*

ESG area%

Environmental

31

Social40

Governance29

8%

Climate change

22%

10%

Natural capitaland ecosystems
Human capital
8%

19%

Social stakeholder
engagement
Governance

13%

21%

Strategy alignment
with the long term
Other themes* Percentages may not add up to 100 due to rounding.

J.P. Morgan Asset Management

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Engagement in 2023: a year in review continued
Engagement by market

48
29
7
24

20

47

28
14
4
13

34

40

5
27

30
10

31
6

49

1

8

Argentina

2

Australia

3

Austria4

Belgium

5

BermudaColombia

0.2%

19

Indonesia

2.8%

11

Denmark

0.6%

20

Ireland

1.1%

0.2%

12

Finland0.3%

21

Israel

0.0%

0.5%

13

France

2.1%

22

Italy

1.0%

0.0%

14

Germany

2.4%

23

Japan

10.2%

0.8%

6

Brazil2.2%

15

Greece0.1%

24Luxembourg

0.2%

7

Canada0.7%

16Hong Kong

2.3%

25

Macau

0.5%

8

Chile

0.2%

17

Hungary

0.0%

26

Malaysia

0.4%

10.8%

18

6.6%

27

Mexico

1.4%

9

8

10

0.0%

China

India

42
22

48

1

4

11

2023 Investment Stewardship Report

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Engagement in 2023: a year in review continued

12

41

33
3

17

45

15

39

9

21

36

35

46

18
25

16

23

43

44
50
26

32

37
19

2
38

28

Netherlands

1.6%

37

Singapore

0.4%

46

United Arab Emiratea

0.4%

29

Norway0.7%

38South Africa

0.6%

47

United Kingdom

12.0%

30

Panama0.0%

39South Korea

2.9%

48

United States

24.3%

31

Peru

0.1%

40

Spain

0.8%

49

Uruguay

0.3%

32Philippines

0.0%

41

Sweden1.0%50Vietnam

0.2%

33

Poland0.4%

42

Switzerland

1.8%

34

Portugal

0.2%

43

Taiwan

2.0%

35

Qatar

0.1%

44

Thailand

0.5%

1.2%

45

Turkey0.1%

36

Saudi Arabia

J.P. Morgan Asset Management

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Engagement in 2023: a year in review continued
Engagement by market

Sector%

Sector%Materials

Capital Goods
11.8

10

9.5

Utilities

6.8

Energy

6.2

Banks

6.0

Food, Beverage & Tobacco

6.0

Pharmaceuticals, Biotechnology

5.1

Health Care Equipment & Services

4.1

Consumer Discretionary

3.5

Technology Hardware & Equipment

3.5

Consumer Durables & Apparel

3.4

Financial Services

3.2

Consumer Services

3.2

Insurance

3.0

Semiconductors & Semiconductor

3.0

Software & Services

3.0

Commercial & Professional Services

2.9

Transportation

2.7

Media & Entertainment

2.6

Automobiles & Components

2.4

Household & Personal Products

2.4

Consumer Staples Distribution

2.3

Equity Real Estate Investment

1.5

Telecommunication Services

1.0

Real Estate Management & Development

0.8

Other Industries

0.2

Diversified Financials

0.1

Sovereign0.1

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Our approach to engagement
J.P. Morgan Asset Management has deeply held convictions that in-depth investment research and rigorous
analysis by experts are key to delivering long-term, risk-adjusted returns for our clients. Our approach toengagement is aligned with this vision and is an important part of our investment processes.
Engaging investee companies in dialogue andencouraging sound environmental, social andgovernance (ESG) practices is an important componentof how we deliver our investment stewardship strategy.
Our engagement is based on our in-depth investment
research on companies, alongside our assessment ofmacroeconomic drivers, sector-specific factors andfinancially material ESG themes.
This research insight enables us to act proactively
and encourage investee companies to acknowledge
issues and improve practices before risks are realized
and opportunities are missed. This is how we seek todrive impact in our investment stewardship activity
and advocate for sound practices at our investee
companies. We believe this will ultimately preserveand enhance asset value.
Our engagement is based on these four principles:• Intentionality: We are determined to act in the bestinterests of our clients by encouraging investee
companies to focus on prudent allocation of capitaland long-term value creation.
• Materiality: We strive to understand how factors

impacting sustainability are financially significant to
individual companies over time, understanding thatthe regions, cultures, and organizations in which weinvest differ greatly.
• Additionality: We focus on strategic issues that are

Investor-led, expert-driven engagement
Our engagement model is built on an investor-led,expert-driven approach and leverages the knowledge ofmore than 1,000 investment professionals around theworld, working in close collaboration with investment
stewardship specialists. Our engagement process
benefits from the longstanding relationships ourinvestment teams have with local investee companies,
through regular interactions with board directors andchairs, senior executives, and CEOs. We believe thiscollaborative, well-resourced approach enables us
to recognize significant risks early and identify newopportunities, supporting our goal of generating
attractive risk-adjusted returns.
Combining our ESG research capability with theexperience and skill of our investment teams and theexpertise of our investment stewardship specialists
gives us a deep understanding of the risks andopportunities facing different sectors, industries,
and geographies. By integrating this expertise into
a global common platform, we seek to maintaina consistently high standard of engagement,
considering the myriad of nuances a responsible
investor needs to embrace. Through engagement,
we seek to encourage long-term sustainable outcomesin investee companies.
Ultimately, the objective is to build stronger and more
resilient portfolios for our clients.

most urgently in need of our involvement in orderto deliver better long-term returns to our clients.
We believe that as large investors, we have the ability
to put our resources to work towards achieving theoutcomes we seek on behalf of our clients.
• Transparency: We seek to be clear about theinvestment stewardship work we do and take steps tobe transparent to our stakeholders, as we expect thesame from investee companies.
It is also worth highlighting that alongside the ongoing
dialogue that we have with investee companies
throughout the year, proxy voting at annual general
meetings is another key tool we utilize in our investment
stewardship activities. Demonstrating our views
through proxy voting is increasingly relevant across ourInvestment Stewardship Priorities.

J.P. Morgan Asset Management

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Our approach to engagement continued
Having fully reviewed the priorities last year, 2023 was
the first full year of working with natural capital andecosystems, the sixth and newest priority theme. This isan extensive topic which looks at economic activity andits relationship with the natural world. Issues include
the extraction of natural resources and their use inindustrial production and other business activity,
waste and recycling, the concept of circular economy
and sustainable systems of production. Like climate
risk over the past decade, we believe that natural
capital and ecosystems will continue to emerge as animportant investment and stewardship consideration in
the coming decade because of the financial impact on
the long-term value of companies.

J.P. Morgan Asset Management Engagement Model
Top-Down - Investment Stewardship Team
Sustainability focused research and focus-list engagement

Escalation

Identification of issues
Engagement
Proxy voting
Outcome monitoring

Fe edback LoopFe e db ack Lo

Within each priority area, we have identified related
sub-themes that we are seeking to address overa shorter timeframe (18-24 months). These subthemes will evolve, over time, as we engage withinvestee companies to understand issues andpromote best practices.

op

Bottom-Up – 1,000+ investment professionals

Financial materiality focused research and portfolio construction

Source: J.P. Morgan Asset Management, as of December 31, 2023.

J.P. Morgan Asset Management’s six
Investment Stewardship Priorities
We have identified six Investment Stewardship
Priorities that we believe can be broadly applied in our
engagement efforts and will remain relevant throughmarket cycles. These priorities address the ESG issues
that pose the most significant long-term material
financial risks to our investments, while also presenting
the greatest opportunities. Engaging on these topics istherefore important to delivering value to our clients.

Environmental

Climate change

12

Natural capitaland ecosystems

This combination of priorities and evolving themes
provides a structured and targeted framework
for engagement for our investors and Investment
Stewardship team globally.

SocialHuman capitalmanagement

Governance

Stakeholder
engagement

Governance

Strategyalignment withthe long term

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Our approach to engagement continued
As we delve deeper into each of the six priorities inthis report, we highlight specific engagement casestudy examples that address the key areas of materialchange we seek to drive at our investee companies
to manage risk and improve investor value. We also
provide examples of how these issues are influenced
through our proxy voting activity.
It’s important to note that while we believe thesesix priorities to be relevant across asset classes,
strategies, and geographies, we acknowledge that ourengagement activity will reflect material differences
between industries, regions, and financial markets.
For example, in the area of human capital management,
U.S. engagements have focused on labor practices attechnology and consumer-facing services companies;
in Asia, the focus has been on the global supply
chain. The same issue can differ by industry: We may
ask a clothing retailer to provide its Tier 1 supplier
list due to concerns regarding supply chain risk,
but we would rarely request this information from aninsurance company.
Similarly, within climate change engagements withextractive industries, methane emissions figure more
prominently in discussions with North Americancompanies given the position of the U.S. and Canada
as a large oil and gas producer and the existing andproposed methane regulation by environmental
agencies. Discussions in emerging markets where
there may be less regulation, on the other hand,
may focus on providing meaningful transparency onemissions performance.
Within long-term alignment engagements, engagementin the U.S. emphasizes pay for performance alignment
given the quantum, and increasing complexity,of compensation plans. In the UK, compensation
discussions have focused on equity and the generous
pension terms granted to executives versus regular
employees. In many other markets, we still seek
meaningful information on establishing basic goodpractices around executive pay.

Our Investment Stewardship Program
In 2023, there were thousands of meetings between
our investment team members(e.g., research analysts
and stewardship experts with board directors, senior
management, and operational experts from investee
companies). The focus and purpose of our discussions
are shaped and informed by our in-depth analysis ofJ.P. Morgan Asset Management

investee companies’ strategy, financial performance,and key practices on ESG issues with material
financial impact (please refer to the section on ESG
Integration for full details). Through our regular andongoing interactions with companies, we discuss arange of issues including financially material ESG
factors, and we highlight areas of good practices
we believe they should aspire to. We systematicallytrack and monitor these interactions as part of ourCore Stewardship Program. Through this program,
we focus on issues that we believe investee companies
should address to protect value by minimizing risk
and creating value by capitalizing on opportunities.
We assess companies’ response to engagement andmonitor over time the progress being made, including
around the transparency of sustainability practices.
Alongside our dialogue with investee company
representatives, proxy voting is also an importantcomponent of our approach.
However, we also recognized that there is a need for a
program of in-depth engagements. These are cases
where we allocate more of our time and resources toengaging a narrower group of companies which our
research and analysis have identified to be of need.
Our Enhanced Engagement Program aspires to meetthe expectations of our global investment teams acrossasset classes, and of our clients and stakeholders
around the world, to manage risk and promote longterm shareholder value at investee companies thatmost merit our time and attention.
The three key pillars of our Enhanced Engagement
Program are:Focus list: This is a list of companies in our portfolios
held in equities and corporate credit, which includes
companies that issue no public equity and are bondonly issuers, where we have meaningful investment
exposure, and our research has identified an area or
two of financially material ESG risks and opportunities.
This list is agreed upon with the relevant JPMAM
investors. We assess our ability to drive improvement
through engagement with these companies,
considering issues such as our previous track record,
the company’s acknowledgement of the issue andbroader regulatory factors shaping the circumstance.
We then establish clear objectives up front and seek toencourage companies to consider changes over thecourse of 18-36 months, depending on the complexityof the change required. Key focus issues are largely

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Our approach to engagement continued
around our six Investment Stewardship Priorities where
we have in-house expertise, but we are not limited
to such topics, as the issues can be quite companyspecific in nature.
The focus list in 2023 consisted of approximately 130
companies. Progress of engagement is regularly
monitored to assess next steps and is a key component
in the periodic review of the inclusion of the companies
on the list.
Thematic projects: Alongside the focus list, we run
engagement initiatives on specific themes aligned withthe six Investment Stewardship Priorities, where wetarget a broader number of investee companies on thesame set of issues. The aim is to engage around 30–40
companies through the lifetime of a particular project.
For example, in 2023, we started a thematic project withregard to human rights risks associated with criticalmineral sourcing at investee companies. More details
on this project are to be found in the social stakeholder
engagement section.
Reactive engagements: While we endeavour to ensurethat our proactive engagement can encourage ourinvestee companies to be more resilient to ESG risks
and more alert to capitalizing on opportunities, there
are always corporate actions, notable events, major
developments, controversies, norms breaches andmatters arising from the proxy voting process that
require reactive engagement. This can also include
long-running issues being uncovered with regard
to controversial corporate practices, products andservices. For more details on this, please refer to theReactive Engagement section of this report.

Establishing objectives and evaluating
progress
The objectives for engagements are set using
a variety of inputs and guidelines, ranging fromproprietary analysis and guidance provided by ourinvestment teams to our proxy voting guidelines andthe expectations set in the six Investment Stewardship
Priorities. For example, with collaboration from JPMAM
investors, we may identify problematic features
incorporated in, or absent from, a company’s executive
remuneration plan. We may define the objective as theremoval or inclusion of such features.

14

Monitoring of progress on engagements is facilitatedby setting engagement objectives and systematicallyusing our documentation system to identify the statusof the engagement. Further discussion on engagement
tracking can be found in the Engagement Progress,
Milestones and Failures section.

How we engage with companies
Engagement with investee companies can be
conducted through in-person meetings, video or phone
calls, speaking engagements, formal letters or emails,
and field trips. This is largely done on a one-to-one
basis, but we work in collaboration with other asset
managers, where permitted, and we consider it to bean effective approach to progress the engagement.
Please refer to the section on Collaborative
Engagement for more details.
We enjoy good access to companies and, as aresult, many of our engagements are conductedwith representatives at senior levels of the company.
This includes the board of directors, senior executives,
general counsel, and operational specialists from thecompany who have subject matter expertise, such asheads of compensation, heads of diversity, equity andinclusion or investor relations.
Increasingly, our interactions with companies in theCore Stewardship Program on ESG issues are led byinvestment research analysts responsible for primary
coverage of the company in equity and corporate
bonds. They are supported by the thematic expertiseon ESG issues by the Investment Stewardship team.
The team also provide engagement training toinvestment teams. In 2023, there were in-depth training
sessions for engagement teams around the world on
high-quality engagement, which were led by our Global
Head of Investment Stewardship. They were done inperson in Tokyo and London and an online session
for global bond investment teams worldwide on fixedincome engagement. The Team followed this up withspecific training sessions on certain themes such as
climate change and how it is material to financial risk
and investment outcomes.

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Our approach to engagement continued
We consider it to be a key part of our approach to
ESG integration that the investors should play anactive and visible role in driving stewardship, whichshapes the long-term investments they seek tohave with investee companies. This is critical to ourinvestment success, in the quality of engagements
and the push for clear outcomes in a time-boundfashion. Generally, it can take several years before
our engagements yield tangible results; we expect anengagement timeframe of about three years before
our milestones are achieved.
Our view is that for most material ESG issues,
our JPMAM equity and fixed income investors generally
have the same view as to what is in the best long-term
interest of the company. This is now backed up by
experience where there is growing collaborations on
engagement between our colleagues in Fixed Income
and Equities teams. We note that there are some issues
on which they may diverge, such as capital structure or
magnitude of buybacks.
Engagements involving voting issues related to annual
stockholder meetings, also referred to as annual
general meetings (AGMs), are attended by equity
investors in addition to members of the Investment
Stewardship team.

Escalation
Engagements with targeted companies are
documented, allowing us to monitor the stageof engagement. There will be times when,
despite prolonged engagement, our concerns
around managing risks and increasing and preserving
the long-term value of our client accounts have notbeen addressed. Under such circumstances, we mayundertake the following forms of escalation dependingon the circumstances:• meetings with non-executive directors, a leadindependent director or chair;• voting against management and the non-executive

directors;• communication to the chair or lead independent

director disclosing our voting rationale;• collaboration with other investors or public statementswith other investors as appropriate; and• reduction in holdings or divestment in certain cases.

It is important to note that while these engagements
may be unsuccessful, securities of companies may
be purchased and retained for reasons other thanfinancially material ESG factors.
We will escalate concerns having reviewed thepotential benefits of such action on our objectives,
while ensuring we are always acting in the best
long-term interests of our clients. Our approach to
escalation considers the facts and circumstancesof each specific case. However, we note that voting
escalation is principally aimed at equity holdings rather
than other asset classes where the opportunity tovote is far rarer. We do not generally differentiate ourapproach to escalation based on geography or fundtype – unless there is a valid reason (e.g., our approachto proxy voting for Russian companies following the2022 invasion of Ukraine or certain votes specific tosustainable strategies).

J.P. Morgan Asset Management

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Our approach to engagement continued
Case study – escalation
POSCO Holdings Inc

South Korea

Equity, Bonds

Issue
POSCO’s subsidiary in Turkey, POSCO ASSM TST, has faced allegations of human and labor rights violations.
The company denied the allegations.

ActionWe have been engaging with POSCO since 2021 regarding its practices on labor rights firm-wide, particularly
in Turkey. Initially, we held one-to-one meetings with POSCO’s representatives. The company stated that
POSCO had been following the local rules and regulations. We emphasized the importance of following
global best practices on labor and human rights management, as well as reporting and disclosure.
We shared examples of other companies’ handling of labor and human rights issues, including a case that
happened in Turkey and had similarities with the POSCO’s case.
Despite having multiple individual engagements with the company, including meetings with its board
members, we have seen slow progress in resolving the labor issues in Turkey. Our concerns have noteased, and we believe this may translate into long-term investment risk as shareholders and bondholders.
To escalate the issue, we chose to participate in the UN PRI Advance program.

OutcomeOn a positive note, we have seen improvement in the company’s public disclosure related to laborand human rights. POSCO Holdings is working with its Turkey subsidiary to find ways to resolve the issues.
We will continue to engage with POSCO.

Collaborative engagement
Collaborative engagement is defined by JPMAM
as when we have joint-dialogue alongside otherinstitutional investors with investee companies
on financially material issues. Such collaborative
engagement can occur, for example, throughdirect meetings with a company, via joint written
communication to a company requesting more
information on a given topic or investor calls.
Most of our engagements are one-on-one dialogues withcompanies, but there are cases where we also consider
that collaborative engagements can be an effective
way to impress upon companies common concerns
shared by investors and understand individual company
situations with respect to their exposure to financiallymaterial risks and opportunities and how these affectinvestor value. We find collaborative engagement
to be effective when one-to-one engagement is not
resulting in meaningful response and/or progress in theengagement over time.

16

The focus for us on collaborative engagement is nodifferent to one-to-one engagement; it is to utilize ourinvestor rights and meet our fiduciary duty to deliver
the best long-term outcome for our clients. It is basedon understanding risks that are financially material
to investee companies and stating our expectations
for the robust and rigorous management of suchrisks, so it does not harm investor value. This includes
assessing how companies are taking advantage ofcompetitive opportunities to innovate in response
to consumer demand and regulatory requirements
around the world.
Collaborative engagement is supported by andencouraged by regulators, in certain markets, on certain
issues. For example, in the UK, climate change industry
collaboration is seen as important and expected.
While adhering to all applicable rules and regulations,such as antitrust and competition laws, we believethat collaborative engagements can allow for effective
communication of investor concerns to companies.

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Our approach to engagement continued
With recent media attention on collaborative
engagements, it is important that clients understandwhat “collaborative engagement” means and does notmean. For example, while collaborative engagements
involve multiple investors (such as other asset
managers) with common concerns around risks
and opportunities facing individual companies,
each investor makes its own investment and proxyvoting decisions. JPMAM does not share competitively
sensitive information concerning its client accounts or
its investment decisions with other investors. It does
not work in concert with other investors on investment
matters and makes its own independent decisions
concerning investee companies including how tovote proxies and whether to change its allocations,invest in or divest from an investee company. Investee
companies make their own strategic decisions basedon their own assessment of the balance of views fromvarious parties.

Human capital and human rights
initiatives
We believe effective management of human rights risks
can mitigate reputational, regulatory and legal risks
amongst others and, ultimately, is in the best interestof shareholders and our clients. Starting in December
2022, we became a participant of Advance, aninvestor-led initiative coordinated by the UN-supported
Principles for Responsible Investment (PRI), with theobjective of increasing respect for human rights andencouraging positive outcomes for people throughinvestment stewardship. We view these objectives
as important to the long-term value of companies
in which we invest, considering the evolving humanrights due diligence regulatory framework and theirlegal, reputational and financial implications. We are
involved in social and human rights discussions withPOSCO and Nippon Steel because of our concerns
regarding specific reputational and financial risksfacing such companies.

J.P. Morgan Asset Management

Janet Wong, social and human rights lead,
speaking at PRI Stewardship Forum in Melbourne
about our experience in co-leading POSCO
engagement through PRI Advance in May 2023.

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Our approach to engagement continued
Governance initiatives
Governance-focused initiatives such as the UK 30%
Club Investor Group, of which we have been a member
since 2012, continued to be an area of focus in 2023.
We are also a member of Japan 30% Club Investor
Group and its Best Practice Working Group and its Best
Practice Working Group and a member of 30% Club
Hong Kong Investor.
We continued our engagement through ourmembership of the 30% Club Hong Kong Investor
Group, which started in 2022. Alongside four othermembers, we reached out to 27 Hong Kong-listedcompanies with single-gender boards to better
understand their board nomination process,their approach to board diversity as well as theirwider diversity and inclusion strategy. As describedin our Governance Engagement and Voting section,
we believe there is a strong positive correlation
between high governance standards and shareholder
returns, which includes seeking diverse perspectives
on the board. Out of the 27 companies, 10 haveappointed female directors to the board in 2023.
Noticeably, the Stock Exchange of Hong Kong will nolonger allow single-gender boards, demonstrating
the importance of our engagement in encouraging
companies to prepare for regulatory change. In Hong
Kong, issuers have to appoint at least one director of adifferent gender by December 31, 2024.
The Asian Corporate Governance Association (ACGA)
is an important industry body we have been working
with on corporate governance issues in Asia. We area member of its China Working Group, Korea Working
Group and Japan Working Group. Meeting with investee
companies to discuss their governance issues,
including their governance of material issues, are key
activities of these country working groups. In 2023,
we have engaged with other investors and with anumber of Chinese companies. We also participated in
the ACGA Exchange Meeting in April 2023 and its annual
conference in November 2023.
To learn more about our governance work, please referto the Governance Engagement and Voting section.

18

Climate change• Asia Investor Group on Climate Change – member• Institutional Investors Group on Climate Change –member• ICMA Green and Social Bond Principles – memberof the Climate Transition Finance Working Group• London Stock Exchange – member of the

Sustainable Bond Market Advisory Group• Net Zero Asset Managers initiative – signatory• The Sustainable Markets Initiative – member ofthe Asset Manager and Asset Owner Task ForceOther sustainability topics• UK Investment Association - our EMEA CEO PatrickThomson serves as the Board Chair. We also sit
on various groups including the Stewardship
Reporting Working Group.

Human capital management and diversity• Hong Kong 30% Club – co-lead of diversity

engagement with Hong Kong-listed companies
with single-gender boards• Japan 30% Club – member• Principles of Responsible Investment – participant

in its human rights initiative Advance

Governance• Asian Corporate Governance Association –member of China, Japan and South Korea Investor
Working Groups• UK Financial Conduct Authority – member of Vote

Reporting Group

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Our approach to engagement continued
More transparency is required for proxy voting
To find ways to enhance disclosure, transparency and standardization of vote reporting, the UK Financial
Conduct Authority (FCA) convened a Vote Reporting Group in 2022, of which we are a member. The key
objectives of the working group are to develop recommendations on minimum vote reporting requirements
for asset managers. These objectives are aligned with our stewardship commitments to help standardize andenhance voting disclosure by asset managers in the market. In June 2023, the Vote Reporting Group issued
a consultation and discussion paper to propose a voluntary, standardized and comprehensive vote reporting
template for asset managers.

Engagement progress, milestones, and failures
We have implemented an approach to tracking
engagement progress and recording milestones where
objectives have been achieved. The aim is to makesure our engagements have a positive impact on risk
and value at individual companies and that investee
companies are responding in a constructive fashion
over time.
It also allows us to identify areas where progress is slow
and enables constant improvement of our engagement
methodology and framework to achieve better
outcomes for our clients.
In 2023, we continued to evolve and strengthen our
approach to tracking engagement progress andrecording milestones and engagement failures.
Our newly established ESG engagement recording
system in our Spectrum™ technology platform enables
systematic tracking of engagement progress.

J.P. Morgan Asset ManagementWe identify financially material ESG issues at investee
companies held in our portfolios and then initiate ourengagement by discussing our concerns with companies
and subsequently asking them to identify actions toaddress issues we believe are important for our client
accounts. In most cases, engagement can take time toprogress. It takes time before the board or management
acknowledges an issue and starts to define andimplement a roadmap of action to deliver meaningfulchange. Sometimes, issues we raise in our engagements
can lead to the investee companies determining to makestructural and organizational changes that are not easyor quick to achieve, and that have impacts on businessmodels, strategy, and investments. Generally, it can takeseveral years before our engagements yield tangible
results; we expect an engagement timeframe of about
three years before our milestones are achieved.

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Our approach to engagement continued
Our approach to engagement progressand milestone tracking
In order to check our engagements are on track andprogressing over time, we have established four stages
in our engagement journey. The progress stages are:1

Issues raised to the company

2

Issues acknowledged by the company

The company develops a strategy to address the 		3 	issues4

The company implements changes and milestoneare achieved

We have also identified scenarios where we haveconcluded that no positive outcomes can be expectedin the given timeframe:0

Engagement failed

Our engagement progress in 2023
The chart below shows the stage of different
engagements at the end of 2023.

In 2023, we observed that increasingly companies on
the focus list are progressing to stage 3 (as per above)and bringing the desired outcome as shown in thechart above. We noticed success cases in each areaof our priority across all regions (see Table 2) otherthan the engagement priority of natural capital andecosystems which is a new topic that was just added
to our priorities in December 2022. Some successful
cases are explained in more detail in the engagementcase studies section.
We have observed successful engagements withinvestee companies taking steps to manage risks
and promote long-term value tend to have concrete
objectives with numerical goals, such as GHG
emissions reductions, diversity in the workplace or on
the board, or capital allocations. We have also foundthat companies are proactive in improving disclosureswhen asked for more transparency by publishing
reports on sustainability, human capital, human rights,
TCFD or remuneration policy.
We also observed cases where our engagement
failed due to a reluctance on the part of the company
management to address our concerns, even after wesought different types of escalations (see Softbank
Group case study).

Engagement progress by stage
1,636

1,750
1,500
1,250
1,000
750
500
250

278
4

106

Stage 0Stage 138

0Stage 2

Stage 3

Stage 4

Source: J.P. Morgan Asset Management, as of December 31, 2023.
Note: In cases where there are several engagement themes for one company, the engagement milestone for the company is measured against thetheme where there was the most progress.

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Our approach to engagement continued
Table of 2023 engagement success examples
CompanyCountry

Priority

Milestone detail

Danske Bank
A/S

Denmark

Climate change

Published its Climate Action Plan, which details how thebank will transition its operations and financed emissions
in line with its own published net zero targets including
both interim targets (up to 2030) and long-term ambitions.
We engaged the bank on this topic in earlier years andencouraged the bank to provide more granular details on
its approach so that we could understand the credibility ofsuch plans.

Deutsche
Lufthansa AGAG

Germany

Climate change

The company has become the first airline in Europe to haveachieved validation of its carbon reduction targets by the
SBTI (Engagement Milestone). It targets a 50% reduction inemissions by 2030 and CO2 neutrality by 2050.

Reckitt
Benckiser Group
PLC

United Kingdom

Socialstakeholder
management

Established cybersecurity process and senior-levelaccountability in mitigation of a future cyber-attack.
The company was subject to a cyber-attack in 2017,
therefore prompting further engagement to understandthe measures taken by the company to mitigate any
business risks.

Nokia Oyj

Finland

Human capitalmanagement

Met the company’s objective to reach a minimum of
26% female hires in all global external recruits throughincreased marketing, communication, and talent attraction
activities designed to highlight Nokia’s employer brandstand out for diversity-friendly employment policies.

Nihon M&A
Center Holdings
Inc

Japan

GovernanceThe company announced a medium-term capital allocation
policy targeting a payout ratio of above 60%, which will
improve returns to shareholders. We have engaged thecompany since 2021, as we had concerns about the
inefficient capital allocation policy.

Tencent
Holdings Ltd

China

GovernanceAppointed the second female board director in 2022.
After the 2023 AGM, female board representation increased
to 25%. In the ESG Report 2022, the company announced its
30% gender diversity goal on the board by 2030.

Johnson &JohnsonUnited States

Strategyalignment withthe long term

Provided additional disclosure for investors to understandconsiderations given to legal and compliance costs inexecutive compensation. At the 2022 annual meeting,
we supported a shareholder proposal requesting that thelegal and compliance costs be included in compensation,
as we thought there could be more information madeavailable to the shareholders. With improved disclosures,
we voted ‘against’ the same proposal filed at the 2023
annual meeting.

J.P. Morgan Asset Management

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Our approach to engagement continued
Case study – unsuccessful engagement
Softbank Group (SBG)

Japan

Equity, Bonds

Issue
We have raised concerns about governance at SoftBank Group given the complicated ownership
structures, which risk conflicts of interests, as well as the poor level of disclosure at the company’s
investment subsidiaries. We have questioned the management about the unusual ownership structure ofthese subsidiaries as the joint founder, Chair and CEO has a stake disproportionate to his cash contribution.
He owes significant sums to Softbank, provided at very low interest rates, on account of losses made bythese investment subsidiaries.
More recently, we have been concerned by the lack of disclosure of material contractual agreements
between SoftBank Group and a venture capital fund managed by an investment subsidiary in relation to the
IPO of Arm Holdings. (ARM Holdings is a semiconductor and software design company, which went public in
September 2023).

ActionWe engaged with the company and raised our concerns that SB Northstar, an investment subsidiary of
SoftBank, could be used as an indirect investment vehicle of the founder, Chair and CEO of the company.
He owns one-third of the company, which has significant debt. We encouraged the company to take steps
to simplify the complex capital structure and manage potential conflicts of interest involving the founder.
After SoftBank announced the scaling down of investment activities of SB Northstar, we held several
meetings with the management team, in one-to-one and collaborative settings, to address similar conflictsof interest and lack of transparency in the investment process and governance at SoftBank Vision Fund 2,
a venture capital fund.
The company claimed that disclosure has improved and asked for more understanding of the constraints
faced in disclosing the share value of unlisted investee companies. Meanwhile, we discovered that SoftBank
Group had contractual obligations to purchase a stake in Arm Holdings at twice the price it was sold to a
venture capital fund managed by an investment subsidiary of SoftBank. This could constitute a contingent
liability that was not disclosed. We met with SoftBank’s independent director, but the discussion did notadequately address our concerns regarding board oversight and governance. We have consistently voted
against two directors, the founder/Chair/CEO since 2019, and CFO since 2020 to express our concerns
regarding corporate governance.

Outcome and next steps
In our view, we deemed this an unsuccessful engagement, as actions taken to address our governanceconcerns have been limited, even after we sought diverse escalation routes. We continue to evaluate our
options, including engagement alternatives.

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Our approach to engagement continued
Reactive engagements
Our engagement program is largely based on proactive
engagement; however, we also engage on a reactive
basis in response to real-world events. These events
can include corporate actions, notable events,
major developments, scandals, norms breaches
and matters arising from the proxy voting process.
This can also include when new information becomes
uncovered about long-running concerns with regard
to controversial corporate practices, products,
and services.
When controversies arise, we assess the severity of
the issues and consider whether engagement canplay a role in improving the situation for the company
and investors, as well as the probability of success.
When engaging reactively around particularly highprofile and controversial events, we have tended toengage multiple times and with greater intensity than
we do for other engagements.
We engage with companies where corporate
controversies have arisen and governance andmanagement practices are called into question.
In these types of cases, we tend to engage at theC-suite level and often with the CEOs themselves.

J.P. Morgan Asset Management

This year, we continued our engagement withcompanies whose business practices have been
identified as violating international norms. In particular,
we are engaging with companies that have been
associated with severe social and environmental
controversies to assess their board oversight,
due diligence, and remediation efforts. These
engagements are important to obtain a more accurate
picture of ongoing developments around controversies
than that which may be portrayed in the media or by
third-party data providers. These engagements may
inform investment decisions across all assets, but inparticular some of our sustainable funds, where we
exclude issuers who have been identified as violatinginternational norms.
Finally, we engage in a number of high-profile votingled engagements, typically where the company has
lost a major voting resolution and we have carried out
follow-up engagements, or cases ahead of a highprofile vote.

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Our approach to engagement continued
Case study – reactive
UBS and Credit Suisse

Switzerland

Equity, Bonds

Issue
The Swiss banking giant UBS took over Credit Suisse in an emergency rescue following concerns about risksof a collapse. Credit Suisse had suffered a series of controversies resulting in changes to management andlosses. We engaged Credit Suisse concerning its business conduct, risk management and compensation
practices in the years leading up to its acquisition.

ActionWe met with the Chair of UBS’ Board after the takeover was completed. UBS acknowledged that the Credit
Suisse integration was a significant, multi-year project and discussed its proposed plans to quickly executeon its priorities. Despite these challenges, the bank indicated that the takeover presented a rare opportunity
to establish itself firmly as the world’s leading international wealth management business. The bank’s key
priorities included ensuring that Credit Suisse’s wealth management clients were onboarded and migrated
onto UBS’ systems. The bank noted that integrating client data was a key focus area for the business andthe regulatory bodies with jurisdiction over UBS. UBS also clarified its plans to significantly scale back Credit
Suisse’s investment banking operation which had been the source of many controversies and problems.
In particular, it noted its plans to address problematic compensation and conduct-related practices – which
included the departure of many staff from that division. The bank noted that the board of the merged entity
will be made up of UBS directors. We also discussed its intention to consolidate sustainability practices,
reporting and any targets which may differ across the two firms.

Outcome and next steps
We will monitor developments at UBS as it progresses on a highly complicated post-merger integration andreview its consolidated sustainability reporting when it is published.

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Our six investment stewardship priorities

Climate change engagement
and voting - 2023

J.P. Morgan Asset Management

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Climate change engagement
and voting - 2023
Introduction
The global energy crisis that characterized 2022,
and the need for countries to secure affordable energy
supply while balancing decarbonisation needs,
has continued into 2023. This has been accompanied
by high inflation and elevated interest rates causing a
cost-of-living crisis in many parts of the world, as wellas posing challenges to national and company-level
decarbonisation plans through increased costs offinancing capital-intensive renewable energy projects.
Global long-term commitment to the low-carbon
transition is clear, with more than 140 countries now
having set net zero greenhouse gas emissions targets.3
However, the current challenges and the fact that mostcountries with net zero targets have not yet establishedthe range of policies that will enable them to reach theirtargets, creates the risk of a disorderly transition andvolatility.4 This disconnect between long-term targets
and current policy creates uncertainty for investors andcompanies seeking to benefit from the opportunities ormanage the risks that will arise from the shift to a lowcarbon world.

3
4
5

Navigating this uncertainty is complicated further
by risks associated with an increase in the physicalimpacts of climate change. NASA’s scientists declared
the summer of 2023 as the earth’s hottest since global
records began.5 Deadly wildfires in Canada and Hawaii
followed extreme rainfall and flooding in Italy and
Greece. These events damage assets, disrupt supply
chains and hinder the ability of companies to dobusiness. The increasing frequency and intensityof such events could have consequential impacts
on investments.
In 2023 we engaged with 517 companies on climatechange. Engagement plays an important role inmanaging risks and opportunities in our client
portfolios by understanding if companies are
considering the latest climate science and likely
policy shifts, building agility into their planning,
and recognizing uncertainties which could impact
the speed of the transition. We also express our views
through our voting activity, holding boards accountablethrough routine votes as well as supporting resolutions
that we feel will support companies toward addressing
financially material risks and opportunities.

https://www.un.org/en/climatechange/net-zero-coalition
https://www.mckinsey.com/capabilities/sustainability/our-insights/the-net-zero-transition-what-it-would-cost-what-it-could-bringhttps://climate.nasa.gov/news/3282/nasa-announces-summer-2023-hottest-on-record/26

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Climate change engagement
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Engaging companies on climate change

517

41

27

Number of companies engaged on
climate change

Number of markets engaged on
climate change

Number of sectors engaged on
climate change

Top markets engaged on climate changeCountry

Top sectors engaged on climate change%

Sectors%

United States

26.4%

Capital Goods

15.9%

United Kingdom

12.7%

Materials

14.9%

Japan

11.1%

Utilities

14.2%

China

5.7%

Energy13.3%

Germany

4.4%

Food, Beverage & Tobacco

4.9%

India

4.4%

Banks

4.5%

France3.8%

Technology Hardware & Equipment

3.3%

Australia

2.7%

Semiconductors & Semiconductor

3.2%

Switzerland

2.4%

Commercial & Professional Services

2.9%

Taiwan2.4%

Insurance

2.7%

J.P. Morgan Asset Management

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Our Climate Change Engagement
Strategy
As a global asset manager, JPMAM believes climatechange and the transition to a low-carbon economy
present significant risks and opportunities to clients’investment portfolios and to the assets that JPMAM
manages on their behalf. As part of our business’s
strategy to help clients manage climate risks
and opportunities, JPMAM became a signatory to
The Net Zero Asset Managers initiative (NZAMi) in
November 2021, in support of the goal to reach net
zero greenhouse gas emissions by 2050 or sooner.
JPMAM has included all of its AUM in listed equities andcorporate bonds, as well as certain direct investments
in forestry, in scope for its targets.6
JPMAM will measure its progress towards its targets
by the proportion of companies in which it invests thathave set their own credible net zero targets. By 2030,
JPMAM anticipates that the percentage of its AUM heldin companies with science-based targets will increase
from 20% to 55%. Investee companies that set andact on credible science-based net zero targets canhelp manage risk and build and sustain shareholder
value over time to the benefit of client accounts.7
For companies where we assess climate poses amaterial risk, JPMAM engages with investee companies
on the credibility of their target setting, as well as
broader aspects of their decarbonisation strategy,
and climate risk reporting.

Prioritizing companies for climate
engagement
In prioritizing companies for climate engagement,
we consider indicators like the company’s GHG
emissions footprint and the size of our holding of
the company’s securities, to understand where ourinvestments could be most exposed to transition risks.
However, we also use sector-specific knowledge andresearch to inform our assessment of the materialityof these risks, how these might manifest for particularsectors and companies and where our engagement
can most effectively be used to ensure drive
investment outcomes.8

Analysis to identify companies for potential engagement

Number of companies identified
for potential engagement

250

200

150

100

50

0

Utilities

EnergyMaterials Industrials Consumer Information Consumer Financials Health carediscretionary techology staples

Real Communication
estateservices

Source: J.P. Morgan Asset Management. Prioritizing companies without third-party validated medium-term emissions reduction targets, where both
JPMAM 2022 holdings and Weighted-Average Carbon Intensity (WACI) are largest

6
7

8

https://www.netzeroassetmanagers.org/signatories/j-p-morgan-asset-management/
JPMAM’s role remains, first and foremost, as a fiduciary to our clients, with a singular focus on acting in their best interests. Our ability to meet ourtargets is dependent on sustained and consistent government policy, accelerated technological breakthroughs and substantial adaptation incorporate business models. The ability to meet specific targets is contingent on action from a range of parties.
For example, the insurance sector does not have significant operational emissions, but physical climate-change impacts will have a significant
impact on their property and casualty business.

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Climate change engagement
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We believe that global emissions reductions will
ultimately be driven by users of energy and theintroduction of policies to limit fossil fuel demandand incentivize the use of lower-carbon alternative
sources of energy. Sectors such as utilities,
transport and industrials already face transition
risks (and opportunities) including carbon taxes on
emissions,9 bans on internal combustion engine
vehicles,10 and mandates around the use of Sustainable
Aviation Fuels (SAFs).11 These measures are likely toramp up and could increase the cost of emissionsintensive inputs and compress margins. This may
further incentivize the electrification of vehicles and thedevelopment of scalable technologies to reduce fossil
fuel use in aviation and industrial processes.
We have therefore prioritized demand-side
companies (users of fossil fuels) for engagement,
as we deem engagement more likely to be effectiveat mitigating climate-related transition risks andensuring investment returns, focusing on sectors
such as transport which currently account for 53%
of oil demand12 (see Lufthansa example below).
We engage these companies guided by our Climate
Change Engagement Framework, asking for (among
other things):(1)	clear disclosure of climate-related risks andopportunities facing the company in line with the
TCFD recommendations; and(2) 	where necessary to mitigate material risks,that such companies to set their own scientificallycredible emissions reductions targets andtransition plans, which outline how targets will bemet, the investments required and the financial
implications for investors.

We acknowledge that for a number of sectors,
significant hurdles exist for companies seeking todecarbonize today, ranging from a lack of proventechnologies to help reduce emissions to an unhelpfulpolicy environment. Companies should clearly disclose
these challenges and the actions being taken toaddress them, such as partnerships with academic
institutions and government entities or investments inresearch and development.
It is important to also engage energy sector companies
around the material risks the sector faces in regard
to the low-carbon transition. However, we believe
engagement strategies that focus on limiting the
supply of fossil fuels will only push supply to producers
in other geographies with potentially lower production
standards, or cause demand-supply imbalancesthat will increase price volatility and the need for
expensive or unreliable energy imports.13 Our approachof prioritizing engagement with the demand side isdesigned to help manage investment risk for thosecompanies. As these companies decarbonize, demand
for fossil fuels and global emissions will fall. The focus
of our engagements with the energy sector therefore
ensures that we can assess the companies most
likely to deliver returns in a low-carbon future whenfossil fuel demand is significantly lower than it istoday. Engagement focuses on demonstrating lowcost operational excellence and emissions reduction,
the use of the latest methane emissions measurement
and management practices and demonstrating how
future changes in demand are being incorporated into
scenario risk analysis and forward planning.

https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/scope-eu-emissions-trading-system_en
https://www.gov.uk/government/news/government-takes-historic-step-towards-net-zero-with-end-of-sale-of-new-petrol-and-diesel-cars-by-2030
11
https://ec.europa.eu/commission/presscorner/detail/en/ip_23_2389
12https://iea.blob.core.windows.net/assets/830fe099-5530-48f2-a7c1-11f35d510983/WorldEnergyOutlook2022.pdf
13
https://www.brookings.edu/articles/reducing-us-oil-demand-not-production-is-the-way-forward-for-the-climate/
910

J.P. Morgan Asset Management

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Case study
Lufthansa

Germany

Equity, Bonds

Issue
The aviation sector accounts for over 2% of global energy-related CO2 emissions, having grown faster inrecent decades than road, rail or shipping. Lufthansa is the second largest airline in Europe. In addition toholding the company’s equities in our client accounts, we hold the company’s bonds in certain high yieldstrategies. The company has set ambitious decarbonisation targets. In light of growing policy developments
in Europe, we sought to gain more clarity on the company’s targets its decarbonisation strategy and its
ability to deliver it in a cost-effective way.

ActionWe engaged the company in 2022 and encouraged having its emissions reduction targets validated by athird party to ensure credibility. The company explained that pre-2030 modernisation will account for thelion’s share of the emissions reductions targeted. The company also noted that Sustainable Aviation Fuels(SAFs) will play a key role from 2025, noting that the company had announced an investment of USD 250
million in SAFs until 2024. Proposed EU legislation on SAF usage would mandate the inclusion of at least a
2% blend in airline fuel (increasing to 5% in 2030).
We met the company again in 2023, including one meeting with the board chair. The company raised
concerns about the lack of SAF availability to meet the EU’s blending quota, which became legally bindingin September 2023, as well as the high associated costs. There will also be notable costs associated withchanges to the EU Emissions Trading System (ETS) rules which will phase out allowances for the aviation
sector by 2026. In response to our questions concerning its engagement with policymakers, the company
explained that it had advocated for a border adjustment mechanism in the EU to ensure a level playing field
on a global basis. We encouraged the company to be transparent about its advocacy on these issues andthat of the trade associations it belongs to.
For us to better understand the materiality of the transition risks the company faces, we also encouraged
the company to enhance its climate change risk TCFD reporting which remains relatively high level and does
not incorporate some of these more recent financial elements discussed.

Outcome and next steps
Since starting our engagement with the company, it has achieved validation of its decarbonisation targets
by the Science Based Target initiative (SBTi), making it the first aviation company in Europe to do so.
We welcome this and will monitor the evolving transition risks the company faces and its ability to mitigate
such risks.

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Regional Spotlight: Engaging emerging market debt issuers in the Gulf States
We note that climate risks can increase for companies in certain jurisdictions as governments and societal
expectations of companies change over time. Ahead of the COP28 Climate Change Conference taking place in UAE
in November 2023, we engaged with a number of companies in the region around their plans to meet new or more
ambitious national targets set in countries like Saudi Arabia and the UAE in recent years, after a number of years ofinaction on climate. We seek to understand how companies are navigating this evolving context and preparing formeasures likely to be cascaded down from the national government.
We have encouraged companies to demonstrate how their plans, at a minimum, align with national targets in orderto mitigate any potential transition risks. We also ask companies to provide investors with transparent TCFD-aligned
reporting and clearer information concerning their capital allocation plans to support the delivery of the targets
they have set so that investors can assess the financial implications.

Case study
Saudi Electricity Company (SECO)

Saudi Arabia

Bonds, Equity

Issue
Saudi Electricity Company (SECO) is the biggest producer of electricity in the Kingdom of Saudi Arabia (KSA)
and has a monopoly on the transmission and distribution of electric power in the country. The KSA has
pledged to reach net zero emissions by 2060, to have 50% of its electricity generated from renewable energy
by 2030 and to completely displace liquid fuel for gas. We engaged with SECO to assess its positioning in orderto understand how the company would mitigate transition risks associated with the national transition plans.

ActionWe sent a letter to the company in early 2023 and followed up with a meeting. The company explained that itis on track to meet its target to reduce its Scope 1 and 2 GHG emissions by 25% by 2025 (vs. a 2016 baseline).
We noted the longer-term KSA national targets and recommended the company also consider setting
credible medium- and longer-term emissions reductions. The company acknowledged our feedback and its
intention to enable the KSA’s national targets.
The company has a directly owned generation capacity of 58 GW, centred on diesel- and gas-poweredplants. The company intends to transition towards a cleaner energy mix by fully replacing liquid fuelwith gas by 2030. We encouraged the company to set its own renewable energy capacity targets to alignwith the national vision. SECO is the sole transmission and distribution player in the country, and any
new renewables projects must be integrated into the grid through it. The company plans to invest USD 3
billion by 2026 for 25 renewable interconnection projects growing the grid’s renewable energy capacity toapproximately 19 GW by 2025.
The company explained that it is working on the next issuance of its Sustainability Report. We recommended
that the report be aligned with the recommendations of the Taskforce for Climate-related Financial
Disclosures (TCFD) to provide investors with the necessary information to assess the climate-related risks
the company faces.

Outcome and next steps
The company’s 2022 ESG report, published later in 2023, included an early attempt at TCFD-aligned
reporting, which we welcomed. In order to continue to understand the transition risks facing the company,
we will monitor the company’s progress with regard to its own target setting and alignment of plans to
support the country’s decarbonisation ambition.

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Case study
Abu Dhabi National Energy Company (TAQAUH)

UAE

Bonds

Issue
Ahead of the COP28 Climate Change Conference, the United Arab Emirates (UAE) increased the ambition of
its Nationally Determined Contributions (NDCs) as well as its National Energy Strategy, committing to triple
renewable power-generation capacity and increasing the share of clean energy in the energy mix to 60%.
In order to understand how Abu Dhabi’s energy and utility company TAQAUH would mitigate any potential
resulting transition risks, we engaged the company. We sought to understand how the company plans to
support the delivery of the UAE’s new emissions reduction goals and renewable energy targets including
whether it intended to have its own targets validated by the Science Based Target Initiative (SBTI).

ActionWe met with the company and questioned whether its stated emissions reduction targets (25% absolute
reduction in Scope 1 and 2 emissions by 2030) were sufficient to meet the UAE’s more ambitious goals.
While the company indicated it was confident it would be able to meet UAE’s goals, it was not able tocurrently commit to having its targets validated by the SBTI. This was due to the company’s own assessmentthat its small amount of coal exposure in Morocco, and its estimation that it would need to achieve a ~40%
emissions reduction by 2030, would make it difficult for it to have its targets validated by SBTI.
In terms of its decarbonisation strategy, the company described its plans to first decommission its legacy
gas plants, indicating this will largely happen by 2028. The company targets 30% of gross generation
capacity coming from renewables by 2030. However, the acquisition of renewable energy developer Masdar
meant it had already met the target at the time of engagement. In line with UAE targets anticipated to be
applicable to the company, we encouraged the company to update its renewables capacity growth target,
noting the national renewable energy ambitions.
The company indicated it plans to invest approximately USD 10 billion by 2030 in transmission anddistribution networks to cater for growth in electrification. They also identified a list of high-level climaterelated risks and opportunities in the 2022 Sustainability Report. We encouraged the company to provide
more information including TCFD aligned scenario analysis to provide investors with a clearer sense of themateriality of the issues.

OutcomeIn September 2023, TAQAUH revised its growth targets, aiming for 150 GW of gross power generation by 2030,
with around 65% of its generation capacity coming from renewable power sources. The announcements
included plans to invest approx. USD 20 billion until 2030, towards power and water capacity expansion andtransmission and distribution networks.

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Engaging with companies around their climate change policy engagement
Almost half of the world’s 2000 largest companies14
have set some form of net zero emissions reduction
targets. Strategies and efforts to meet these targets
often come with increasing marginal cost of abatement.
Many companies assess these costs as importantinvestments in ensuring their longer-term strategic
positioning for the low-carbon transition, i.e. reducing
the impact of future policies and regulations aimed
at internalizing carbon costs. However, in order forcompanies to improve the shorter- to medium-term
profitability of their low-carbon investments, it isimportant that companies engage with governmentsin the regions where they operate, to ensure that theregulatory environment is supportive of their strategy
and the investments they will be required to make tomeet their goals and, often, national climate targets.

However, in certain industries, we have identified
potential material risks where certain companies
undertake lobbying activities, either directly or
through trade associations, that significantly departfrom the company’s stated goals. Where companies
lobby adversely to their stated positions, they expose
themselves to increased risks, such as brandand reputation, and external scrutiny and fines byregulators. For example, the California Public Utilities
Commission imposed a fine on a utility company forusing customer money (included in their utility rates)
to fund lobbying designed to block clean energy
legislation.15 In light of this, we engage with companies
to ensure the transparent disclosure of climate-related
lobbying activities and companies’ policy positions.
We acknowledge that companies are members of tradeassociations for a variety of reasons and believe it isimportant that companies are transparent about how
and where their own policy positions are different tothose of the trade associations to which they belong,noting that these will not always be the same.

Examples of engagements and voting on climate change lobbying

14
15

Company

Nature of lobbying related risks and actions taken

CoterraEnergyWe engaged with the U.S. oil and gas producer ahead of the AGM, where it faced a climate-relatedshareholder proposal asking it to disclose a report on how its lobbying activities, and those of the tradeassociations they belong to, align with the goal of the Paris Agreement. The company noted that it alreadydisclosed lobbying and political activities, as well as its trade associations and the amounts those tradeassociations spend on lobbying. Coterra does not disclose a discussion of alignment between themselves
and its trade associations on lobbying. We encourage such transparency, especially where we conclude
that climate change is a material financial factor, as is the case for Coterra Energy. The lack of suchdisclosure could expose the company to reputational and legal risks. The company noted that it is willingto disagree with its trade positions and advocate for different positions and cited examples. We supported
the shareholder resolution which received 37% support.

Paccar

The vehicle manufacturer has committed to science-based targets to limit global warming to well below
2°C. The company faced a climate-related shareholder proposal at its 2023 AGM, asking it to disclose
a report on how its lobbying aligns with the company’s stated targets, as well as being transparent
about potential differences between company targets and those of the trade associations it belongs to.
Our analysis found that the company disclosed in its CDP (formerly the Carbon Disclosure Project) reportthat its major trade associations are aligned with its current policy positions. The report also stated that,currently, the company’s engagement activities are not in line with the Paris Agreement, but in the next
two years it will make a commitment to do so. Meanwhile, the Truck and Engine Manufacturers Association(EMA) has been in the news for opposing the Advanced Clean Truck (ACT) rule and other emissions-related
regulations and its commitment to the Paris Agreement is not clear. Noting the likelihood of misalignment
with the company’s own stated policy positions, we supported the proposal which received 47% support.

https://zerotracker.net/insights/net-zero-targets-among-worlds-largest-companies-double-but-credibility-gaps-undermine-progress
For example, see the recent fine related to climate lobbying faced by SoCalGas, a subsidiary of Sempra: https://www.latimes.com/business/story/2022-02-04/socalgas-faces-10-million-fine-for-fighting-climate-action

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Engaging with sovereign issuers about climate risk
As investors in sovereign debt, we believe that integrating climate change risk indicators (as well as other ESG factors)
helps promote better investment outcomes. Sovereigns with better ESG performance generally trade at lower spreads
in developed and emerging markets.16 Sovereign disclosure of climate change risk data has improved in recent years,
and we continue to engage with issuers to advocate for better disclosure. We are also increasingly engaging withissuers of ‘green’ sovereign debt about both the monitoring and verification of underlying performance metrics and thewider national decarbonisation plans to ensure issuances are part of a credible strategy (see Indonesia case study).

Case study
The Republic of Indonesia

Indonesia

Sovereign Bonds

Issue
Many sovereign economies have set Nationally Determined Contributions (NDCs) which, in order to achievethem, will require significant financing for green infrastructure. A new and increasing trend in sovereign
emerging markets is the restructuring of debt, where proceeds are used to fulfil climate commitments, suchas via sustainability-linked bonds (SLB). Indonesia was the first country to issue a sovereign green sukuk,
Islamic certificates (similar to bonds) that are used for financing environmental-related projects and designed
to comply with Islamic law.

ActionWe met with the representatives from the Ministry of Finance and the Ministry of Environment and Forestry
from Indonesia. The purpose of the engagement was to understand Indonesia’s climate-related plans
and its intentions for financing them. We explained the need for JPMAM, as investors, to assess sovereignissuers’ climate risk mitigation performance as part of assessing more broadly the integrity of sustainabilitylinked instruments, and we referenced an environmental assessment of countries conducted by Yale
University. The representatives from the ministries highlighted that the assessment did not capture
Indonesia’s enhanced Nationally Determined Contributions (NDC) targets announced in September 2022.
The representatives also expected that the planned pollution tax, and the new energy-efficient infrastructure
projects, will improve Indonesia’s air quality going forward.
We also sought an update on Indonesia’s plan in the Just Energy Transition Partnership (JETP), a climate
financing program for developing countries backed by the G7 advanced nations. Noticeably, Indonesia hasrecently released the final draft of its Comprehensive Investment and Policy Plan (CIPP) to support the USD 20
billion climate financing pledge made by the G7 in November 2022. We welcomed Indonesia’s medium-termtargets of 44% renewable energy generation by 2030, total on-grid power sector emissions peak by 2030 andthe 2050 net zero emission for the power sector. That said, only the on-grid power sector is in the scope ofthese targets, which do not cover the off-grid captive coal-fired power plants built by industrial users. We also
asked about the long-term financing plan to meet the total estimated investment cost of USD 97 billion, which
is higher than the USD 20 billion initial commitment of the CIPP.

Outcome and next steps
We appreciate the dialogue with the Indonesian government’s representatives with respect to its green bondfinancing programs, an important step for us to understand the sovereign sukuk and its use of proceeds.
To gain further insight into how such investments are used to forward the country’s medium-term targets,
we will monitor the situation and engage, as appropriate, with the sovereign in 2024.

16

https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/portfolio-insights/fixed%20income-sovereigns-and-esg-full-whitepaper.
pdf

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Engaging around Climate Opportunities
The transition to a low-carbon economy presents
an unprecedented opportunity for companies thatare responding to the challenges of climate change,
investing in innovative solutions and benefitingfrom shifts in market and consumer preferences.
Energy storage, grid resilience, low-carbon
transportation and energy efficiency enhancementsthat enable the transition to create additional
investment opportunities. Companies that develop
best-in-class solutions in these areas will be well
positioned for growth due to the increasing urgency
around mitigating climate change; growing policy
and regulatory support; and competitive advantages
due to increasing customer preferences for energy
efficiency and low-carbon solutions. Given the scale ofthe opportunity for companies within this space, it isimportant for us to understand whether a company’s
proposed solutions are likely to effectively deliver theirpromised outcomes. As disclosure standards arelacking for many of these emerging technologies andare uneven across jurisdictions, we seek to understandhow products and services deliver their promised
climate outcomes and understand if companies areevidencing their claims.

17

Avoided emissions
Avoided emissions refer to the emissions avoided
through the introduction of a solution (e.g. products,
services, technology, projects).17 This metric seeks tomeasure the decarbonizing impact of the products
and services sold by a company, and so quantifies
the emission reductions for the customer purchasing
the products/service. While GHG accounting acrossScopes 1, 2 and 3 measures a company’s historicalemissions, avoided emissions instead measure thehypothetical future emission reduction in society due tothe introduction of a solution, compared to a reference
scenario. Avoided emissions are complementary,
but separate, from traditional GHG accounting.
There has been growing interest in the concept of
avoided emissions as a way to measure product impact
and identify companies which are enabling the lowcarbon transition. Companies in a range of sectors havestarted to report their avoided emissions. If a company
is claiming that a core part of its product/service offersa meaningful solution to climate change, we encourage
the substantiation of this claim; depending on the facts
and circumstances, avoided emissions may be an
appropriate way of doing so. Evidencing these claims
may allow companies to gain a competitive advantage
with customers seeking emission reductions, as wellas help avoid accusations of greenwashing if avoided
emissions are calculated in a robust and transparent
manner. In 2023, the World Business Council for
Sustainable Development (WBCSD) published a‘Guidance on Avoided Emissions’, which provides aset of requirements for companies to consider whenassessing avoided emissions, but the industry has
not yet coalesced around a single methodology.
While standards for measuring avoided emissions
are still at a nascent stage, we are engaging withcompanies that are reporting this metric to encouragetransparency of methodologies, including disclosure ofreference scenarios and separate reporting of avoided
emissions from GHG footprints.

Guidance on avoided emissions, WBCSD. https://www.wbcsd.org/Imperatives/Climate-Action/Resources/Guidance-on-Avoided-Emissions

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Case study
Infineon

Germany

Equities, Bonds

Issue
Semiconductors are used in green applications across renewable energy technologies and electric vehicles.
Advancements in semiconductors are also driving improved energy efficiency across many applications.
Some semiconductor companies are beginning to seek ways to measure this positive impact but there is a lackof industry standardisation. Meanwhile, semiconductor manufacturing and product use remain emissionsintensive and are set to rise as production increases globally.
Infineon, a German semiconductor company, offers solutions across green energy, clean mobility and theInternet of Things. The company advertises ‘CO2 savings’ of 100m tons CO2e from products to demonstrate
positive product impact and presents this as a 1:33 ratio to the company’s CO2 footprint. Infineon has not set
science-based targets covering its own material emissions.

ActionWe met with the Global Head of Sustainability to encourage Infineon to increase transparency on thecalculation of the company’s avoided emissions and decarbonisation strategy.
Infineon reports on CO2 saved through product use and breaks this down by end use (industrial drives,automotive electronics, wind and photovoltaics), advertising the emissions savings enabled by Infineon
solutions. We appreciate that Infineon is measuring emission reductions and provides explanatory
notes. We encouraged further transparency on the assumptions underpinning these calculations andconsideration of the WBCSD guidance on calculating avoided emissions. We believe such transparency
would help evidence Infineon’s claims against greenwashing risk, allow investors to better understand thiscalculation, and potentially move towards greater industry comparability.
We also discussed Infineon’s decarbonisation strategy and encouraged the company to establish its
own science-based targets verified by a third party. We believe science-based targets will continue togain importance to customers seeking to decarbonize their own supply chains and is also important todemonstrate the credibility of Infineon’s claims to investors.

OutcomeIn December 2023, Infineon committed to set third-party verified science-based targets covering material
emissions, which strengthens its proposition to customers seeking sustainable solutions and to investors
evaluating the financial risks and opportunities of investing in the company. Infineon provided more detailon how CO2 savings are attributed, accounting for market share and the value of the semiconductor in
the equipment.

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Climate Change Voting
Considering climate change in routine votes
Our voting policies are designed to promote thebest long-term interests of our client accounts.
As such, we may consider climate risk when voting
in director elections, executive compensation orother management resolutions, where we are notsatisfied with the steps taken by the company toaddress the material risks it faces because of climatechange, the quality of the engagement discussion or
its progress.
Effective April 1, 2024, we added a new section to ourGlobal Proxy-Voting Guidelines, addressing our voting
policies related to the management of financiallymaterial climate risks. This reflects our convictionthat climate change could pose a material risk to ourclients’ accounts, as well as our experience evaluatingclimate risk as part of voting proxies in recent
years. The additions make clear that we encourage
disclosures of minimum climate-related indicators bycompanies in sectors particularly exposed to financiallymaterial climate risks. JPMAM may vote against thedirectors of relevant committees of companies wherethese are not available or meaningful.
These criteria include:• We note many companies have chosen to set long-term net zero targets. In order for us to evaluate thelong-term credibility of transition plans, where suchlong-term targets are set, we encourage the company
to disclose the scope of emissions included insuch targets. We recognize the many challenges
associated with reporting Scope 3 emissions.
While we understand the limitations associatedwith reporting Scope 3 emissions, we would expect
companies that have included such emissions in their
net zero targets to disclose their Scope 3 emissions.
We also expect disclosures of interim emission
reduction targets where the company has set longterm net zero targets.
• We encourage disclosure on past performanceagainst emission reduction goals, and forwardlooking strategy to achieve emission reduction goals,
including use of offsets and corporate transactions.
We believe that providing meaningful disclosure
is important to help investors evaluate whether
companies are managing material climate risks that
could impact returns over time. For more information
see our Global Proxy Voting Guidelines here.

• We encourage disclosures aligned with the reporting

framework developed by the Task Force on Climaterelated Financial Disclosures (TCFD) addressing
all the four pillars of the TCFD – (i) governance, (ii)strategy, (iii) risk management and (iv) metrics andtargets related to any performance indicators used to
manage such risks.
• For industries where we believe climate changerisks pose material financial risks, we encouragecomprehensive TCFD reporting (or equivalent)
including scenario analysis to help us understand theresilience of a company’s strategy.
• We encourage disclosures of Scope 1 and 2 GHG

emission targets, where decarbonization of acompany’s operations and purchased energy has
been identified by the company as a key part of thecompany’s strategy to manage climate change risks.

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Case study – Routine Climate Votes
Kinder Morgan

U.S.

Equities

Issue
Kinder Morgan (KMI), a U.S. oil and gas company, is unusual among its peers in its lack of Scope 1 and 2
emissions reduction targets. Targets to reduce Scope 1 and 2 emissions, which partially concern energy use,would demonstrate the company is seeking to lower long-term energy costs and mitigate transition risks.
The concern that KMI was therefore not appropriately managing climate transition risks led to us voting
against the re-election of the Chair of the Board’s Environmental, Health, and Safety Committee. We wanted
to understand how the company is managing financially material climate risks, and what opportunities itsees to reduce those emissions.

ActionWe engaged with KMI in August and October, which followed the publication of the company’s updated
sustainability report in July and conveyed our rationale for the vote against the director. The engagement
helped us to understand that the company was more actively pursuing emissions reductions than it
first appeared. While KMI has not officially set a target, the company expects to reduce its Scopes 1 and 2
emissions intensity by 30%.
KMI explained the process of completing the Scope 1 and 2 emissions inventory; now that it has the data,
it indicated that its focus was on economic ways to reduce emissions. Over 70% of KMI’s Scope 1 emissions
are from compressor stations. There is no good technology that they can add to existing compressor
stations to reduce or capture those emissions; currently, it would have to replace a gas-fired engine with
an electric/hybrid engine. If they did that for its entire compressor station base, the total replacement
cost would be USD 20 billion. In addition to significant costs, the company explained that the emission
reductions are not guaranteed. Using an electrified engine would lower Scope 1 emissions but increase
Scope 2 emissions significantly, as the company operates in areas where the local grid relies on emissionintensive coal generation.
For methane, it is investing in improved monitoring to increase the frequency of leak detection fromannually to quarterly. The company indicated that the improved monitoring would go a long way to reducing
methane emissions, but it will take until 2028 before more frequent monitoring is fully implemented.

Outcome
We will continue to encourage the company to provide more transparency concerning its emissions
reduction efforts and any targets it establishes.

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Climate-related shareholder resolutions
Voting on climate change shareholder proposals
is another important way of expressing our views,
where we think management could better manage
climate-related financial risk. In 2023, we saw
an increase in the overall number of resolutions
being filed and an increase in overly prescriptive
shareholder proposals, dictating specific actions by
the company and creating the potential for unintended
consequences for long-term shareholders. We notedthat shareholder proposals in previous years focusedon enhanced reporting, such as TCFD reporting, that we
tended to support as we believed such reporting
provided meaningful information to shareholders
to evaluate risks and opportunities at a particularcompany. As a result, in 2023, we voted in favour of 39
climate-related shareholder resolutions, reflecting adecrease in overall % support for these resolutions.

intended outcome. Increasingly, we see climate-related
resolutions which are overly prescriptive, and/or not
tailored to the company’s specific risks.
For example, we continue to see similar resolutions
asking energy companies to set absolute Scope
3 emissions targets or to voluntarily cease oil andgas production, which would lead to unintended
consequences. As outlined in our engagement
prioritisation strategy earlier in this chapter,certain of these resolutions do not reflect a complete
understanding of the energy system. As a result,
JPMAM supported more climate-related shareholder
proposals at companies that are users of fossil fuels(11% higher) than for those at energy sector companies.
We tend to support shareholder resolutions on climaterisk disclosure, requests for reporting on climate
lobbying as well as on the potential social impacts ofthe transition (often categorized as ‘Just Transition’)
if we believe reporting is important for investors toevaluate reputational and other financial risks to thecompany (see UPS example). Where we believe thatclimate change poses financially material implications
to the business, we support shareholder resolutions
which call for greater details from companies that have
set their own long term aspirational goals.

Our starting consideration is whether the resolution
is focused on an issue that is material to the best
economic interest of our clients. In many cases,
successfully managing climate change is important
for the future success of the company and resolutions
around it merit our in-depth attention. We consider
most helpful, resolutions which are worded in a waythat gives the company the ability to select the strategy
it considers will most effectively achieve the resolution’s

JPMAM voting on climate-related proposals in 2023
Request for Advisory Vote on Climate Plan
Report on Climate Change Lobbying
Report on Climate Change Risk
Report on Just Transition
Report on Climate Change (Other)
Climate Change Action
GHG Emissions Targets
Renewable Energy
Fossil Fuel Financing
0%
For

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AgainstSource: J.P. Morgan Asset Management.

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Case study – Climate-related Shareholder Resolution
UPS

U.S.

Equities

Issue
American package and document delivery company UPS received a shareholder resolution asking for it toprepare a report addressing the impact of its climate change strategy on relevant stakeholders, including
but not limited to its employees, workers in its supply chain, and communities in which it operates,consistent with the ‘Just Transition’ guidelines of the International Labor Organization and indicators of theWorld Benchmarking Association.

Action
UPS has set its own targets to be carbon neutral across Scopes 1, 2, and 3 by 2050. Noting that thecompany’s decarbonisation targets will lead to substantial changes in the business and supply chain,
we assessed it to be important for the company to consider where there could be risks of disruptions to theunionized workforce and how these would be addressed in order to avoid reputational risks from distressed
employees, and potential falls in productivity. We voted ‘for’ the proposal.

Outcome
The proposal received 24% support.

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Our six investment stewardship priorities

Natural capital and ecosystems
engagement – 2023

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Natural capital and ecosystems
engagement – 2023
Natural capital refers to nature-based assets, including soil, air, water and living things. With over half of global GDP
dependent on nature, and the decline of nearly 40% of the value of natural capital per head since the early 1990s,
engaging with our investee companies on natural capital and ecosystems is a critical element of our investment
due diligence.18
Many businesses depend on these natural capital and nature-based assets. Yet, physical risks, such as thedegradation of nature or loss of biodiversity, are not effectively priced into company valuations.19 We view naturerelated risks caused by the overconsumption of natural resources, environmental degradation and pollution, as asystemic risk for business and the financial outlook of companies in the long term. We urge companies to assess
their material exposure to nature, to identify actions for risk mitigation and to explore business opportunities.
Momentum is building on the recognition of thefinancial risk of nature loss in all corners. The United
Nations Biodiversity Conference (COP15) held in
December 2022, has widely been referred to as the‘Paris moment for nature’, and the adoption of theKunming-Montreal Global Biodiversity Framework(GBF) includes progressive and comprehensive
targets for governments, companies and financial
institutions alike. In September 2023, the finalizedversion of the Taskforce on Nature-related Financial
Disclosures (TNFD) was released. The objective of
the TNFD is to help financial institutions, and othercompanies, assess and report their nature-related
issues in a standardized approach. The tool can be ofuse by investors for their engagement with investee
companies on the topic of natural capital, which is bothcomplex and wide-ranging.

In our first full year of engagement, having formalized
our approach to this pillar at the end of 2022, we sought
to deepen internal research and engagement on two
nature-related sub-themes: water scarcity for water
utilities and commercial users of water, and in the latterpart of this year, and a core focus for 2024, plastic waste
abatement.

“Biodiversity, Natural Capital and the Economy: A Policy Guide for Finance, Economic and Environment Ministers”, OECD Environment Policy Papers,
No. 26, OECD Publishing, Paris (2021). See here: https://doi.org/10.1787/1a1ae114-en
19
OECD, Watered down? Investigating the financial materiality of water-related risks in the financial system, September 2023.
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Engaging with companies on natural capital

231

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27

Number of companies engaged
on natural capital

Number of markets engaged onnatural capital

Number of sectors engaged onnatural capital

Top markets engaged on natural capitalCountry

Top sectors engaged on natural capital%

Sector%United States

27.8%

Materials

20.1%

United Kingdom

14.6%

Food, Beverage & Tobacco

13.5%

Japan

8.7%

Utilities

11.1%

China

6.6%

Capital Goods

10.8%

India

4.2%

Energy6.6%

France3.8%

Consumer Discretionary

4.2%

Australia

3.1%

Consumer Durables & Apparel

4.2%

Hong Kong

2.4%

Technology Hardware & Equipment

4.2%

Netherlands

2.4%

Commercial & Professional Services

3.5%

Germany

2.1%

Semiconductors & Semiconductor

2.8%

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Natural capital and ecosystems
engagement – 2023 continued
Water stewardship and risks
In recent years, we have seen more stories about
physical water shortages hurting the profitability ofcompanies and economies of countries. For example,
low water levels in the Rhine have weighed ontransportation and distribution networks for goods andservices, impacting economic growth in Germany by
up to half a percentage point. In Taiwan, government
policy to restrict water supply amid diminishing rainfall
and typhoons has led to worldwide chip shortages. 20
These physical water risks could be reduced or avoided
through preventative investment.
The cost of inaction outstrips the upfront investment
required by companies to address water risks byfive times. Or, according to the CDP, equivalent to
a combined loss of USD 301 billion for all reporting
companies, compared with a total cost of addressingthese risks of USD 55 billion. 21 Companies which haveassessed their production and supply chain risks
and are putting in place strategies to mitigate theserisks benefit from improved water efficiency, reduced
operational risk, as well as potentially a lower costof capital and exposure to water price fluctuations.
In the long term, we encourage companies to seek
opportunities to replenish more water than they
consume, for instance through nature-based solutions,or to design products and services which have a lower
water footprint. According to the latest data, at least
half of the world’s population currently live under highwater-stressed conditions for at least one month ayear. 22 It is important for companies, and their investors,
to understand their underlying water risks.
This year, we focused our efforts to engage with supplyside water utilities and demand-side companies in
sectors ranging from food and beverage and apparel.
We assessed that these were sectors where theissue was most financially material. Many companies
have been reporting on water consumption andhave efficiency targets. Our engagement focuses onunderstanding companies’ assessments of their longterm risks from water scarcity. We encourage transparent
disclosure of the methodology and scope of activities toaddress their water risks. We provide a case study fromthe UK water utility sector, which highlights the acutechallenge of balancing water scarcity and increasing
demand, alongside financing and affordability risks.
In 2024, we aim to extend our engagement withcompanies on the demand side of water.

Plastic waste abatement
Another theme, which is increasingly becoming an
investment risk for portfolio companies, is the unabateduse and waste of single-use plastic. Not only is thedisposal of plastic in a take-make-waste economy
leading to a loss of 95% of the value of finite resources– worth up to USD 120 billion – but increasing regulatory
and reputational scrutiny have significant financial
risks for the largest producers of single-use plastic.23
Studies suggest that in a business-as-usual scenario,
companies could face a global cost of up to USD
100 billion if regulations pass through the full costof plastic waste management to industry throughextended producer responsibility schemes by 2040.24
This legislation has already been implemented acrossnearly 60 countries.25 The UN is also set to begin
negotiations for a global plastics treaty, following theendorsement of a historic plastics pollution resolution
from members in March 2022. Navigating the cost,
supply and regulatory impact of single-use plastic
has profound implications for market access forthese companies.
In the latter part of 2023, and with the bulk of
engagements to take place in 2024, we are engaging
with consumer goods companies on their exposure toplastic, to evaluate the investment risks, and encouragesuch company’s risk mitigation actions. Manycompanies already report their plastic footprint andhave set measurable reduction, re-use and recycling
targets. Some of these target settings refer to the Ellen
MacArthur Foundation’s New Plastics Economy Global
Commitment, launched jointly with the UN Environment
Program in 2018. We seek to evaluate the credibility ofexisting company targets and identify those companies
which are most exposed to plastic risks, and thosewhich are better positioned to take advantage of thetransition from single-use to reusable models – worth
approximately USD 10 billion.26

https://earth.org/the-taiwan-water-shortage-dilemma/
CDP, https://www.cdp.net/en/articles/media/cost-of-water-risks-to-business-five-times-higher-than-cost-of-taking-action
22
WRI: 25 Countries, Housing One-quarter of the Population, Face Extremely High Water Stress, 16 Aug 2023
23
World Economic Forum, Ellen MacArthur Foundation and McKinsey & Company, The New Plastics Economy: Rethinking the future of plastics (2016).
24
https://www.pewtrusts.org/en/research-and-analysis/articles/2020/07/23/breaking-the-plastic-wave-top-findings
25
PRI, The Plastics Landscape: Regulations, Policies and Influencers, https://www.unpri.org/download?ac=9630&secureweb=WINWORD
26World Economic Forum, Ellen MacArthur Foundation and McKinsey & Company, The New Plastics Economy: Rethinking the future of plastics (2016).
20
21

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Natural capital and ecosystems
engagement – 2023 continued
Case study – UK water utilities sector
Pollution, water scarcity and financial resilience

Equities, Bonds

Issue
Water utility companies in the UK provide around 14 billion litres of water a day for public water supply.
However, with droughts, flooding and the impacts of climate change and population demographics puttingpressure on long-term water security, it is estimated there will be a shortfall of around 4 billion litres ofwater per day if no action is taken between 2025 and 2050. 27 These risks are further compounded by poor
management execution, as the sector has struggled to meet performance targets and license conditions
resulting in unabated pollution and increasing fines. From 2021 to 2022, UK water utilities were required toreturn nearly GBP 120 million to customers by the UK water services regulatory authority regulator Ofwat,
due to missed operational targets (although we note this is only around 1% of total sector revenue). 28
Economic slowdown and inflation are further complicating the situation. In 2023, the UK’s largest water utility
company, Thames Water, revealed it was struggling to service its nearly GBP 14 billion of debt. As investors,
this raised concerns about the long-term business and financial outlook of UK water utility companies.
With financing needs expected to increase substantially over the next 25 years to meet growing supply/demandchallenges, we remain concerned that companies continue to retain their social license to operate throughsustainable, responsible and long-term performance.

ActionThrough meetings, including investor meetings through the UK Investor Forum, we had the opportunity tomeet with the three publicly listed water utilities, Severn Trent, United Utilities and Pennon Group, as wellas the largest privately owned utility, Thames Water, which is a major issuer of corporate bonds. One of
the most widely reported issues has been the leakage of raw sewage into the environment through storm
overflows. We noted the apology issued by Water UK, the sector’s trade association, earlier this year, but
urged companies to prioritize concrete actions to improve operational performance. We discussed with thelisted companies the speed at which monitors have been rolled out to assess the operation of storm overflow
valves but acknowledged that data calibration will take time to improve accuracy. We encourage companies
to be prudent in deploying technology that is effective and accurate and report transparently on progress tocustomers and investors.
We also discussed the companies’ long-term resilience to climate change. Some water utilities havealready experienced these risks first-hand. For example, Pennon, owner of South-West Water, Bournemouthand Bristol Water, has boosted reservoir storage by 37% in response to drought in its region. 29 In line withrecent government legislation, water companies are committing to ambitious long-term targets, suchas halving leakage, exploring new water supply options like reservoir storage or desalination, as well as
managing household water consumption. For instance, the strong operational performance of Severn
Trent, operating in Central England, has accelerated a GBP 95 million investment across a number ofenvironmental projects, including what has been reported as the world’s first carbon neutral wastewater
treatment plant.30
Policy paper, Plan for Water: our integrated plan for delivering clean and plentiful water, April 2023, DEFRA. Link here: https://www.gov.uk/
government/publications/plan-for-water-our-integrated-plan-for-delivering-clean-and-plentiful-water28
PN 39/22 Worst performing water and wastewater companies called out in latest Ofwat assessments, Ofwat December 2022. Link: https://www.ofwat.gov.uk/pn-39-22-worst-performing-water-and-wastewater-companies-called-out-in-latest-ofwatassessments/#:~:text=Northumbrian%20Water%2C%20Southern%20Water%2C%20South,to%20customers%20in%20November%202022
29
Pennon Group, Annual Report 2023. https://annualreport.pennon-group.co.uk/index.html
30
Severn Trent, May 2023. See here: https://www.stwater.co.uk/news/news-releases/severn-trent-given-go-ahead-to-bring-forward-p95minvestment-to-/27

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Natural capital and ecosystems
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Action continued
These targets provide greater visibility to investors on company levers to address long-term systemic
water risk. Companies also shared positive examples of deploying nature-based solutions, such as lowcost and low-carbon alternatives to grey infrastructure. Solutions, such as working with local farmers to
reduce agricultural run-off and sustainable drainage, offer effective ways to strengthen business resiliency.
We encourage consistent reporting from companies using nature-based solutions and are supportive of
the publication from United Utilities seeking to standardize the framework for deploying, measuring andmonitoring nature-based solutions.31
Yet with financing needs over the next 25 years predicted to grow materially, the balance between investment
and affordability will be a key risk. According to the latest business plan information for the UK watercompanies, it is estimated the additional enhancement investment needed in the period 2025-2050 will bearound GBP 272 billion – equivalent to nearly three times the industry’s regulatory capital value of GBP 94
billion.32 This is a step change likely to be even greater than the spending required since the privatisationof the industry in the 1990s. We expect this much greater level of investment will require quite significant
customer bill increases of a potentially similar magnitude or pace. We recommend a strong and coordinatedresponse from the sector, working together with the government and the regulator on these increases.
We believe clear and consistent messaging on the need for investment, together with a clear plan forcustomer affordability and consideration for a more progressive pricing tariff, will avoid leaving a vacuum forthe media, which may leave executives potentially exposed. We also caution that increasing bills should not
replace critical levers for responsible, well-run and efficient companies, including robust capital discipline.

Outcome
As long-term investors in this sector, we recognize there remain structural headwinds for UK watercompanies, which may be hard to resolve for a single company alone. The role of the regulator to ensure a
consistent, predictable, and effective regulatory regime within a stable policy environment has a significant
impact on attracting the capital investment required. We have closely followed the work of the UK Investor
Forum, which has escalated investor concerns to UK policymakers to improve visibility on the long-termrisks and assurance of the opportunities in the sector. We strongly recommend improved connectivity
between the regulator, companies and government, which we believe is pivotal to attract the level of capitalrequired to meet future investment, secure companies’ social license to operate and improve long-term
company profitability.

31
32

https://www.unitedutilities.com/globalassets/documents/pdf/pr24---unlocking-nature-based-solutions-to-deliver-greater-value.pdf
Based on the updated business plan information, Moody’s estimates water companies in England and Wales will spend around GBP 272 billion (infinancial year average 2022/23 prices, the price base assumed in companies’ plans) in the period 2025-50, to enhance their services. This isequivalent to almost three times the industry’s RCV of GBP 94 billion at March 2023. See here: Regulated Water Utilities – UK: Enhancement
expenditure set to rise materially over the next 25 years, Moody’s Investor Services.

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Our six investment stewardship priorities

Human capital management
engagement and voting – 2023

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Human capital management engagement
and voting – 2023
Effective management of human capital is critical to an engaged and productive workforce and, ultimately, failure to
manage human capital risks and opportunities can affect a company’s relationship with its workforce and otherstakeholders which may, in turn, impact shareholder value. Many companies have openly discussed how theirbusinesses have been impacted by the loss of key personnel to competitors, and by labor unionization, among otherissues. The competitive war for talent and the need to address employees’ concerns, shines a spotlight on the needto prioritize this area.
To effectively manage the workforce and attract and retain employees, companies need to clearly demonstrate theircommitment to their workforce.
This begins with compensation and benefits but also includes the company’s approach to diversity, equity andinclusion, labor practices and decent work.
Human capital management issues are particularly pertinent in certain sectors and geographies and thissection demonstrates how we have targeted engagements in key sectors to address these issues where they areparticularly material. In 2023, we engaged with 511 companies on human capital-related topics.

Engaging with companies on human capital management

511

40

26

Number of companies engaged onhuman capital management

Number of markets engaged
on human capital management

Number of sectors
engaged on human capitalmanagement

Top markets engaged on Human capital management
Country

Top sectors engaged on Human capital management%

Sector%United States

20.9%

Capital Goods

14.1%

United Kingdom

12.7%

Materials

9.8%

China

11.5%

Food, Beverage & Tobacco

6.8%

Japan

11.1%

Technology Hardware & Equipment

6.0%

India

5.4%

Consumer Durables & Apparel

5.8%

South Korea

4.7%

Consumer Discretionary

5.5%

Hong Kong

3.5%

Semiconductors & Semiconductor

4.6%

Germany

3.3%

Banks

4.3%

Australia

2.6%

Utilities

4.3%

Netherlands

2.5%

Consumer Services

4.0%

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Human capital management engagement
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Diversity, equity and inclusion
At JPMAM, we believe an engaged and diverse workforce base is integral to a company’s success, enablingthem to innovate, and more effectively respond to a broad array of customer interests and needs across diverse
communities in which the company operates, thus delivering stronger shareholder returns.
In our 2022 report, we introduced our diversity engagement framework to assist us in engaging with companies
on topics related to human capital management, specifically diversity, equity and inclusion. In 2023, we have seen
positive engagement progress, which we believe is important to long-term shareholder value (see Ryohin Keikaku
case study). We conducted diversity-related engagements with approximately 238 companies globally to understandtheir approach to diversity, equity, and inclusion, across the general workforce, senior management, and the board.

Case study
Ryohin Keikaku

Japan

Equities

Issue
The Japanese major consumer discretionary company, which owns Muji branded stores, appointed thefirst female director to the board in 2021. Although the company has a gender-diverse customer base,female representation at executive and senior management levels remained disproportionately low
compared with the number of female workers who form the majority of the wider workforce. The Chair
has struggled to drive inventory management and to build an inclusive culture during his long-standing
presidency. As a result, the company has experienced difficulty in recruiting and retaining mid-career
employees including merchandising and IT professionals who are needed to drive the company’s supply chain
reforms, and ultimately the company’s ability to deliver long-term value.

ActionSince 2020, we have conveyed our concerns to the company with regard to the need for board refreshment
and have continued to vote against the election of the Chair at the annual general meetings (AGMs).
Together with the new president’s management reforms in accelerating board effectiveness and enhancing
the talent pipeline, we encouraged the company to appoint a majority of outside directors to ensure greater
independence and to create more opportunities for underrepresented groups by fostering an inclusive culture
for employees. The company acknowledged that the rapid increase in mid-career hiring has led to culture
challenges and conflicts, which has lowered productivity. The company has since initiated multiple efforts
on diversity, equity and inclusion (DEI) through firmwide round-table discussions and workshops under
the leadership of the newly established Diversity Equity & Inclusion Committee. This year, our engagement
continued to focus on the disclosure of enhanced employee-related data, including the gender pay gap,
toprovide greater transparency and annual progress reporting.

OutcomeAt the 2022 AGM, three female outside directors were appointed, which increased female representation on theboard from 11% to 37.5%. We also noted one of the three directors led successful DEI initiatives at an insurancecompany, including providing advice on driving workplace inclusion and a culture of openness.
The company introduced the numerical goal for workforce diversity for 2030, with a 50% ratio of female
managers at the store manager level for the first time, and it also plans to disclose its age, gender, and race
ratios by 2030 in the next integrated report. We will continue to encourage improvements to the company’s
disclosures on DEI and further engage to achieve the inclusion of ESG metrics covering DEI within thecompany’s executive compensation plan, as part of aligning the plan with material outcomes that are designed
to increase long-term shareholder value.

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Human capital management engagement
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Equity reflects the promotion of fairness, while inclusion is making sure individuals feel welcome and included
and can help retain employees over the long term. We believe the failure to address these issues creates legal andreputational risks to companies and ultimately, their long-term value.
Key points of engagement include establishing a process to achieve pay equity on a regular basis with public
disclosure. Collecting and reporting on granular pay gap data is an example of best practice to evaluate pay equity;
it allows companies to assess the level of gender or racial inequality, which may be driven by several root causes,
including a lack of minority representation in senior roles.

Case study
Charter Communications

U.S.

Equities, Bonds

Issue
Charter Communications is a US telecommunications and mass media company. Charter acknowledges
that the ability to deliver products and services to customers is dependent upon a highly skilled workforce.
The company outlines how it supports its workforce including ensuring 1) training and investing in employees;2) enabling a diverse and inclusive culture; and 3) focusing on a safe and healthy workplace.
With the understanding that effective human capital management is important to achieve its goals, we notedthat the company did not publicly disclose key diversity, equity and inclusion disclosures, such as would be
included in the company’s EEO-1 report. Note, that an EEO-1 report breaks down employees by demographic
criteria such as race, ethnicity, gender and job sector.

ActionIn April 2021, the company received two shareholder proposals pertaining to the release of a report assessing
diversity, equity and inclusion; we voted for both proposals. Following the annual shareholder’s meeting,the company released its inaugural DEI report, and we found the report to be lacking in quantitative data,
particularly in comparison to its peers.
In December 2021, we engaged with the company, where we outlined our concerns and encouraged it to also
release EEO-1 data. In 2022, the company again received proposals pertaining to a report on DEI and EEO-1
disclosure; we supported both.
In advance of the 2023 annual shareholder meeting, we re-engaged the company to discuss the status of the
proposals from the 2022 proxy season, with the EEO-1 and DEI proposals receiving 44% and 43%, respectively
and an upcoming lobbying proposal. We continued to encourage the company to disclose EEO-1 data.

OutcomeCHTR acknowledged that DEI is becoming a greater focus for the board; for example, it noted that
previously the Chief Diversity Officer used to report to the Compensation Committee but began reporting to
the entire board.
Additionally, the board started to receive a report on procurement focused on the company’s supplier diversity
program.
Following our 2023 engagement, CHTR shared that it determined to release EEO-1 data and to disclose two
human capital management metrics including retention, hiring and promotion data. The disclosure is to occur
in 2024. They indicated they would apply Sarbanes Oxley (internal reporting control) standards to its disclosure.

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Labor practices and decent work
In addition to the importance of a diverse and inclusive culture, as part of creating an effective and talented
workforce, employee and labor engagement is also operationally important. While good labor engagement
may improve employee’s health and well-being, lower absenteeism and turnover rate and improve operational
efficiency, mismanagement can result in a poor health and safety record, low employee satisfaction and material
reputational and legal risks. This year, we have developed a framework to engage with companies where labor
issues are financially material (see our engagement on Mundys SPA’s health and safety for details).
Our labor engagement framework encourages companies to:1.	Strategy and governance: Establish board and/or
senior executive-level oversight of monitoring labor
practices. Establish the companies’ own labor andsocial suppliers’ standards, which may be guided by
globally accepted standards.
2.	
Materiality assessment: Identify risks and exposure
to the company’s value chain through human rights
due diligence and/or impact assessment and track
the robustness of the processes.

4.	Transparency and reporting: Provide evidence todemonstrate the company’s respect for core laborrights. Participate in multi-stakeholder or otherexternal partnerships to address systemic laborand human rights issues along the supply chain
and provide reports of its activities within these
initiatives.

3.	
Risk remediation: Facilitate options to avoid, preventor mitigate the actual or potential human andlabor rights impacts. Provide a formal mechanism
to supplier workers and relevant stakeholders toreport grievances and disclose annual grievancefindings. Describe actions to remediate breaches of
any international norms that have been adopted by
the company.

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Case study
Mundys SPA

Italy

Bonds

Issue
Mundys Spa is an Italian infrastructure company that operates motorway and airport assets, among others.
As the company is responsible for the maintenance of infrastructure, its long-term value is highly reliant
on human capital and employee health and safety is highly material. The company’s incident rate for its
workforce continued to deteriorate during 2020-2021, including seven fatalities in 2021. Employee health andsafety is also a stewardship priority for us, as we believe employers that invest in workplace safety and takeaction to reduce employee injury and illness will benefit long term, including in terms of fewer legal liabilities
and insurance investigations. We hold Mundys in certain high yield strategies.

ActionWe initiated engagement with the company in late 2022. Our objective was to better understand themeasures the company is putting in place to prevent these incidents and ensure employee safety going
forward, including both full-time employees and contractors. We asked for the company’s comment on thenumber of fatalities and the measures to prevent this from occurring. We also asked about the targets inplace regarding health and safety metrics.
In 2023, we discussed occupational health and safety with the chief sustainability and innovation officer who
was appointed in 2021. We enquired about the changes made by the company since the past controversies
related to a bridge collapse in 2018 and its understanding of the root cause for the recent employee fatalities
in South American countries. We also asked about its supplier engagement strategy on this issue.

OutcomeThe board recognized occupational health and safety as a key business risk after the bridge collapse in 2018.
The fatality rate is reported to the board and investigated to see how it could have been avoided. The company
also disclosed in its latest integrated annual report that the most significant factor for the fatal accidents
in 2022 was encroachment by non-company drivers on demarcated work sites in Italy, Mexico and Brazil.
The company also continues to encourage safer practices by offering best-practice training regarding onsite
safety for workers. We will continue to monitor the progress and scope of its health and safety initiatives.

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Human capital management engagement
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Voting on human capital management
JPMAM directly engages with companies on human capital management and expresses its views by voting proxies
in the best interests of our clients. This year we supported four shareholder proposals related to human capital.

Case study
Dollar General

U.S.

Equities, Bonds

Issue
Dollar General is a retailer that operates discount stores in the US. The company faced stock underperformanceand we believe some of that was driven by delayed labor investments and store conditions. We also noted that
the Occupational Safety and Health Administrator (OSHA), a U.S. federal agency, had flagged Dollar General as a‘severe violator’. These identified issues resulted in fines from OSHA alongside negative media attention.

ActionThe company received a shareholder proposal asking them to conduct a workplace health and safety audit.
We engaged with the company to discuss the issue and they acknowledged having challenges regarding
health and safety practices. Issues such as locked backdoors and excess inventory, which contributed tounclear fire exit pathways, helped drive some of the violations. During our engagement, the company also
shared that while OSHA visits were down slightly compared to last year on a year-to-date basis, fines weretracking at only 10% of last year. And most of the issues were from the first quarter of the year before thecompany had renewed its focus. None of the fines were for severe violations. The company understands that to
be removed from OSHA’s ‘severe violator’ list, it will need to sustain its focus on operational improvements.

Outcome
We voted for the shareholder proposal which received 68% support. While acknowledging Dollar General’s
renewed focus on the issue, in light of being categorized as a ‘severe violator’ and controversies, wethought the company would benefit from an independent assessment to help understand if there are any
unmitigated health and safety risks and to assuage stakeholders’ concerns that the company is not taking
the issue seriously.

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SocialOur
sixstakeholder
investment stewardshipengagement priorities
and voting – 2022

Social stakeholder engagement
and voting – 2023

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Social stakeholder engagement
and voting – 2023
Generating long-term returns requires managing the interests of stakeholders. To be sustainable over the longterm, a company’s leadership needs to take into account the broader network of relationships in which it operates.
This includes shareholders, suppliers, customers, and surrounding communities. For example, the failure of amining company to manage its impact on local communities could result in unrest and impact its license to operate.
Similarly, a consumer electronic company’s failure to exercise responsible sourcing could result in reputational risk
and boycotts from customers.

Engaging with companies on their stakeholder engagement

301

32

26

Number of companies engaged on
stakeholder engagement

Number of markets engaged
on stakeholder engagement

Number of sectors engaged
on stakeholder engagement

Top markets engaged on social stakeholder engagement

Top sectors engaged on social stakeholder engagement

Country

Sector%%United States

23.3%

Food, Beverage & Tobacco

9.9%

China

15.0%

Pharmaceuticals, Biotechnology

9.9%

United Kingdom

14.3%

Materials

7.4%South Korea

6.5%

Capital Goods

6.0%

Japan

6.2%

Banks

5.8%

Australia

5.3%

Consumer Discretionary

5.3%

India

5.3%

Insurance

5.3%

Hong Kong

4.2%

Utilities

5.3%

Taiwan2.1%

Healthcare Equipment & Services

4.8%

Brazil

1.8%

Automobiles & Components

3.7%

Germany

1.8%

Consumer Durables & Apparel

3.7%

Mexico1.8%

Financial Services

3.7%

Netherlands

1.8%

Switzerland

1.8%

We take an active ownership approach to our investee companies’ management of stakeholders’ interests andhuman rights in general. This year, we continued our company engagements on material human rights issues
faced by our investee companies, and we prioritized our engagement on social and human rights risks along
the value chain that arise from key long-term trends. With the ongoing momentum on climate transition anddigitalisation, responsible minerals sourcing and responsible use of technology are two key themes in focus.

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Social stakeholder engagement
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Engagement on human rights and supply chain
Themes in focus: Responsible minerals sourcing - cobalt

The central role of battery technology in the
carbon transition presents compelling longterm opportunities for investors as electrificationtransforms the global economy. However, the risingdemand for batteries also raises difficult questions,
given the well-documented human rights issues thatsurround the mining of the crucial minerals needed
to make them. With regulatory pressures increasing,companies across a wide range of sectors could facesignificant reputational and financial penalties if they
fail to carry out sufficient due diligence on mineralsourcing.
Cobalt is a mineral that is vitally important to thecarbon transition, but where potential human rights
abuses in supply chains—including the worst formsof child labor—could carry particularly acute risks
to companies and investors. The problem is that
more than 70% of global cobalt supplies come fromthe Democratic Republic of the Congo (DRC), whereserious human rights and child labor issues in themining industry have been identified, including theworst forms of child labor.33,34 Amnesty International’s
report ‘This Is What We Die For’ sent shockwaves
through the market in 2016, showing how artisanal
cobalt from unauthorized mining areas in the DRC,
including ore mined by children, can enter the global
supply chain.35 The report also identified gaps incorporate disclosures and regulations relating tohuman rights abuses in the cobalt supply chain.
Investors have since increased their engagement withcompanies regarding cobalt sourcing and the humanrights due diligence measures that they have in place.
There are two types of mines in the DRC – industrial
large-scale mines (LSMs), and artisanal and smallscale mines (ASMs). ASMs, which contribute up to 30%of the DRC’s cobalt supply, are more labor-intensive
than LSMs, with individual miners – men, women and/or children – working in family groups or in teams tomine cobalt using basic tools, typically without theuse of machines.36 The lack of basic employment
standards in many ASMs, means human rights risks
are elevated, including child labor.
Given the material financial risks related to humanrights abuses and child labor in the cobalt supply
chain, J.P. Morgan Asset Management has enhanced
its research since 2022 and deepened its corporate
engagement on these complex issues. Our research
efforts are focused on identifying the key questions
that we feel companies should be able to address
related to cobalt sourcing. As part of our research,
we engage with various external stakeholders,
including policymakers, standard setters and nonprofit organizations involved in remediation actionin the DRC. We have also attended the Organization
for Economic Co-operation and Development (OECD)annual responsible mineral supply chain forum in
2022 and 2023 to hear the diverse opinions of different
cobalt value chain players.
Based on the issues identified by our research, ourengagement in the assessment of human rights
risks in cobalt supply chains focuses on the use of
the OECD due diligence framework;37 supply chain
management; disclosure of human rights risks;engagement with rights-holders; traceability of cobalt
supply chains; and the use of external assessments.
Our engagement findings (Table 1) show that
improvement is needed in most of these six areas(shaded orange in the table). The areas shaded green
are deemed to be satisfactory.

Baumann-Pauly, D., “Making Mining Safe and Fair: Artisanal Cobalt Extraction in the Democratic Republic of the Congo”, World Economic
Forum (Geneva, Switzerland; September 2020).
34
Gaffar, C., Kaempfer, I., “Opportunities for Businesses to Promote Child Rights in Cobalt Artisanal and Small-Scale Mining: A Study by Save theChildren and the Centre for Child Rights and Business’, Thinius, A., Nakschbandi, D., Schliebitz, E. (eds.), Save the Children (Berlin, 2021).
35“This is what we die for: Human Rights Abuses in the Democratic Republic of the Congo Power the Global Trade in Cobalt”, Amnesty
International (London, 2016).
36“Making Mining Safe and Fair”, World Economic Forum (Geneva, Switzerland; September 2020).
37
Organization for Economic Co-operation and Development, “Monitoring Corporate Disclosure: Assessing Company Reporting on Mineral
Supply Chain Due Diligence”.
33

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Table 1: Management of human rights risks
Engagement focus

RationaleFindings

Referencing of the OECD due diligenceframework.

The OECD guidance is referenced ina range of international declarations,
regulations and initiatives.

Almost all (93%) of the companies weengaged with reference the OECDframework.

Discussion of supply chain
management systems.

Step 1 of the OECD guidance expects
companies to establish strong systems
to manage the responsible sourcing ofminerals.

Most companies that we engaged
with (93%) said they have a supply
chain management system to assess
human rights risks covering cobalt.
They usually ask their cobalt suppliers
to fill out a Cobalt Reporting Template/
Extended Minerals Reporting Template.

Disclosure of salient human rights
risks related to the sourcing of criticalminerals, including cobalt.

A key indicator in step 2 of the OECD
guidance that the OECD reports as agap in corporate disclosure policies.

Only 14% of companies engaged
disclose identified salient human rights
risks by materials, including cobalt, andtheir respective findings along their
supply chain.

Demonstration of meaningful
engagement with relevant rightsholders to identify and manage humanrights risks.

A key indicator referenced by theOECD and UN Guiding Principles, that
the OECD reports as a weakness incompany disclosure policies.

Only 29% of companies that weengaged with were able to demonstratethat they had attempted to engage with
relevant rights-holders, in this case, thechild miner. Usually, this engagement
was indirectly, through working with
non-profit organizations that areproviding support to child miners in
the DRC. We concluded that child laborand small-scale mining in the DRC
represent salient human rights risks forcompanies.

Traceability of the cobalt supply chains.

Step 4 of the OECD guidance expects
downstream companies to identify thesmelters and refiners in their supply
chain and review the due diligencepractices of their suppliers.

79% of companies that we engage
with use a Cobalt Reporting Template/
Extended Minerals Reporting Template
to conduct due diligence of their cobalt
suppliers all the way up to the cobalt
smelters/refiners.

As it has been reported that cobalt from
ASMs is blended with LSM cobalt, it’s
important to understand traceability
efforts up to and including mine sites.

However, just 36% of companies
showed evidence that they wereattempting to trace cobalt right backto the mine site itself. Some tracing isachieved through industry partnerships
such as the Global Battery Alliance(GBA), or the Responsible Minerals
Initiative (RMI), which uses blockchain
technology to trace cobalt from mines
to smelters.
How companies manage to trace thesource of all cobalt, including cobalt
that is co-mingled with responsibly
mined cobalt from LSMs, remains
unclear.

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Engagement focus

RationaleFindings

Discussion of external assessments ofcobalt sourcing.

Step 4 of the OECD guidance expects
downstream companies to audit
smelters and refiners in their supply
chain, and often through external
assessments.

79% of companies engaged use
external assessments of mineralsourcing, such as the Responsible
Minerals Initiative (RMI) Responsible
Minerals Assurance Process (RMAP),
and the Initiative for Responsible
Mining Assurance (IRMA).
Both assessments are based oninternational standards, including theOECD due diligence guidance, anduse appointed auditors. RMI’s RMAP
focuses more on the extent to whichmineral smelters/refiners conform with
the RMAP standards. IRMA, on the other
hand, applies to all mined materials
and assesses the performance ofindividual mines on business integrity,environmental standards and humanrights, including human rights issues
in ASMs.
However, only 29% of companies wereable to clearly articulate the audit
methodology used. For the RMI/RMAP,
only one company could describe
the on-site audit process. For thosecompanies using IRMA, a more detailed
discussion is required.
In our view, companies should be able
to demonstrate a good understandingof external assessment methodologies
and audit processes.

Source: J.P. Morgan Asset Management.

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What actions are companies taking to help prevent or mitigate cobalt humanrights risks?
Active participation in the remediation of adverse
human rights impacts is a key requirement of Principle
22 of the United Nations Guiding Principles on
Business and Human Rights. As such, our engagement
discussions included understanding the different
methods that companies are using to prevent humanrights abuses in the DRC.
The findings of our engagement reveal that companies
use four main mitigation or remediation methods.
First, they can seek to avoid cobalt altogether. Second,
they can seek to source cobalt directly from industrial
mines. Third, they can seek to ban the use of artisanal
cobalt. And fourth, they can seek to address humanrights concerns through multi-stakeholder initiatives.

Nevertheless, when it comes to the assessment ofthese complex issues, there are several important
areas where our engagement suggests downstream
companies are falling short of emerging industry
practice. The main issues include gaps in thedisclosure of human rights risks, the failure to consult
meaningfully with rights-holders as part of theirdue diligence process, the failure to understand theprocess used by external auditors to assess theirmineral sourcing, and the inability to show clearly how
their support for industry initiatives is contributing toprogress on these issues (Table 2). The claim by somecompanies to be able to address human rights risks
by tracing the source of cobalt to specific mines also
requires further investigation.

Table 2: Industry practice where improvement is needed
Good industry practice% companies achieving this (2023)

The company discloses salient human rights risks related to the sourcingof critical minerals, including cobalt.

14%

The company can demonstrate meaningful engagement with relevant
rights-holders to identify and manage human rights risks.

29%

The company assesses the robustness of its human rights due diligence,such as understanding the audit process of any external responsible
production programs, and disclosure of the audit progress.

29%

The company can articulate its contribution to any external industry
initiatives that address systemic child labor and human rights issues in
the cobalt artisanal mining sector.

29%

Source: J.P. Morgan Asset Management.

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Case study
LG Chem Ltd/ LG Energy Solution Ltd

South Korea

Equities, Bonds

Issue
LG Energy Solution (which is now a subsidiary of LG Chem after its spin-off in 2020) is one of the world’s
leading electric vehicle and energy storage system battery manufacturers. Over the past years, the battery
manufacturer joined different cobalt-related multi-stakeholder initiatives such as the Responsible Cobalt
Initiative, Responsible Minerals Initiative, Global Battery Alliance and Fair Cobalt Alliance. However, its public
disclosure about its overall responsible minerals sourcing strategy and its particular involvement in these
initiatives remains unclear.

ActionWe had five engagements with the company on responsible cobalt sourcing this year. In April, we first reached
out to LG Chem, the battery-making company’s parent company, to discuss responsible minerals sourcing,and subsequently had a more detailed discussion with LG Energy Solution the battery manufacturer itself on
the topic.
We clarified its current audit practice on its cobalt suppliers, its understanding of and position on different
external responsible production schemes, its human rights budget and how it incorporates its human rights
assessment results into its business strategy and remediation plan. We also specifically asked about its viewon artisanal cobalt, as there have been OECD reports38 about the potential co-mingling of artisanal cobalt
with cobalt from industrial mines. We asked how its traceability projects help ensure there will not be any comingling of artisanal cobalt. We valued the candid discussion including the company’s acknowledgementof the report findings on this difficult, industry-wide issue. The company emphasized the importance of amulti-stakeholder approach to manage artisanal and small-scale mining cobalt sector and its involvement indifferent multi-stakeholder initiatives to help address the artisanal cobalt issues.
Based on the company’s responses and its current public disclosure, we followed up with the company
concerning industry practices along the cobalt value chain. In particular, we encouraged the company toinclude disclosure of salient human rights risks of the critical minerals it uses including cobalt, demonstrationof meaningful consultation with stakeholders in its human rights risk assessment and articulate its
contribution in the external industry initiatives to address the systemic child labor and human rights issues in
the cobalt artisanal mining sector.

Outcome
The company acknowledged our suggestions on responsible cobalt sourcing and indicated its intention toaddress concerns regarding its sustainability planning and reporting. We will continue to engage with thecompany, not only on responsible cobalt sourcing but also on other critical battery minerals.

38

https://mneguidelines.oecd.org/Interconnected-supply-chains-a-comprehensive-look-at-due-diligence-challenges-and-opportunities-sourcingcobalt-and-copper-from-the-DRC.pdf

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Engagement on digital rights and cybersecurity
Theme in focus – trusted Artificial Intelligence (AI) and cybersecurity
Digitalisation and technological advancement play a key role in enhancing standards of living and generating
positive business impacts. Innovations of the ‘Fourth Industrial Revolution’, such as the Internet of Things(IoT), 5G and artificial intelligence (AI), may improve operational efficiency and productivity, increase access to
information and enable more efficient decision-making. However, companies must deploy and use technology
with prudence and care to gain the trust of end-users and regulators. Controversies related to the handling ofsensitive personal data, content algorithms and content moderation have already drawn increased scrutiny
from regulators globally. This is particularly topical in 2023 due to the development of generative AI and therespective discussions around regulations of AI applications.
We take both proactive (see Lenovo case study) and reactive (Medibank Private case study) approaches
on this topic.

Case study
Lenovo Group Ltd

China

Equities, Bonds

Issue
We engaged with the multinational technology company Lenovo on trusted AI. This is a key engagement topic
for the company due to its continued investment and the growing portfolio of AI technologies, even as thehandling of sensitive personal data, content algorithms and content moderation is drawing increased scrutiny
from regulators globally. Financial impacts from non-compliance with the evolving regulations can include
significant fines and losses in market capitalisation.

ActionWe first raised this issue with the company in March 2022, to understand its public commitment toaccountable and gender-fair AI practices through its joining the ‘Women and AI’ Charter from Cercle InterElles,a French-based network across scientific and technological industries. In February 2023, we met with its
senior AI data scientist and senior manager of global AI business. We asked about its AI governance principles,the oversight structure and the current practice Lenovo is using to mitigate risks arising from these emerging
technologies. We asked for specific examples of whether Lenovo rejected any AI solutions because it deviatedfrom its responsible AI principles and asked the company to disclose its AI governance practices.

OutcomeIn November, Lenovo discussed its approach to responsible AI on its website, indicating that it has establisheda responsible AI committee to develop and oversee AI principles, comprized of a group of 20 people withdiverse backgrounds. Lenovo further indicated that it has created six pillars for its responsible AI practice,which include diversity and inclusion, privacy and security, accountability and reliability, explainability,transparency and environmental and social impact. We welcome the company’s acknowledgement of theimportance of trusted AI in driving business value for customers and are encouraged by the progress Lenovo
has made on this emerging issue.

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Case study
Medibank Private Ltd

Australia

EquityIssue
In October 2022, Australia’s biggest health insurer suffered a cyberattack. A group of hackers stole thepersonal information of 9.7 million current and former clients and released the data on the dark web.
This prompted a short-term double-digit tumbling in the company’s share price, an investigation by the
Office of the Australian Information Commissioner into the company’s personal information handlingpractices, and, in June 2023, an AUD 250 million capital charge imposed by the Australian Prudential
Regulation Authority.

ActionIn 2022 and 2023, we met with the company multiple times, including the CEO, the chief financial officer,
its sustainability lead and the Chair of the supervisory board, to better understand the incident’s financial
implications and the company’s cyber management. In May 2023, we travelled to the company’s headquartersin Australia to meet with the independent board chair and risk committee chair to discuss the oversight ofcyber and other ESG topics. At the meeting, the company indicated that we were one of the first investors toraise the issue directly with both of the independent directors.
On cybersecurity oversight, we asked about the company’s experience in handling the crisis last year, the roleof the recently retired chief technology officer in crisis management, its view on cyber insurance, and how
unpredictable third-party risks may impact the company’s outsourcing/insourcing strategy. We noted that
employee accountability is key to managing cyber risks and sought to understand how cybersecurity forms
part of the company’s annual review of its employees.

Outcome
The Company indicated that Deloitte has completed an external review of its cyber practices. While thecompany did not release Deloitte’s report to the public, as it contains sensitive information, the company
shared bullet points as part of its half-year results, which included a high-level summary of the following topics
from the report: stolen login credentials, firewall misconfiguration, third-party risk and system resilience.
We encouraged more disclosure on how the company will address these issues and hold its employees andthird parties accountable for cyber management in the future.

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Voting on human rights
This year we supported 15 human rights-related shareholder proposals, which range from child labor and otherhuman rights issues along the supply chain to human rights due diligence or impact assessments. See our Ford
Motor Company voting case study for details.

Case study
Ford Motor Company

U.S.

Equities

Issue
Ford Motor Company is an American multinational automobile manufacturer. Ford received a shareholder
proposal asking for a report assessing how its business plans, with respect to electric vehicles, would dependon child labor outside of the US. The cobalt supply chain has high exposure to child labor and other humanrights violations.

ActionWe have shared the proponent’s concerns about the industry’s reliance on the DRC for cobalt supply. It was
unclear whether Ford’s audit and certification process was able to identify cobalt produced by the ‘artisanalmines’ known for child labor and prevent cobalt from artisanal mines being mixed with cobalt from more
reputable mines. Ford’s rebuttal to the proposal included a statement that it continues to enhance due
diligence requirements and that the company is investigating supply chain mapping to further increase thetransparency of its cobalt supply. That statement suggested that the human rights assurance process is awork in progress.

OutcomeUltimately, our concerns led to supporting the proposal. We believe that doing the work to report on the issue
will help Ford develop a more transparent cobalt supply chain and begin to reduce the reliance on child labor.
The proposal received 7% support overall. The low support level can be partly explained by the 40% voting
power held by the Ford family through the Class B shares. Nevertheless, we expect the investor community toincrease its focus on this issue in the coming years.
We also added Ford to our focus list of companies for engagement.

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Our six investment stewardship priorities

Governance engagement
and voting – 2023

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Governance engagement and voting – 2023
We believe that there is a strong positive correlation between high governance standards and superior shareholder
returns. Governance is about ensuring the quality of the decision-making process, which can determine thesuccess and failure of the company. Effective corporate governance features transparency, accountability,
oversight and respect for shareholders.
We evaluate governance starting with the board
composition, structure and performance, looking forindependence, relevant skillsets and board dynamics.
Companies should make an effort to effectively refreshthe board through a transparent and independent
recruitment process based on a fair evaluation
against the selection criteria and by identifying thecompetencies, backgrounds and experiences required
at each company to drive long-term value. A company’s
CEO succession strategy is critical to a company’s
ongoing success, requiring careful planningand engagement to enable a smooth transition.
Companies should conduct board evaluations toassess the performance of the board and individual
directors to identify action items and improve
its functioning.

J.P. Morgan Asset Management

Importantly, it is the mandate of the board to oversee
whether the corporate strategy is aligned with the
purpose and value of the company. The board oversees
management’s execution against the company’s
capital, liquidity, strategic and financial operatingplans in achieving its set objectives. Capital allocation
issues are judged in terms of alignment with longterm strategy and value creation at the applicable
company. Boards are also responsible for overseeing
the management of financially material environmental
and social matters, which could affect the sustainabilityof the company.
In 2023, J.P. Morgan Asset Management carried out
481 engagements globally with regard to governance.
We developed our governance engagement framework,
which is used to guide companies in our discussions
on board effectiveness and capital allocation.
This section demonstrates how we are advancing
engagement with investee companies on these topics.

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Governance engagement and voting – 2023
Engaging with companies on governance

481

41

25

Number of companies engaged
on governance

Number of markets engaged
on governance

Number of sectors engaged
on governanceTop markets engaged on governanceCountry

Top sectors engaged on governance%

Sector%United States

24.6%

Capital Goods

11.9%

Japan

16.7%

Materials

8.0%

China

9.8%

Banks

7.6%

Britain

8.4%

Utilities

6.4%

India

7.2%

Energy6.1%South Korea

4.4%

Food, Beverage & Tobacco

5.6%

Brazil3.3%

Pharmaceuticals, Biotechnology

4.5%

Hong Kong

3.1%

Financial Services

4.1%

Mexico2.7%

Consumer Durables & Apparel

3.9%

Germany

2.2%Media & Entertainment

3.7%

Semiconductors & Semiconductor

3.7%

Technology Hardware & Equipment

3.7%

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Governance engagement and voting – 2023
Engaging companies on board effectivenessWe believe the composition of the board is important for board effectiveness. An appropriate mix of directors with
relevant knowledge, independence, competence, industry experience and diversity of perspectives helps generate
constructive discussions and supports decision-making that aligns with the company’s mission, purpose andlong-term strategy and goals. In an effort to create effective boards, we believe companies should strive to include
diversity to enhance perspectives with respect to gender, race, ethnicity and nationality, and provide appropriate
training beyond the prerequisite qualifications.
When we engage with companies focusing on board evaluation, we encourage companies to conduct internalboard evaluations annually and external evaluations, by independent professional bodies, on occasion to assess
how the board, the board committees and the individual directors performed against its expectations. This caseshows how the board evaluation was used to identify whether board members have the necessary and relevant
knowledge for the board committees as part of enhancing the quality of the board. (see Compagnie Financiere
Richemont SA case study)

Case study
Compagnie Financiere Richemont SA

Switzerland

Equities

Issue
We have engaged with Compagnie Financiere Richemont SA, a Switzerland-based luxury goods holding
company, over several years on board effectiveness and director refreshment. The board has historically been
comprized of a number of non-independent directors. We met with the company ahead of its AGM to discuss
the composition of the board and its key committees and to understand actions being taken to address noncompliance with Swiss market practice.

ActionThe company explained that the Board, and each of its key committees, conduct an annual self-assessmentof their role and effectiveness. This provides members of the Board the opportunity to reflect on individualand collective performance. The respective Committee’s conclusions are communicated to the Board. As partof these evaluations, the Board identified a need for refreshment of its members but noted the importanceof refreshment over time to ensure continuity and a smooth transition of the responsibilities of the Boardand its committees. As a result, the company is undertaking a multi-year program of long-tenured directors
stepping down and new directors being appointed. The company noted that there have been no significant
disruptions or loss of institutional knowledge as a result of the gradual process, as reflected in its findings
from subsequent board evaluations.

Outcome
The company has made progress and board independence has increased from 30% at the 2019 annual
meeting to 56% at the 2023 annual meeting. We are pleased with the progress made by the company as it
continues to execute the succession plan for long-serving non-executive directors while ensuring effective
transmission of knowledge. This also highlights the importance of robust board effectiveness and board
evaluation programs in identifying areas which require action.

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Governance engagement and voting – 2023
Engaging on CEO succession
CEO succession is a pivotal moment in a company’s history with exceptionally high stakes for shareholders,
employees, and stakeholders. The consequences of a failed succession at a company can erode its
competitive advantages, destroy shareholder value and induce talent turnover and invite unwanted short-term
activism. With so much at risk, it is perhaps one of the most critical functions of the board. The challenge can beespecially difficult at well-performing companies when boards fail to find the right successor to carry on the legacy
or make the transition at the wrong time.
There is no perfect recipe that will guarantee a successful transition, but there are things that can reduce thetransition risk. In our view, complete candour between the Board and management is a necessary criterion for a
successful transition. It may even help to have a carefully managed overlapping period between an outgoing CEO,who continues to serve on the board, and the new CEO. Psychological and emotional factors can come into play
between Board and CEO, or the CEO and potential successors, and there can be external factors that can disrupt
even well-executed transition plans.
JPMAM’s Investment Stewardship team held several engagements with companies that faced transition in 2023.
Below we provide an example of our engagement with one such company (see The Walt Disney Company case study).

Case study
The Walt Disney Company

U.S.

Equities

Issue
The Walt Disney Company is an American multinational mass media and entertainment conglomerate.
We have had concerns regarding the effectiveness of the board following the failed succession plan.
Bob Chapek, who succeeded ex-CEO Bob Iger, lasted 32 months in the role. Business journals ran numerous
stories about his conflicts with Mr. Iger, who continued to serve on the board, and other senior managers
and board members who desired Mr. Iger’s return. Mr. Iger was CEO for 15 years and he generated enormous
shareholder value over this period. As a result, his contract was repeatedly renewed even as the board
failed to find a successor. He stayed on as Executive Chair through the end of 2021 (22 months), and soonafter relinquishing that title to Non-Executive Director Susan Arnold, returned as the CEO in November 2022.
That came only six months after the board had decided to renew Mr. Chapek’s contract.

ActionJPMAM engaged with the company and expressed surprise that it took the board 32 months to decide that
Mr. Chapek was not the right choice, especially given the fact that he was not an outside hire. Responding
to the long evaluation period, management indicated that the company went into lockdown with COVID-19
soon after Mr. Chapek became CEO. However, we believe that the board did not respond promptly evenas management issues became clear. For example, the proxy’s compensation, discussion and analysis
continued to paint a fairly positive picture of how the company was performing under his leadership.

Outcome
We voted against all the long-term non-executive directors at Disney to express our dissatisfaction with thefailed succession, numerous controversies and what appeared to be inconsistent actions by the board.
All directors, however, received more than 93% support overall.

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Collaborating to achieve board-level
diversity goals

How we voted on board diversity andindependence

At the Asian Corporate Governance Association(ACGA) Japan meeting in September 2023, we had
follow-up discussions with Japan Financial Services
Agency (JFSA) and Japan Exchange Group (JPX) on
the ACGA open letter sent to them last year, requestingenhancement of gender diversity on boards ofJapanese listed companies through Japan’s Corporate
Governance Code and Listing Rules. We appreciate
the quick response from them, with the Tokyo Stock
Exchange announcing its intention to introduce
guidelines for executive-level female representation
for companies listed on the Prime Market, including
revisions to the Listing Rules in Relation to the Intensive
Policy for Gender Equality and the Empowerment of
Women 2023.39

Board diversity and independence are some of ourcore governance topics for engagement with Asiancompanies including companies located in Taiwan.
In late 2021, the Taiwan Stock Exchange amended the
Corporate Governance Best Practice Principles, settinga gender diversity expectation of at least one-third.
Still, female representation on Taiwan companies’
boards averaged 14-15% in 2022. Within J.P. Morgan
Asset Management, we advocate for at least majority
board independence as well as an ambition of atleast 25% gender-diverse board before 2025, and at
least 30% before 2030. As with all of our stewardship
activities, these goals are viewed through the lensof maximizing shareholder value. We still see room
for improvement for many corporates in Taiwan,
and we have been engaging with our investee
companies on this subject, alongside wider corporate
governance topics.

The delegation meeting was concluded by a roundtable
to discuss practical ways for implementing deeper
gender diversity in the management and boards ofJapanese companies and achieving the 30% target
set by the Japanese government for 2030. Speakers
included the Director General of the Gender Equality
Bureau at the Cabinet Office of Japan, the female CFO
of Visional Inc., a provider of career networking andcloud-based human capital management platform,
and our Japan Head of Stewardship, each representing
policymaker, corporate and investor points of views
respectively. We noted our efforts to promote diversity
through engagement and voting as part of enhancing
long-term value for our clients. We also noted therecent changes to our proxy voting guidelines for Japan
including voting against the election of representative
directors if there is only one or no female directors in
2024 and less than 30% by 2030.

39This year, we decided to exercise our shareholder
rights and attend three AGMs in Taiwan to reiterate ourgovernance concerns directly to the board of directors
and senior management (see Chailease Holding
Company Limited, Advantech Co., Ltd. and Silergy Corp.
case studies). We believe that in-person meetings areimportant for engagement impact and relationshipbuilding purposes; they are effective platforms forinvestors to engage with all board members at thesame time and to share our views with them directly.

https://www.jpx.co.jp/english/rules-participants/public-comment/detail/d01/p6b22i00000032f2-att/uorii50000003ib4.pdf

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Governance engagement and voting – 2023
Case study
In-person AGMs in Taiwan
Chailease Holding
We have been engaging with Chailease Holding, the family-controlled leasing company on board diversity
and independence since 2022. The company has a medium- and long-term goal for at least one-third of thecompany to be made up of female directors and supervisors, but there is no timeline.
At the AGM this year, we asked if there is any specific timeline for the company’s voluntary one-third female
directors/supervisors goal, whether the company has any plans to further increase board independence to atleast majority independence, and what considerations it has for board refreshments. The chief strategy officer
acknowledged the importance of further increasing board independence and diversity and agreed on majority
independence as its intended direction. The board chair also noted our expected timeline of at least 30%
female board directors before 2030.

Silergy
Silergy, a semiconductor manufacturer, recently started its ESG journey and published its inaugural ESG
summary report last year. We welcomed the progress and reiterated the importance of management anddisclosure of financially material ESG factors, including board oversight of material ESG topics to the board
chair at its AGM.
At the AGM, we communicated our corporate governance principles of majority board independence, as well
as a 30% gender-diverse board before 2030, to the board chair. We encouraged the company to consider otherboard candidates who have relevant cyber/ESG oversight experience. The board chair promised to consider
our suggestions. We also communicated our gender diversity goals to one of the board directors, who is also
the director of Women on Boards Association in Taiwan.

Advantech
We engaged with Advantech, a manufacturer of industrial computers, Succession planning is a key
engagement topic especially for family-controlled companies in Asia. Industrial computer manufacturer
Advantech is currently 27-28% held by the Liu Family. At the AGM, the company proposed appointing anotherson of the founder to the board. A long-standing independent director will continue to serve on the board
and will be classified as a non-independent director, as he has already served the board for more than nine
years/three terms. These changes resulted in a decrease in board independence from 43% to 33%. While we
supported management this year, as we see it as a temporary transitional change, we asked about thefounder’s succession planning and the company’s plan on board composition.
As part of its three-year succession plan, the company is going to establish a ‘management committee’consisting of three co-presidents and four- to six vice presidents. The board chair expects board
independence to increase in the next director election cycle. We will continue to monitor the company’stransition from a family-driven enterprise to oversight by a professional and independent management andboard in the coming years.

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Governance engagement and voting – 2023
Engaging on board ethnic diversity
In Asia, gender diversity is just beginning to emerge as a board agenda topic. In other regions, the focus on diversity
is more expansive as investors look for gender diversity as well as racial/ethnic diversity on boards. We believethat a diverse board contributes to the effectiveness of boards and the further development of sound governanceand risk oversight. As part of enhancing long-term shareholder value, we encourage companies to consider theimportance of racial/ethnic diversity as part of the board nomination process (see Regenxbio Inc. case study).

Case study
REGENXBIO

U.S.

Equities

Issue
Regenxbio is a U.S. biotechnology company. We support a diverse skillset for directors as an important partof contributing to long-term shareholder value. Under our North America Proxy Voting Guidelines, we will
generally vote against the chair of the nominating committee when a company lacks any gender diversity
or any racial/ethnic diversity unless there are certain mitigating factors. We noted that Regenxbio waslacking racial/ethnic diversity on the board, however, also noted the company has 3 female directors out of 9.
We engaged with the Board to encourage them to include ethnic/racial diversity as part of their nomination
process as part of promoting the long-term effectiveness of their board.

ActionAs part of our engagement, we learned that the Board previously included a self-identified Middle Eastern/
North African director. The company further noted that, after the director departed, it determined to add
Jennifer Zachary, as the third female director. They noted Ms Zachary’s qualifications include her experienceat the FDA and her understanding of the relevant legal, policy and regulatory regimes for the ethical conductof clinical trials. The company further highlighted that this experience added valuable and relevant skills tothe board.

OutcomeUnderstanding the company’s objectives and approach, we, nevertheless, encouraged the company to think
about how it was identifying potential candidates, continuing to expand the pool beyond traditional candidates
and clearly articulating its desire to add racial/ethnic diversity in its recruitment process. We will monitor its
progress at next year’s annual meeting.

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Governance engagement and voting – 2023
Engaging companies on capital allocation
We seek to invest in companies that are allocating
capital efficiently, generating reasonable long-term
returns for shareholders and making timely interest
and principal payments to bondholders. We believe
companies should demonstrate financial discipline
around investor returns relative to the cost of capitaland long-term value creation.
Capital allocation decisions can be affected bytraditional factors, such as interest rates, but also
regulatory requirements, climate change, nature risks,social movements and other financially material ESG
issues. We encourage companies to think ahead andimplement capital allocation strategies that incorporatematerial risks and opportunities into their businessmodels. Boards should disclose a clear policy on thecompany’s approach to its capital structure, which
could address the demands of different stakeholders.

Where the costs and return of capital are notadequately considered by corporate management,
corporate value may stagnate or be destroyed. In somemarkets, such as Japan and Korea, companies holdshares in other companies to strengthen business
relationships. These types of arrangements, known
as ‘cross-shareholdings’, have been used to protect
corporate management by creating a loyal shareholder
base and diluting minority shareholder rights leading
to potential conflicts of interest among company
and shareholders. We are concerned about poor
corporate governance and lack of financial discipline atcompanies where their capital is allocated to equities,
with returns far below their costs of capital.
In such cases, we engage to encourage the company todevelop capital allocation policies and encourage themto optimize capital by resolving cross-shareholding
ownership to return to shareholders, or to invest for
growth and to protect minority shareholder rights(see Toyota case study).

Focus on: Action by regulator to improve capital efficiency in Japan
In Japan, there are long-standing issues at corporates. Large amounts of capital continue to be trapped withinbalance sheets, and almost half of the Prime Market listed companies, and approximately 60% of the Standard
Market listed companies, trade below book value. In March 2023, the Tokyo Stock Exchange (TSE), in its effort
to push corporate governance reform, requested all listed companies to assess the state of capital efficiency
against the cost of capital, plan for improvement and engage with global investors through disclosure. 40
To follow up, JPX announced it will publish a list of companies that have adhered to the request starting fromJanuary 2024, and to compile and publish feedback from investors. As of the end of 2023, 49% of the Primelisted companies have disclosed the plan of action the companies will take, such as investing for growth andsustainability, strengthening of shareholder returns and reduction of cross-shareholdings.41
Initiatives at policymakers are providing strong backing for stewardship activities and serving as a tailwind to
the Japanese stock market.

40
41

https://www.jpx.co.jp/english/news/1020/dreu250000004n19-att/dreu250000004n8s.pdf
https://www.jpx.co.jp/english/news/1020/e20230414-01.html

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Governance engagement and voting – 2023
Engaging on capital allocation and unwinding of cross-shareholdings
Case study
Toyota Motor Corporation

Japan

Equity, Bonds

Issue
Toyota Motor is the world’s top carmaker and the largest company in Japan in terms of market capitalisation.
The company has strengthened its business foundation through robust partnerships with its suppliers
through cross-shareholdings, with its listed subsidiaries, affiliates, and business partners. We had concerns
over cross-shareholdings due to the potential conflict of interests and diminishing of minority shareholders’rights and capital inefficiency.

ActionWe engaged with the General Manager in charge of Capital Strategy & Affiliated Companies Finance in 2021,
focusing on cross-shareholdings to discuss our concerns. The company explained its intention to reduce byhalf the legacy cross-shareholdings that do not have strategic importance any longer in the medium term.
The company noted its plans to enter and maintain cross-held relationships with companies where it intends
to have a strategic partnership in certain technologies/products/regions. The company noted that, in suchcases, relationship building is prioritized over return and cost of capital. We questioned whether cross-sharing
is indispensable for strategic partnerships and suggested the company consider whether a joint venture
would be a more transparent corporate structure.
Following 2021, we had several follow-up engagements to understand the company’s progress inaccelerating the unwinding of cross-shareholdings and consideration of alternatives to such arrangements.
With misconduct incidents reported at its major subsidiaries, we engaged in 2023 to express our concerns
over its group governance. We were informed that Chair Akio Toyoda is committed to the reduction of crossshareholdings and the capital strategy department is responsible for engagement with cross-shareholders
to accelerate the unwinding process. The company indicated that not only legacy shares, but also strategic
shares, have been put under review against cost of capital in an aim to improve capital efficiency and toreallocate to areas where investments are needed. It was mentioned that those holdings that have not yielded
sufficient returns and traded below book value would be the first target for reductions. The company admitted
that cross-shareholdings have led to a weakening of governance at its group companies and that even thosesymbolic holdings will not be exempt from unwinding.

OutcomeToyota has reduced the number of listed cross-shareholdings companies to 49 as of March 2023 from65 in March 2020. In July 2023, it announced that it planned to partly reduce its strategic holdings in thecompany KDDI from 14.68% to 11.71% by tendering shares in the tender offer for treasury shares. We noted that
Toyota group companies such as Denso, Aisin and JTECT are taking the lead in accelerating the unwinding.
In November, Denso announced a public offering of the shares (sellers: Toyota Motor, Toyota Ind., Aisin) andbuyback. The move by Toyota and its group companies is consistent with its commitment to reduce crossshareholdings within the group companies to improve governance.

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Governance engagement and voting - 2023
As investors, we want to ensure that companies deploy their capital in a way that can optimize shareholder returns
without compromising the health of their balance sheet and the interests of bondholders. The South Korean market
experienced an increase in shareholder activism in 2023, as the rise of retail and other minority investors raised
concerns about chronic governance issues related to the entrenchment of controlling shareholders.
We believe that company boards should articulate their approach to shareholder returns. In cases wherecompanies have not provided a clear overview of their approach to shareholder returns, we may escalate our view tomanagement before annual shareholder meetings. Our engagement with KB Financial Group is an example.

Proxy voting – capital allocation and board diversity
Case study
KB Financial Group

KoreanEquityIssue
KB Financial Group, a Korean financial holding company, was the target of a shareholder activist campaign
which proposed a capital allocation framework and for the company to commit to a higher mid-term
shareholder return ratio. We shared some of the same concerns and sought to separately engage with theboard to express our views directly. Given the potential impact on long-term value to investors, we wereparticularly concerned about the inadequate shareholder return policy, and at the same wanted to raise
concerns about board diversity before the company’s annual general meeting in March.

ActionWe sent a letter stating our stewardship priorities and governance recommendations to the chairperson and
CEO requesting their responses in three areas. We believe that the shareholder’s return policy should support
a total shareholder return ratio, including dividends and buybacks, of at least 50% from 2022 earnings,
and potentially far higher in future years. Also, investment for growth should only be pursued where value
is created, and we expressed our doubts that M&A transactions and overseas expansion could ever meetthese criteria. And we encouraged the board to improve female representation to achieve a minimum of 25%
representation by 2025 and 30% by 2030.

OutcomeThe board acknowledged our concerns and said they intended to provide a 33% total shareholder return at aminimum and provide more visibility and predictability going forward to shareholders. The board has reached28.6% gender diversity in the board and has indicated its plans to enhance diversity. We supported the electionof all directors at the subsequent annual general meeting.

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Our six investment stewardship priorities

Strategy alignment with the longterm engagement and voting –2023

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Strategy alignment with the long term
engagement and voting – 2023

Long-term thinking leads to enduring business models. We believe executive compensation plans should be
structured to create long-term alignment between shareholders and the management of the companies in which
we are invested. As long-term investors, we see the importance of incentive awards, designed to encourage
management to perform at the highest levels. These programs need to align with appropriate performance criteriathat are both challenging and reflective of the company’s strategy and objectives over the long term. They should
reward executives for long-term value creation rather than short-term gains.
Meeting these goals is easier in theory than in practice. Given the rising pace of innovation, disruption, anduncertainty, compensation committees face several challenges in designing plans that are in long-term alignment
with shareholders. We are, therefore, not prescriptive in our evaluations and recognize boards need flexibility when
formulating a compensation plan. We also acknowledge some discretion is needed when evaluating management
performance towards realising long-term outcomes. In addition to challenges of business uncertainty, there areother challenges in designing plans; see the box below.

Challenges in Designing Compensation Plans• Choosing metrics well correlated with long-term share performance. In recent years, we have seen a

proliferation of performance share units (PSUs) in long-term equity plans that are driven by operational andfinancial metrics in lieu of shareholder returns over the performance period. Picking one or two PSU metrics
that would correlate well with long-term share performance can be a daunting task. Most boards make agood faith attempt to use metrics and targets, which if obtained should result in a similarity of outcomes
between management and shareholders. Issues arise when a metric is chosen that does not correlate
well with long-term shareholder returns. For example, we have seen companies use absolute long-termsales growth as a metric on which to determine management compensation. Such a metric may be flawed,
however, when targets are achieved as a result of expensive acquisitions or pricing at the expense ofoperating margins.
• Choosing targets that are well correlated with long-term share performance. In other cases, a Board may

choose the right metrics but an inappropriate target. For example, a cyclical company may use earnings
per share (EPS) growth rate targets relative to EPS at the bottom of a cycle, allowing management to achievetargets simply because the cycle rebounds even if the company’s shares underperform.
• Determining time periods over which to measure and compensate executives. Most grants of performance

shares are evaluated over a three-year performance period, which is considerably shorter than theinvestment horizon of most long-term investors. Consider a company that performs very well in the first
three years of a CEO’s tenure only to give back the gains in the next three-year period of his/her tenure.
While long-term shareholders may not make any returns over this period of the CEO’s tenure, it is easy tosee how such a tenured executive who receives annual equity grants driven by three-year PSU performanceends up with target compensation.
• Inclusion of ESG metrics. There has been a marked uptick in the inclusion of ESG metrics withincompensation plans. The challenge remains to explain how the chosen ESG metrics, targets, and weighting
fit into the company’s long-term strategy and how they are tied to material outcomes that enhance longterm shareholder value. We expect targets for ESG metrics to be financially material, challenging, andnot merely increase management compensation and insulate executives from volatility in stock priceperformance and operational performance.

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While we acknowledge the challenges in creating a compensation plan that aligns executive compensation withshareholder experience, we frequently come across practices we find problematic. The specifics can change fromyear to year – for example, adjustments to plans following the onset of COVID-19 took centre stage in 2020 and 2021
– but the general themes stay consistent.
In this chapter, we discuss some of those problematic practices that we encountered in 2023, along with somenotable compensation programs that we did support. In some cases, we also elaborate on the role engagement
played in assessing compensation and seeking to bring about changes in plans we found were not in alignment
with the interests of long-term shareholders.

Engaging companies on their strategic alignment with the long term

289

Number of companies engaged on
strategic alignment with the long term

33

Number of countries engaged
on on strategic alignment withthe long term

Top markets engaged on Strategy alignment with thelong term
Country

26

Number of sectors engaged
on on strategic alignment
with the long term

Top sectors engaged on Strategy alignment with thelong term%

Sector%United States

37.9%

Capital Goods

10.0%

Britain

17.1%

Banks

8.5%

Japan

12.5%

Materials

6.3%

Germany

3.4%

Utilities

6.0%

India

3.4%

Energy5.7%

Australia

2.6%

Pharmaceuticals, Biotechnology

5.7%

Brazil2.6%

Consumer Discretionary

4.8%

China

2.6%

Software & Services

4.6%

Switzerland

2.3%

Consumer Durables & Apparel

4.0%

South Korea

2.0%

Financial Services

4.0%

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When time-based awards work
A long-term trend in executive compensation has been
the adoption of performance-based metrics in equity
grants. In the S&P 500, for example, the percentage ofcompanies that include PSUs in their compensation
program has grown from 50% in 2009 to 93% in 2021.42
The major proxy advisors have also been advocatesfor majority performance-based equity awards inexecutive compensation.
Additionally, many, including some proxy advisors,consider options to be time-based awards, thus
discouraging companies from using them incompensation design. As we highlighted in last year’s
report, we disagree with that view. We acknowledge thatthe use of options as a compensation vehicle in someindustries subject to significant exogenous risk andvolatility could lead to pay benefits for management
even if underlying performance is not supportiveof such benefits. Also, there are concerns aroundthe valuation of long-dated options, but these canbe addressed. Nonetheless, as we show later in thereport, options can be used very effectively. We alsofind the pairing of options with long-term financial andoperational milestones a very effective tool for driving
pay-for-performance alignment.

Limitations of PSUs: Why PSU
payouts may not align with theshareholder experience
1. C ompany performance versus stock
performance: Shareholders evaluate company
performance on long-term expectations
while PSU evaluation is limited to the 2–3-year
performance period.
2.	
Performance criteria: It is often difficult to selectone or two key metrics that will determine
company performance over the performance
period. This leads to a proliferation of metrics.
3.	
Multiple pay opportunities: Proliferationof metrics and/or annual measurements
provides executives multiple pathways to
get compensated.
4.	
Poor governance by compensation committees:
Setting very low targets or ‘adjusting’ out
accounting items without considerations ofaccountability.

In that context, we took note of a 2019 research
paper which found that companies which do not use
performance shares outperformed their sector peersthat do.43 While we would not advocate for companies
to drop all use of PSUs, we strongly urge compensationcommittees to review their PSU plans and examine their
payouts in context of long-term stock performance.

42
43

https://corpgov.law.harvard.edu/2023/03/07/sp-500-ceo-compensation-increase-trends-5/
https://millstein.law.columbia.edu/sites/default/files/content/docs/Journal%20of%20Applied%20Corporate%20Finance%20Writeup%20-%20
JACF%2031.3%20%288%29%20%281%29%20%283%29.pdf

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We believe one of the most important drivers ofalignment between management and shareholders
is a large ownership stake and the retention of asignificant portion of vested shares over the executives’tenure. Research shows that companies with large
executive ownership stakes outperform those withlow ownership.44
That ownership stake can be achieved through timebased awards; management is naturally aligned tomaximize their value over their tenure while managing
risks, rather than aim to maximize certain metrics overrelatively short periods of time, such as the typical three
years in the US.
We have found that the following companies havesuccessfully used time-based equity awards including
options in their compensation program. In such cases,
we have supported compensation plans.
Amazon: We agreed with the approach taken by theboard of the U.S. retailer and technology company
around creating a compensation scheme that would
promote long-term alignment as they transitioned from
CEO/Founder Jeff Bezos to Andy Jassy, a management
executive who was promoted internally as CEO. Largetime vesting shares are atypical but may be warranted
in transitions where the board wants to protect theculture of ownership.
The USD 225 million time-based share grant, made to
the new CEO in 2021, will vest over ten years, with 80%of the granted shares vesting from years five throughten and is expected to be his only equity compensation
during that time. Given the annualized value of the
grants relative to their peers, and the back-end
loaded nature of the grants, we supported executive
compensation in 2022, as well as in 2023 after similar
multi-year time-based grants were made to othermembers of the executive team, but not the CEO
Autozone (AZO): The vast majority of executive
compensation at the U.S. retailer comes in the form ofannual option grants. In an engagement we had withthe company, the board communicated its belief that
this compensation structure is a causal factor in thecompany’s success and strong shareholder returns
over time.

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The compensation plan drives a virtuous cycle: agood incentive plan leads to good capital allocation,
which drives strong performance, which drives value
creation for employees, which drives retention, which
drives employees becoming better at their jobs,
which in turn drives further strong performance.
AZO believes the option plan contributes to good longterm corporate financial planning that is better tailoredto long-term strategy alignment than performance
shares for this company. Performance shares,
driven by one or two specific metrics, can incentivize
management teams in the retail sector to meettheir objectives with sub optimal capital allocation,such as by opening too many stores or buying too
much inventory to hit earnings or sales numbers
despite poor returns. AZO views too many stores asa chronic problem for mature retailers. Meanwhile,some incentives could lead retailers to underinvest inoperating expenses like labor and maintenance, which
can boost performance measured against PSU metrics
like earnings per share or return on capital for a shortperiod (long enough to generate PSU payouts) but
could later result in loss of long-term competitivenessand shareholder value.
Copart: The U.S. online car auction company grants
its executives upfront options packages that aremeant to cover four years of equity pay. They had givensuch grants in 2013 and 2020, before again granting
one in 2022 to new co-CEO Jeff Liaw. The grant,
which consisted of USD 6 million of time-based stockand USD 23 million of options, was meant to cover his
equity compensation for the next four years.
Since the initial implementation of this structurewith the December 2013 options grant, the stock hascompounded at 27% per year, as of the end of the mostrecent fiscal year in July. We believe the compensation
philosophy contributes to that performance, as it leads
to a long-term focus on value creation, and accordingly,
we voted in favor of the plan at the annual meeting
last December.
In an engagement this year, we noted our support
for executive compensation and encouraged thecompany to keep the same structure of periodic
upfront options grants.
Conversely, when we believe executives are notsufficiently aligned with shareholders through ownership,
we will seek to remedy that through engagement.

44

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1343179

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Alignment of executives with shareholders
Case study
Aker BP ASA

NorwayEquityIssue
Following positive engagements with the company on climate risk, we engaged with Aker BP, a Norwegianoil producer, around executive share ownership guidelines. The company has previously operated a cashbased annual bonus and long-term incentive plan and as a result, the share ownership among senior leaders
remains low. We expect that executive directors should build up a significant level of personal shareholding toensure alignment of interest with shareholders.

ActionWe explained that we expect company remuneration policies to include robust shareholding guidelines,
which management teams are required to meet to demonstrate alignment of interest with shareholders.
We noted that low or no shareholdings by senior management, could be viewed negatively and that executives
are encouraged to purchase company shares using their own resources. We encouraged the company
to introduce guidelines as part of any remuneration policy going forward and to ensure future long-term
incentive plans are share-based. We also explained that the company could explore some element of sharebased deferral for annual bonuses until shareholding guidelines were met. We further noted that some
European markets had introduced post-employment shareholding requirements, requiring executives toretain a portion of their holdings for a time after they have left employment with the company.

Outcome
The company explained that while previous iterations of its long-term incentive plans had been cash-based,
it had recently introduced a share-based long-term plan, but it would take some time for executives to build
up their ownership of shares. The company noted that it will relay our views on shareholding guidelines tothe board ahead of the next remuneration policy review. While we will continue to monitor any proposedchanges by the company, low executive share ownership expectations appear to be a market-wide issue
across Norwegian companies, and we will seek to address our concerns with wider market participants
throughout 2024.

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PSU metric disclosure
As performance shares have become the dominant feature of executive compensation programs, understanding
both the metrics used and how they are calculated has become critical for investors. To that end, our recently
published 2024 Proxy Voting Guidelines include guidance about how we may vote against either the say-on-pay
proposal or compensation committee members if the company does not disclose metrics, targets, and payout
percentages for closing-cycle PSU awards. We may also vote against management if the proxy does not provide areconciliation between GAAP metrics and any non-GAAP metrics used as part of the compensation plan.

Case study
CencoraU.S.

EquityIssue
We have had concerns about how non-GAAP metrics have affected payouts at the U.S. drug distributor
Cencora. The company has had significant charges related to opioid litigation over the years, with the largest
charge coming in 2020. It was not clear how those charges impacted the ROIC calculation used for PSUs.
While the company would reasonably not want to over-penalize current management for a legacy problem,the charges also had the effect of making GAAP balance sheet equity negative for several years, which could
artificially inflate an ROIC calculation.
To that point, PSUs had in general paid out close to the maximum over the 2018-2020, 2019-2021 and 20202022 cycles.

ActionWe raised these concerns about the impact of the non-GAAP metrics on payouts in multiple engagements withthe company. While acknowledging the validity of the concerns, they assured us that the charges did not drive
higher payouts, explaining that they use an asset-based calculation instead of book value of equity and debt.
They noted that there are several components underlying their ROIC calculations, and pointed out that thedisclosures by other companies are also fairly limited in most instances.
In response, JPMAM shared with them ROIC disclosures presented by another company that gives morequalitative and quantitative disclosure. Also, the fact that there can be several factors impacting ROIC
calculations necessitates some disclosure on changes in ROIC, especially when the changes are large and thepayouts have been close to the maximum of 200%. Finally, it also raises questions about the appropriatenessof the target level given that the company has been consistently above target.

Outcome
In its proxy statement filed in January 2024, Cencora included a footnote disclosing that invested capital was
calculated as the 12-month average of accounts receivable, inventories, accounts payable, net property andequipment, goodwill, intangible assets, and right-of-use assets. This is the first time they have provided sucha disclosure. The disclosure confirms that the charges from opioid litigation did not result in higher payoutsfrom the ROIC metric, as the charges impacted the liability side of the balance sheet.
We were pleased with the additional disclosure.

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Timing of equity grants
We have noted increasing scrutiny around the timing of equity grants, particularly as it relates to material nonpublic information (MNPI). Amendments to the SEC’s Regulation S-K will now require companies to disclose
information on options granted before the disclosure of MNPI. These rules are meant to prevent ‘spring-loaded’
option grants, by which options are granted with stock prices that do not reflect the positive MNPI, only for the stock
price to immediately jump following the disclosure.
We are generally pleased to see this amendment; while 10b5-1 rules have long been intended to stop the purchaseor sale of securities by insiders who possessed MNPI, new grants have not been explicitly addressed by that rule.
We are sensitive to cases where companies time grants without accompanying disclosure to allow investors toassess the governance around the timing of grants and MNPI.

Case study
U.S. retailer

U.S.

EquityIssue
We noted that equity awards, a mix of time-based and performance-based restricted stock, were approvedby the board of a U.S. retailer on the same day that the board decided to publicly disclose that it was pursuing
strategic alternatives. The stock would appreciate by 20% in the next two business days following theannouncement.
While we generally name companies in our public reporting, we decided in this case to anonymize.

ActionWe engaged with the company ahead of its annual meeting and laid out our concerns. We believed it was
unusual that the grants had occurred on the last day of the fiscal year when most companies grant annual
equity awards during the first quarter of the fiscal year. The company itself had done the latter in the prior year.
The company believed the timing was an unfortunate coincidence, explaining that six months ahead ofthat grant it had already decided to move fiscal grants up to the very beginning of the fiscal year as its new
standard practice.
We noted that is an unusual practice as most companies typically need time to finalize the full-year financial
statements and certify achievement of closing-cycle incentive awards. The company then disclosed thatthe grants for the following year occurred three weeks after the end of the fiscal year, reverting to a morecommonly practised cadence.

Outcome
We voted against compensation due to our concerns. Whether the timing was intentional or not, we believed
executives inappropriately benefitted simply from the timing of disclosures.
The say-on-pay proposal received 98% support overall, suggesting our concerns went unnoticed by otherinvestors or were not shared by the broader market.

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Annual Incentive metrics and weights
We generally prefer that more compensation be tied towards long-term value creation than short-term results.
We want management teams to make decisions to protect and grow the long-term value of the company, rather
than to maximize short-term financial performance. And depending on the industry, earnings can swing wildlyfrom year to year based on cyclical factors outside of the company’s control. Thus, compensation plans that are
predominantly driven by short-term measures, especially metrics like earnings or EBITDA are more akin to profitsharing-plans than value-creation plans
We have therefore had concerns about the compensation structures of several U.S. homebuilders, where
executive pay had been tilted heavily to annual metrics like pre-tax income. The following case study illustrates
our engagement in this area.

Case study
LennarU.S.

EquityIssue
We have had concerns about both the magnitude of executive pay at the U.S. homebuilder Lennar, as well as
the structure of the compensation program, which we felt overly emphasized short-term performance andhad the potential to be misaligned with shareholder returns. The company paid three different executives(the Chair and co-CEOs) over USD 30 million each in 2022. In addition, when we first engaged with them in
2021, short-term cash compensation (annual incentive plan) was a much greater percentage of pay than atmost companies and was based on a percentage of pre-tax profits, which ran the risk of management making
decisions that overly emphasized short-term results.

ActionWe have engaged three times over the past three years with the company’s CFO and the prior chair of
the Compensation Committee. We shared our concerns about both the quantum of pay and how it wasdetermined. We also engaged with other homebuilders, including Lennar’s closest peer D.R. Horton, who have
had the same issue to varying degrees.

OutcomeLennar has capped short-term cash compensation at USD 6 million to USD 7 million, about half of prior levels.
They increased the amount of equity granted but increased the percentage of performance shares. Lennar
also increased the hurdle required to hit targets on key performance indicators to the 60th percentile of peergroup, up from peer group median. We felt they should target better than peer group median given they (andD.R. Horton) have much more scale than the rest of the peer group.
We were pleased by some changes, such as the increase in performance for target payout to the 60th
percentile. However, we were concerned by the significant increase in equity grant size that would more thanoffset the lower annual incentive. We believe that this will effectively lock in a high level of compensation, andas a result, we voted against compensation at the annual meeting.
That concern did not appear to be shared by the broader market, as say-on-pay support rebounded from 63%
in 2022 to 86% in 2023. Later, one of the CEOs retired, reducing the number of extremely highly paid executives
from three to two, which we view as a positive step.

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Case study
Dexus

Australia

EquityIssue
Dexus is a major Australasian Real Estate Investment Trust. The company put forward ‘the Adoption of
the Remuneration Report’ for shareholders to vote in the AGM held in October 2023. We engaged withthe company to express our concerns about the design of the compensation for the senior executives,
particularly for the CEO.

ActionThe clarity of the ‘Role-specific’ assessment for the CEO’s performance, which is one of the KPIs in determining
the executive’s Short-term Incentive (STI), is a key subject we discussed in the meeting. According to the CEOscorecard disclosed in the 2023 Remuneration Report, this ‘Role-specific’ element carried 20% weighting
in design of the assessment for the STI. The only thing mentioned under this element is the successful
integration of AMP Capital’s real estate and infrastructure equity business platform (AMPC), which Dexus
acquired in March 2023. The company representatives mentioned the importance of getting the key people
and the assets through the acquisition and emphasized that the acquisition is value accretive.
We also discussed the fact that the maximum STI payout of other executives was reduced to 100%, from 125%
for the prior year, but the maximum payout of the CEO stayed at 125%. We suggested the company consider
increasing the portion of LTI in the composition of the total remuneration.

OutcomeIn our view, the successful integration of AMPC requires the contribution and leadership of more than one
senior executive. If Dexus wants to include the assessment of the success of integration in the calculationof the STI, the assessment should appear on the scorecards of the relevant senior executives, not only on
the scorecard of the CEO. We also have reservations about the quantum of the weighting. The company’s
responses to other issues have not eased our concerns about the design of the executive compensation.
As a result, we voted ‘against’ the ‘Adoption of the Remuneration Report’ resolution.
Notably, the resolution was not passed, as close to 30% of the votes were cast against the resolution.
This compared to 8% of ‘against’ votes for the prior year.

842023 Investment Stewardship ReportStrategy alignment with the long term
engagement and voting – 2023 continued

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Voting on strategic long-term alignment
This chapter has demonstrated how we utilize our engagement and voting power to bring about change,
where we believe executive compensation plans have not been structured in a way to create long-term alignment
between shareholders and company management. In 2023, we voted against management on compensation
1,850 occasions (17% of the time). An additional case study follows up on our Howmet Aerospace case study,
which appeared in last year’s report.

Case study
Howmet Aerospace (HWM)

U.S.

EquityIssue
We wrote last year about our concerns with the U.S. aerospace company’s repeated use of ‘one-time’ awards.
These awards resulted in outsized compensation levels for a mid-cap company, and we therefore voted
against the plan. In engagements with the company, it explained that these awards were necessitated by alack of succession candidates while committing to the adoption of a normal annual compensation programfor any future CEO compensation.

ActionWe engaged with HWM again ahead of the 2023 annual meeting and were pleased to see the company
formalize its move to regular compensation planning. CEO John Plant did not receive any equity awards in2023 but will be eligible for participation in the company’s normal program beginning in 2024. His equity
target value will be ~USD 14 million. That would put him towards the higher end of the peer group, but within
range, and is justified by the strong performance of the company during his tenure.
Meanwhile, the company is building its succession plan, which involves both internal and external
candidates.

OutcomeAs a result of the changes the company made, we voted in favour of compensation at the annual meeting.
The say-on-pay proposal received 98% support up from 53% last year.

J.P. Morgan Asset Management

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Engaging for Sustainable Outcomes
In 2015, the United Nations’ Sustainable Development Goals (SDGs) provided a blueprint for countries aroundthe world to end poverty, protect the planet and ensure that all peoples enjoy peace and prosperity. The rise ofsustainable investing has coincided with the increasing adoption of the SDGs as a way of framing societal impact.
As long-term investors, we understand the global challenges identified by the SDGs are likely to influence society
for years to come and represent unmet societal needs that some companies are well-placed to address throughinnovative solutions. As part of identifying opportunities for our client accounts and, for clients with sustainableobjectives, understanding how companies are measuring positive outcomes, our engagement identifies companies
that tackle these global challenges as they facilitate a more sustainable future. By meeting these unmet societal
needs, companies can create competitive advantages and access new markets. This can create the opportunity for
attractive financial returns over the long term while contributing solutions to sustainability challenges.
Engagement with these companies aims to maximize
the sustainable outcomes driven by investee
companies, as those companies that successfully
address these key societal needs efficiently are likely
to benefit long-term, and those that successfully
demonstrate the value of products for customers
and stakeholders may gain a competitive advantage.
Therefore, we identify companies which have identified
growth drivers linked to addressing these societal
needs and encourage them to better evidence
positive outcomes for end users and allocate
expenditures for research and development on thesesustainable solutions.

86

We will seek to work with companies further as they
develop outcome-oriented metrics and standardization
within the industry increases. Engagement forsustainable outcomes may vary in approach dependingon the sector and the outcome being sought, as data
availability and ease of measurement differ greatly
across possible social and environmental indicators.
Nonetheless, our focus will remain on encouraging
companies to address the most material societal
challenges, with the goal of creating long-term value
for the company and, with respect to our sustainablestrategies, for society.

2023 Investment Stewardship Report

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Engaging for Sustainable Outcomes continued
Case study
CNH Industrial

U.S.

Equities, Bonds

Issue
Precision agriculture offers the opportunity to reduce inputs such as water, pesticides and fertilizer throughoptimized, more efficient applications. Reducing these inputs lowers costs for farmers and lowers negativeenvironmental impacts through water conservation and minimizing the application of chemicals.
CNH Industrial provides precision agriculture equipment. However, we do not believe the company evidences
the positive environmental impacts and cost savings of its products as effectively as its peers. We believe
precision agriculture is an opportunity for growth for CNH given cost savings and increasing desire forsustainability among customers.

ActionWe met with CNH Industrial to discuss the market for precision agriculture, quantification of environmental
benefits and solutions that lower emissions for farmers using CNH equipment.
CNH Industrial confirmed that all large equipment sales integrate some components of precision agriculture
and that they categorize 900 million of sales as related to precision agriculture components, expecting
this to be more than USD 1 billion in 2023. The company indicated that its acquisition of Raven, a precision
agriculture company, in 2021 has added significantly to efforts in this market by making software faster andeasier to integrate. We discussed examples of how these products and services can reduce the use of inputs,
and therefore costs, for customers.
We also discussed solutions the company is exploring to lower emissions on farms. There are significant
barriers to the electrification of farm equipment due to the time in field and size of machinery, making theweight of batteries unfeasible. However, CNH is investigating innovative methane-powered engines andpossible novel service models offering methane collection services to farms, which may lead to additional
new market opportunities.

Outcome
CNH provided quantified examples of how its products can reduce use of herbicides and water, to help
demonstrate that CNH is providing solutions to address the challenges identified by SDG2 Zero Hunger.
However, we noted that CNH could better evidence and quantify the environmental benefits, as well as costsavings, of its equipment through reporting. We will continue to encourage the company to disclose thisinformation more transparently.

J.P. Morgan Asset Management

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Stewardship in Alternative Markets
JPMAM’s Global Alternatives team includes investment solutions in private equity, private debt, real assets (such as
infrastructure and transport), and hedge funds. The level of influence over our investments in alternatives differs,
based on our ownership structure, enabling differing levers for our stewardship of these assets. Stewardship in theseexamples may take a different form to our listed equity and debt strategies. Nevertheless, one principle remains thesame across JPMAM, which is our commitment to the responsible allocation, management, and oversight of capitalto maximize the value of our investments for our clients and beneficiaries.
Within private markets, our assets may be directly
owned by our portfolios, and they may exercise
significant influence. In our commercial forestry
investments where we directly control assets,
stewardship involves driving higher sustainability
standards as part of responsible forestry management
and afforestation practices. Similarly, where we tend
to hold majority stakes in infrastructure assets, we willhold a board seat and exercise responsible ownershipby holding the board accountable for sustainability
performance and encouraging the adoption of higher
standards to address financial risks and opportunities.
In those assets where we hold a minority stake and may
not manage the company day-to-day, we still exercise
our influence by engaging with investee companies toensure positive outcomes for our clients. For instance,
we may partner with property managers in our realestate properties to ensure buildings meet the highefficiency standards for resource use including energy,
water and waste.
While maintaining the highest integrity andconfidentiality between our public and private assets,
the head of the global alternatives business is amember of JPMAM’s Sustainable Investing OversightCommittee (SIOC). This helps promote the consistentunderstanding, assessment and application ofsustainable investing and stewardship across JPMAM.
Nevertheless, stewardship for global alternatives
is managed directly by the portfolio management
teams in light of the sensitivity of material, non-public
information. As a result, the approach to stewardship
across the alternatives business is unique to theunderlying circumstances of the portfolio assets,
as determined by the aims of the individual portfolio
management teams. The Sustainable Investing team
may offer support on the approach to alternative
sustainable investing solutions and products, ESG
integration and stewardship, but this will never include
asset-specific information.

88Standards of transparency and reporting withinalternative investments are low, especially whencompared to public markets. This is widely recognizedacross the industry, and much of our engagement
within alternatives is geared towards procuring uniform
ESG data from our investments. When we exert more
influence due to majority ownership structures,
data availability is higher, and our challenge involves
standardizing and driving the highest standards
possible through assurance. Where we do nothave access to this data, our engagement relies on
working in partnership to increase transparency on
metrics we deem financially material. Tracking these
KPIs over time will allow us to better manage risks within
our investments.

Campbell Global
In 2021, JPMAM acquired Campbell Global, LLC,
a timberland investment and managementcompany, as part of providing investment
opportunities related to climate, conservation,and biodiversity for clients who are looking for suchopportunities. Within Campbell Global, we provide
investment advisory services to longstanding
commercial forestry businesses in the U.S. andglobally. Campbell Global aims to have harvested
trees replanted, open managed forests forrecreational purposes, and report on our activities
with precision and transparency. Campbell Global
also tracks and discloses key performanceindicators across many facets including GHG(greenhouse gas) accounting metrics and naturebased KPIs. This helps to monitor and manage
ESG considerations over the active management
phase of the investment horizon and is criticalto help ensure the long-term sustainability of
our clients’ and beneficiaries’ assets. To further
demonstrate the commitment to responsible
investing, Campbell Global ensures that 100% of
our managed investments are certified by a thirdparty forest certification provider.

2023 Investment Stewardship Report

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Stewardship in Alternative Markets continued
Case study
Campbell Global

U.S.

Alternatives

Issue
As an advisor to clients who own commercial forestry businesses, the foundation of our clients’ capital value
depends upon the sustainable management of forests, carbon, biodiversity, soil, species, and clean water.
Given the critical role that nature plays in our clients’ financial success, Campbell Global consistently works toenhance our ability to measure and monitor the environmental impact on our managed forests with the longterm goal of enhancing our clients’ natural capital resources.
While measurement techniques for biodiversity are still at a nascent stage, we believe understanding
the composition and abundance of species within our managed forests allows us to better evaluate theresilience of our clients’ assets, as many indicators of biodiversity reflect the health of our clients’ forest
assets. Furthermore, local, federal, and/or international regulations and third-party certifications often havesustainable forest management standards that must be achieved to access local markets and, inherently,
maximizing long-term returns for our clients.

ActionIn 2023, to improve how we address biodiversity across our global portfolio of managed properties, Campbell
Global examined both potential and current managed assets to identify and benchmark attributes necessary
to establish a baseline. We also started rolling out biodiversity enhancement plans which identify areas ofhigh conservation value; cultural/social conservation sites; rare, threatened, or endangered (RTE) species;
along with opportunities for projects to promote conservation and/or biodiversity enhancement. Campbell
Global is also developing species profiles for RTEs to specify how third-party forestry management activities(such as harvesting, road maintenance, etc.) should be conducted near migratory corridors, foraging habitats,
and/or nests.
These plans will enable Campbell Global to track and measure baselines, benchmarks, and the impact of the
projects that we identify during the rollout.

Outcome
We will continue to develop plans to enable us to identify and track vital indicators of healthy, sustainable
forests. This systematic approach will allow us to create long-term value for our clients while improving ourclients’ natural resources.

J.P. Morgan Asset Management

89

Proxy voting – How we utilized our voting
rights in 2023

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2023 highlighted the continued importance of using voting as an important lever of dispensing our stewardship
responsibilities. High-profile topics including climate transition plans, board effectiveness, succession planning
processes, and appropriate compensation programs continued to remain at the forefront of investor minds.
These topics, along with others including sustainabilityof supply chains, appropriate capital allocation,and stronger board and management diversity, saw
overall dissent, globally, at company general meetings
marginally higher than in 2022. In 2023, we also saw
an uptick in the number of resolutions requiring
companies to stop undertaking particular actions
or policies with respect to environmental, social, orgovernance issues. While these types of resolutions
are not new, the nature of the themes is changing andincreasingly encompasses company climate actionplans, diversity programs, and other environmental andsocial topics.
These topics, among others, have shaped a large partof the governance and related proxy voting work carriedout by our investment and stewardship teams in 2023.
We believe that the need to effectively use voting rights
is important to encourage corporate practices thatdeliver long-term sustainable returns to shareholders.
An increase was seen again in 2023, from previous
years, in the number of resolutions globally on
environmental and social issues. We take seriously
our responsibility to review these issues and carry out
voting in a considered manner, using insights from ourresearch and engagement with companies. Over 2023,
we reviewed these environmental and social-related
resolutions and supported those that aligned with ourInvestment Stewardship Priorities, where we believed
voting in favour of such resolutions was in the bestinterests of our clients. However, where we found thatthe prescriptive nature of the resolution, particularly onsome environmental issues, sought to micromanage
companies and was not in our clients’ best interests,
we refrained from supporting these.
A phenomenon we observed in 2023 was an increasein the number of shareholder proposals received bysome large companies. This has raised concerns
about not just the ability of shareholders to engage
meaningfully with management on all the proposals
ahead of the shareholder meeting, but also the ability
45

of management to focus their attention and resources
to address the issues. In such situations, shareholders
have responded by prioritizing the issues to engage
with management, ahead of the shareholder meeting.
Another development we saw was a single shareholder
proposal requesting multiple asks of a company.
Some of these may include one or two points which arefinancially material and valuable for investors to see thecompany address. However, we do not always support
these resolutions if they are being bundled with otherasks, which are either financially immaterial or not
adding value to the company’s success.
Our primary concern at all times is striving for thebest economic interests of our clients and, as such,
we vote in a manner that is intended to be beneficial
to delivering the long-term value of the companies
in which we invest. To facilitate this, we haveestablished proxy voting guidelines covering global
markets that are overseen by a network of regional
proxy committees.
We strive to vote proxies at every meeting, except inmarkets or companies that impose restrictions onshareholders wanting to vote at general meetings,
such as share-blocking. There also could be occasions
where we are unable to cast a vote, due to a conflict ofinterest occurring or securities being out on loan aspart of a client’s securities lending program.

2023 voting45
In 2023, J.P. Morgan Asset Management voted on
94,684 proposals across 9,568 meetings and opposedmanagement (either voting against or abstaining)approximately 9.3% of the time.
J.P. Morgan Asset Management voted with managementon 85,883 proposals and voted against management
on 8,801 proposals. An analysis of our voting activity
shows the most common reasons for voting against
management include directors not meeting our
independence criteria, executive compensation plans

Split votes are reflected in the statistics once based on the instruction for which the majority of votable shares was applied. There were 1,776
proposals with split votes globally, broken down as 49 in EMEA, 1,572 in Americas, 21 in Japan and 134 in Asia-Pacific ex-Japan. That includes 288 split
votes on shareholder proposals, broken down as 2 in EMEA, 286 in Americas, 0 in Japan and 0 in Asia-Pacific ex-Japan.
Management and shareholder proposal tables are broken down based on ISS classifications, with some aggregations. Proposals for contested
proxies are reflected once based on which proxy card was voted.
Meetings are assigned to regions based on the country location of the issuer.
This section includes a summary of voting data taken from our proxy adviser. Such information has not been audited.

90

2023 Investment Stewardship ReportProxy voting – How we utilized our voting
rights in 2023 continued
that are either poorly aligned or inadequately disclosed
and capital issuances that are either overly dilutive or
not justified to shareholders. We also supported 1,222
shareholder proposals, including those related tosocial and environmental issues, such as climate risk,
gender pay gaps and human rights. We abstained orwithheld votes on 1,590 proposals.

J.P. Morgan Asset Management voting globally in 2023
Number of Votable Meetings

9,771

Number of Meetings Voted

9,568

Number of Proposals Voted

94,684

Number of Shareholder Proposals voted ‘for’

1,222

Votes with Management

85,883

Votes ‘against’ Management

8,801

Abstains

708

Withholds

882

Some key voting trends from the year include:• Investors continue to press companies on theimplementation of their climate transition plans,and 2023 was no different. However, investors are
increasingly using voting on other AGM-related
resolutions to highlight discontent on this issue
beyond the company ‘say on climate’ resolutions or
climate-related shareholder resolutions. We haveseen investors target the election/re-election ofboard directors including the Chair, require climate
and/or other ESG-related metrics be included incompensation programs, and also target capitalrelated resolutions over company capex concerns.
• A return to some core governance issues including

board effectiveness, diversity, and succession
planning. As diversity topics continue to occupy
boardroom agendas, investors continued touse voting as a tool to address concerns on key
diversity metrics across management teams andboard directors. However, 2023 also saw a renewedemphasis on key topics including board effectivenessand succession planning. As businesses continue
to face challenges including climate transition,a prolonged heightened inflationary environment,
and the rise of AI, investors are keen to know thatcompanies are not only appropriately resourced with

J.P. Morgan Asset Management

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the right skills and expertise to address these risks
but also to take advantage of the opportunities thatarise from the changing landscape.
• Shareholder proposals regarding environmental,social, and governance issues continued to risein 2023, requesting companies implement certain
policies, take a particular action or provide particular
disclosures. However, 2023 also saw an increase in
the number of resolutions requiring companies tostop undertaking particular actions or policies withrespect to environmental, social, or governanceissues. As noted earlier, while these types ofresolutions are not new, the nature of the themes ischanging and increasingly encompasses company
climate action plans, diversity programs, and otherenvironmental and social topics. While support forthese resolutions remained low in 2023, we expect tosee similar resolutions tabled throughout the 2024
voting season.
• Companies were keen to highlight to investors theincreasingly global market from which they draw
talent and the need for their remuneration programs
to be competitive to recruit and retain executive
management. However, investors highlighted theneed for companies to be responsive to shareholder
concerns, such as aligning compensation with longterm performance or wider employee workforce pay
and conditions. Where this balance was not met,
investors used their voting to highlight their dissent.
All of the trends mentioned link to our six Investment
Stewardship Priorities: Climate change, natural capitaland ecosystems, human capital management, social
stakeholder engagement, governance, and strategyalignment with the long term.
Please see the relevant sections for further engagement
and specific voting examples.
As we look to 2024, we will continue to monitor how
companies continue to address key themes, including
climate change risks and opportunities, executive pay
and wider financially material ESG considerations,effective board oversight, robust succession planning,
and assurance of material ESG practices.

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Proxy voting – How we utilized our voting
rights in 2023 continued
2023 voting in detail
GlobalNumber of votable meetings

9,771

Number of meetings voted

9,568

Number of votable proposals

96,666

Number of proposals voted

94,684%

EMEA%

Americas

2,064
98%

1,873

91%

31,36698%

29,591

94%

%

Japan

%

Asia exJapan

%

4,031

529

3,147

4,023 100%

529

36,491

6,146

22,66336,307 100%

6,146 100%

22,640 100%

100%

3,143 100%

Number of shareholder
proposals voted ‘for’

1,222

Votes with management

85,88391%

27,521

93%

33,652

93%

5,393

88%

19,31785%

Votes ‘against’ management

8,801

9%

2,070

7%

2,655

7%

753

12%

3,323

15%

Abstains

708

1%

295

1%

360

1%

-

0%

53

0%

Withholds

882

1%

-

0%

867

2%

-

0%

15

0%

1,590

2%

295

1%

1,227

3%

-

0%

68

0%

Abstain and withholds
aggregated

136

228

33

825

Management proposals
Director
Elections

DirectorrelatedCompensation

Capitalization

Mergers &Transactions

Company
ArticlesGlobal

EMEA

AmericasJapan

Asia ex Japan

Support

37,515

7,255

21,907

4,194

4,159

Not Support

3,051

613

1,300

577

561

Abstain

525

273

231

-

21

Support

5,318

3,214

571

517

1,016

Not Support

889

193

280

67

349

Abstain

138

2

112

-

24

Support

8,731

3,592

3,292

158

1,689

Not Support

1,850

648

661

5

536

Abstain

1

-

-

-

1

Support

7,158

3,888

462

2

2,806

Not Support

796

179

58

-

559

Abstain

-

-

-

-

-

Support

3,947

1,147

584

9

2,207

Not Support

732

80

24

6

622

Abstain

4

-

-

-

4

Support

2,059

797

261

107

894

353

77

34

13

229

4

-

1

-

3

Not Support
Abstain92

2023 Investment Stewardship Report

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Proxy voting – How we utilized our voting
rights in 2023 continued
RoutineBusiness/
Miscellaneous
Environmental& Social

Other

Global

EMEA

AmericasJapan

Asia ex Japan

16,357

6,458

3,974

290

5,635

701

250

49

52

350

Abstain

6

4

2

-

-

Support

353

329

4

-

20

Not Support

33

25

-

-

8

Abstain

-

-

-

-

-

Support

236

158

60

-

18

Not Support

62

53

9

-

-

Abstain

19

13

6

-

-

Global

EMEA

AmericasJapan

APAC ex Japan

Support

39

3

26

9

1

Not Support

157

20

91

40

6

Abstain

-

-

-

-

-

Support

45

1

43

1

-

Not Support

196

5

191

-

-

Abstain

-

-

-

-

-

Support

621

58

56

4

503

Not Support

131

59

21

12

39

Abstain

9

3

6

-

-

Support

74

46

16

3

9

Not Support

105

11

86

6

2

Abstain

-

-

-

-

-

Support

63

2

38

4

19

Not Support

156

15

120

7

14

Abstain

-

-

-

-

-

Support

380

26

49

12

293

Not Support

256

93

69

51

43

2

-

2

-

-

SupportNot Support

Shareholder proposals
Director-related
Environmental

SocialDirector
Elections

Directorrelated

Governanceexcluding
Directors
Other
Proposals

AbstainManagement and shareholder proposal tables are broken down based on ISS classifications, with some aggregations. Proposals for contested proxies
are reflected one time based on which proxy card was voted.
Meetings are assigned to regions based on country location of the issuer. This methodology is different from last year’s report, which used location of
the account holding the security. Regional totals are therefore not comparable vs last year’s report.

J.P. Morgan Asset Management

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Proxy voting – How we utilized our voting
rights in 2023 continued
Proxy voting process in detail
We vote shares held in our clients’ portfolios basedon our reasonable judgment of what will best serve
the long-term interests of our clients, in accordancewith the legal standards applicable to the particularclient account.
Globally, we have the ability to flag certain shareholder
meetings in our proxy voting system to allow extra
scrutiny in certain cases. These include material
investment positions where there are contentious
resolutions, where engagement is ongoing following
a controversy or where corporate actions are being
decided, such as mergers and acquisitions or major
disposals. We also consider additional analysis
voting resolutions at companies where our in-houseresearch has identified material ESG-related issues.
We also assess companies where engagement has
not progressed sufficiently and voting action is used
to escalate the engagement (please see the section on
Our Approach to Engagement).
As part of the review process, and to ensure we arevoting the fullest position we can do so, we reconcile ourinternal record of holdings with voting rights available
to us for company general meetings. Where we voteagainst management, we may write to the companies
after the vote, or engage before voting, to inform themof the reasons behind our actions. We feel this is aneffective engagement approach to share our views
with the board on key issues where we have concerns.
This helps encourage further dialogue with directors on
important corporate governance matters.
In 2023, J.P. Morgan Asset Management voted at 9,568
meetings, representing 97.9% of meetings where we had
a legal right to do so. Unvoted meetings related primarily
to markets that have share-blocking requirements
in place or where other onerous administrativerequirements make it difficult for J.P. Morgan AssetManagement to exercise its votes.
Many of the resolutions at general meetings relate
to routine business. At companies where we havenot identified any material corporate governanceconcerns, we have identified certain votes that we deem
significant. We define significant votes as those where
we are a major shareholder in our portfolios, where thevote is likely to be close or contentious or where there
may be potential material consequences for our clients.
We would also include certain categories of shareholder
proposals and votes in relation to companies or issues

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identified on our focus list for engagement as potentiallysignificant votes. Some examples of these votes arepresented in each of the six Investment Stewardship
Priorities sections of this report.
J.P. Morgan Asset Management publicly discloses its
voting for certain accounts. In 2023, we continued toprovide transparency of our voting through a third-party
vote disclosure service, which is updated on a quarterly
basis and contains the voting record, at company
level, for all meetings voted for global companies heldin our European fund range in the preceding quarter.
The voting reports are available here. The proxy voting
record for J.P. Morgan U.S. mutual funds and ETFs is filed
publicly on Form N-PX and is available here.

Proxy voting rules and oversight
We have comprehensive proxy voting guidelines ineach region, covering 1) North America; 2) Europe,
the Middle East, Africa, Central America and SouthAmerica; 3) Asia ex-Japan; and 4) Japan. These take
into account good practice recommendations from theInternational Corporate Governance Network and theOECD, along with local market best practice guidelines,
among others.
Overall responsibility for the formulation of proxyvoting guidelines rests with the regional Proxy
Committees, whose role is to review J.P. Morgan AssetManagement’s proxy voting guidelines with respect
to investee companies and to provide an escalation
point for voting and corporate governance issues.
The committees are composed of senior researchanalysts, portfolio managers, the global head ofstewardship (who sits on each regional committee)
and members of the Investment Stewardship team,
as well as legal, compliance, operations and risk
specialists. The committees escalate to the J.P. Morgan
Asset Management Sustainable Investing OversightCommittee (SIOC).
Our Global Proxy Voting Guidelines document can befound here.
We have developed North American Sustainable
Strategy Proxy Voting Guidelines that are designed toalign proxy voting decisions within scope of sustainablestrategy accounts’ objectives and strategies. As partof our continued efforts to accommodate varying
client voting preferences, as of the end of 2023, we arein the process of evaluating whether to refine voting
guidelines in other regions.

2023 Investment Stewardship ReportProxy voting – How we utilized our voting
rights in 2023 continued

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Sustainability-Related Shareholder Proposals
There has been an increase in shareholder
proposals related to environmental and social
issues. These proposals vary in quality and nature,
and we outline our approach below, using climatechange as an example.
We generally support climate-related shareholder
resolutions on:• Strategy and governance: companies having

senior-level oversight of climate risks andopportunities; establishing a stated position on
climate change; or being transparent on relevant
capital allocation and corporate expenditures.
• Climate risk disclosure: companies reporting

regularly on climate risks, such as following
recommendations from the Task Force for Climaterelated Financial Disclosures.
• Lobbying: we expect companies to lobby in amanner that is consistent with their publicly statedposition, given the potential reputation risk.
Apart from shareholder proposals, we also haveproxy voting guidelines related to how we votewith respect to director elections when we donot believe there has been adequate oversightor disclosure related to material climate risk
(effective April 1, 2024).
Many economies are responding to climatechange with regulations as well as policies to drive
decarbonization. In our view, climate change has
become a material risk to the strategy and financial
performance of many companies.
JPMAM may vote ‘against’ directors serving on
relevant committees of companies that, in our
opinion, face material climate-related transition orasset risks, where such disclosures are not available
or where we believe such disclosures are notmeaningful. JPMAM may also vote ‘for’ shareholder
resolutions requesting such information where thecompany has not provided such disclosure.

J.P. Morgan Asset ManagementTo provide shareholders with meaningful disclosureson how the company is addressing risks related toclimate change:• We encourage disclosures aligned with thereporting framework developed by the Task
Force on Climate-related Financial Disclosures(TCFD) addressing all the four pillars of the
TCFD – (i) governance, (ii) strategy, (iii) risk
management and (iv) metrics and targets related
to any performance indicators used to manage
such risks.
• For industries where we believe climate changerisks pose material financial risks, we encouragecomprehensive TCFD reporting (or equivalent)
including scenario analysis to help us understandthe resilience of a company’s strategy.
• We encourage disclosures of Scope 1 and 2 GHG

emission targets, where decarbonization of acompany’s operations and purchased energy
has been identified by the company as a key partof the company’s strategy to manage climatechange risks.
• We note many companies have chosen to set long-term net zero targets. In order for us to evaluate
the long-term credibility of transition plans, wheresuch long-term targets are set, we encourage
the company to disclose the scope of emissions
included in such targets. We recognize the many
challenges associated with reporting Scope 3
emissions. While we understand the limitations
associated with reporting Scope 3 emissions, wewould expect companies that have included such
emissions in their net zero targets to disclose their
Scope 3 emissions. We also expect disclosuresof interim emission reduction targets where thecompany has set long-term net zero targets.
• We encourage disclosure on past performanceagainst emission reduction goals, and forwardlooking strategies to achieve emission
reduction goals, including use of offsets andcorporate transactions.

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The board of directors is critical in formulating andexecuting company strategy. While we do not support
the use of shareholder proposals to diminish theauthority of the board, if the board recommends
a vote against a climate-related shareholder
proposal, we expect boards to clearly articulate
the rationale supporting their recommendation.
The board’s response should clearly explain why the
implementation of disclosures or actions requestedby the shareholder proposal would be detrimental toshareholder value.
For shareholder proposals that require companies
to stop undertaking certain actions, we evaluate
proposals case-by-case. We do not believe that
supporting all climate resolutions as a matter ofpolicy will benefit the portfolio and may lead to poorer
outcomes for clients and potentially further damage
the environment. In order for a policy-based approachto these resolutions to be positive for a client portfolio,
all public companies in a sector would need to receive
similar shareholder proposals and respond similarly,
and private companies, state-owned enterprises
or private companies would not fill any output gaps
created by publicly owned companies.46 We believe thatthese conditions are unlikely to hold true. Therefore,a policy-based approach may lead to a transfer of value
from our clients’ portfolios to other parties, and thebeneficiaries of such policies would be companies thatare not subject to the same high operating standards,
leading to worse environmental outcomes.
Next steps on climate action are becoming increasingly
complex, as reflected by increasingly complex andstringent shareholder proposals. Therefore, a rulesbased approach is not sophisticated enough forthese resolutions. However, JPMAM has standard
principles that it utilizes to evaluate such proposals,
and our recently updated Voting Guidelines, effectivefrom April 1, 2024, have a section dedicated to voting
related to climate risks. Our case-by-case decisions
on shareholder resolutions are research-driven andinformed by long-term, in-depth knowledge of thecompanies and their business environment.

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Split voting and administrative support
for client voting
J.P. Morgan Asset Management’s voting policy andguidelines are developed and enhanced based on
the principles of good corporate governance and thedeliberations of senior research analysts, portfolio
managers and the Investment Stewardship team,
as well as legal, compliance and risk specialists asmembers of the Proxy Committees. As part of thesedeliberations, portfolio manager views, including
considerations of what is in the best interest of ourclients, will form a significant part of the review process
in determining how we continue to evolve our policy
and how we vote at company general meetings.
We typically vote in a consistent manner given that,what is in the best interests of our clients, does notdiffer based on differences in investment strategies.
However, we recognize that there are occasions where
it may not be in the best interest of our clients to voteour entire holdings, across all strategies, in a consistentmanner. We have built into our proxy process the abilityof each portfolio management team to vote the proxiesof shares held in their clients’ accounts in the manner
they deem consistent with their proprietary views ofwhat is in the best interest of their client accounts.
Each portfolio management team is permitted to votein a manner that is contrary to the decisions of otherportfolio management teams. An example of this in
2023 can be found in the CRH case study below.
Over the year we have seen increased requests from asmall number of institutional clients to be provided withenhanced voting choices and administrative support
to clients for them to vote their proxies. For such clients
who have retained proxy voting decision making
authority, this optionality may allow them to align theirvoting with their own governance policies and positions.
As a result of these requests, we have establisheda process for institutional segregated clients inseparately managed accounts to be able to implement
their own choice of voting policy through the existing
JPMAM proxy voting infrastructure and operational
platform. However, as the client votes and makes thevoting decision according to their own policies or
the policies of a third party and we do not have proxyvoting discretion, such proxy voting decisions will not
be informed by the active insights of our investors andstewardship teams.

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Case study
CRH Plc

UK

EquityIssue
As part of the announcement of its final results earlier last year, CRH, a London-listed building materials
company, informed shareholders that they intended to seek a primary listing in the US. The company believedthat a U.S. listing would mean enhanced commercial, operational, and acquisition opportunities; and deliver
higher levels of profitability, returns, and cash. However, the loss of a primary listing on the UK market would
mean that CRH would no longer be an eligible asset for some of our UK Equity funds.

ActionRecognizing that, while there may be some benefits to a shift in primary listing, it would not be in the bestinterest of all of our clients to vote consistently, we used our established governance process and escalated
this case to the EMEA Proxy Committee. As part of the committee deliberations, the benefits of the primarylisting shift and the arguments against were presented and discussed. While global funds could continue tobenefit from the potential enhanced growth opportunities as part of the shift in listing, UK-based shareholders
would lose an attractive quality stock and the diversity benefits if the company lost its primary UK listing.

OutcomeThe Proxy Committee affirmed the proposal to adopt a split vote in this instance and portfolio managers
exercised their judgement and voted their accounts in the best interest of their respective clients.

Use of proxy advisors and voting guidelines
To assist us in the filing of proxies, J.P. Morgan Asset Management retains the services of Institutional Shareholder
Services Inc. (ISS), a proxy voting services advisor. As part of this service, ISS assists with functions, suchas coordinating with client custodians to ensure that all proxy materials are processed in a timely fashion,
recordkeeping, acting as an agent to execute JPMAM’s Proxy Voting Guidelines, providing proxy research andanalysis, and to provide certain conflict of interest-related services. To assist us with our voting research on abroad range of related sustainability and governance issues, we also retain the services of Morgan Stanley CapitalInternational’s ESG research service (MSCI ESG), Sustainalytics, CDP, Glass Lewis and ISS-. While JPMAM recognizes
the contribution of proxy advisors and uses the research of certain proxy advisors as one of several inputs into
the voting process, JPMAM has developed its own proxy voting guidelines and determines in–house how JPMAM
will vote on any particular proxy voting issue. Importantly, such proxy advisors do not determine how JPMAM votes
proxies except in certain limited situations such as to manage material conflicts of interest.47
More information on this can be found in the Monitoring Service Provider’s section.

47

A conflict is deemed to exist, for example, when the proxy is for JPMC or for J.P. Morgan Funds, or when the proxy administrator has actual knowledge
indicating that an affiliate is an investment banker or rendered a fairness opinion with respect to the matter that is the subject of the proxy vote. Whensuch conflicts are identified, the proxy ordinarily should be voted as determined by the independent third party.

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Proxy voting – How we utilized our voting
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Stewardship and fixed income
investments
In EMEA, as a bondholder we may, on occasion,
have the right to vote proxies on issues that affect ourbond investments. We do not have specific guidelines
for these types of meetings as we consider each caseon its own merits in terms of investment outcome forour clients and beneficiaries.
More broadly, we conduct extensive engagements
through ongoing dialogue with issuers including at thetime of new issuance with bond issuers on bondholder
related governance, transparency of covenants, reviewof transaction documents and other issues such as useof proceeds. These include discussions with bond-onlyissuers that do not have public equities issued.
We also are active in industry dialogue on fixed income
investor issues. We have participated in a number ofbond market-focused groups. This has included aworking group studying the high yield bond market
characteristics alongside the Green and Social
Bond Principles. For more details, please refer to theCollaborative Initiatives and Managing Risks section.

Stock or securities lending
Certain clients participate in a securities lending
program. As title passes in a securities lendingtransaction, client accounts are not permitted to voteproxies where the securities are out on loan over therecord date. In most cases, JPMAM is not involvedin a client’s securities lending arrangements andordinarily will not have the ability to restrict securities
from being lent or recall securities from loan-tovote securities. For the accounts where JPMAM is
involved in the securities lending arrangement andhas expressly agreed with the client, JPMAM will
determine if it should recall securities on loans to voteproxies when it believes a vote is material with respect
to an investment such as when JPMAM believes its
participation in a vote is necessary to preserve thelong- term value of an investment or in highly contested
issue for which JPMAM believes its vote is important tothe account’s strategy.

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Proxy voting review and assurance
The J.P. Morgan Asset Management Investment
Stewardship team annually reviews all global proxyvoting guidelines, which are made available on our
website. These are approved on an annual basis by theapplicable J.P. Morgan Asset Management Regional
Proxy Committee, which is composed of investors,
stewardship specialists and control function partners.
It acts as an oversight function.
Regular reviews are conducted by internal control
partners on committee materials to ensure consistency
across each region and to track the attendance ofthe committee members. Additionally, our Control
Management function performs periodic evaluations
over the design and effectiveness of our proxy voting
controls. We also conduct periodic internal audits of ourstewardship activities, which include proxy voting andhave committed to auditing our proxy voting process inline with ISAE3402 standards.
In Japan, our proxy voting activity is required to abideby the guidelines of the Investment Trusts Association,
Japan (JITA), as well as the Japan Investment Advisers
Association (JIAA), and to comply with Japan’s
Stewardship Code as a signatory to the code. Further
details are described in the Internal and External
assurance sections.

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Part 2

Structures and practices
supporting stewardship

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J.P. Morgan Asset Management– Who we are

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JPMorgan Chase & Co.

Our purpose

JPMorgan Chase & Co. (the ‘Firm’) is a leading financial
services firm based in the United States of America(‘U.S.’), with operations worldwide.

At J.P. Morgan Asset Management, we strive to deliver
superior investment capabilities and insights to help
our clients achieve their most important financial
objectives.

JPMorgan Chase & Co. had 3.9 trillion in assets and
USD 328 billion in stockholders’ equity as of December
31, 2023. The Firm is a leader in investment banking,financial services for consumers and small businesses,
commercial banking, financial transaction processing
and asset management. Under the JPMorgan andChase & Co. brands, the Firm serves millions ofcustomers in the U.S. and globally including many of
the world’s most prominent corporate, institutional andgovernment clients.48

J.P. Morgan Asset & WealthManagement
J.P. Morgan Asset & Wealth Management is a global
leader in asset and wealth management services.
The Asset & Wealth Management line of businessserves institutional, ultra-high net worth, high net worth
and individual clients. With combined overall client
assets of USD 5 trillion and assets under managementof USD 3.4 trillion as of December 31, 2023, we are one of
the largest asset and wealth managers in the world.
J.P. Morgan Asset Management (JPMAM) is themarketing name for the investment managementbusinesses of JPMorgan Chase & Co. and its
affiliates worldwide. Unless otherwise noted, thefocus of this report throughout is on J.P. Morgan
Asset Management.49

This aligns with our fiduciary duty to act in the bestinterest of our clients. We are passionate about offering
a global depth and breadth of investment solutions
supported by dedicated market experts and continual
reinvestment in tools, technology, and operational
excellence. Our aim is to empower better investment
decisions by providing investment insights that tap intoover 150 years of investment experience.
We believe that robust investment stewardshippractices are important to delivering on our fiduciary
duty. As defined by the Financial Reporting Council(‘FRC’),50 “Stewardship is the responsible allocation,
management, and oversight of capital to create longterm value for clients and beneficiaries, leading tosustainable benefits for the economy, the environmentand society.” The key tenets of this definition of
stewardship align with the spirit and purpose of our
fiduciary approach, grounded in enhancing andprotecting investment returns to produce better client
outcomes through an expectation of high standards
for corporate responsibility in companies in which
we invest.

It is a leading investment manager of choice for
institutions, financial intermediaries, and individual
investors, offering a broad range of core and alternative
strategies, with investment professionals operatingin every major world market providing investment
expertise and insights to clients. J.P. Morgan AssetManagement oversees more than USD 2.9 trillion
in client assets under management globally as ofDecember 31, 2023.
This report describes J.P. Morgan Asset Management’s approach to investment stewardship. Please note that J.P. Morgan Asset Management’s
approaches are separate from JPMorgan Chase & Co. References to “we” or “our” in this document refer to J.P. Morgan Asset Management and not
JPMorgan Chase & Co.
49
In 2023, J.P. Morgan Asset Management acquired 100% ownership of its former China joint venture, which has now been renamed as JPMorgan AssetManagement (China) Company Limited (“JPMAM China”). Integration of JPMAM China into the global framework of J.P. Morgan Asset Management iscurrently in progress. Descriptions in this report concerning J.P. Morgan Asset Management, therefore, may not fully apply to JPMAM China at thetime of publication.
50
The FRC is a UK executive non-departmental public body sponsored by the Department for Business and Trade. The FRC promotes transparency andintegrity in business. It regulates auditors, accountants and actuaries, and sets the UK’s Corporate Governance and Stewardship Codes.
48

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J.P. Morgan Asset Management –Who we are continued
In this report, we strive to outline the activities, as wellas the outcomes, that we believe point to how wecontribute to driving long-term value creation:• Through our ongoing policy advocacy efforts to

support the integrity of capital markets.
• By incorporating financially material ESG

considerations in active investment capabilities.51• Through empowering our clients to make informed

choices coupled with a relentless focus on helping
them achieve their financial objectives.

Our business model and strategy
As a global asset manager, we provide investment
services for institutions, intermediaries, and individuals
alike, including doing business with 61% of the world’s
largest pension funds, sovereign wealth funds andcentral banks. 52
Our fiduciary commitment to client outcomes extends
across the investment services that we provide to all key
client segments that we serve, including, but not limited
to, the following client types: Defined Benefit, DefinedContribution, Insurance, Endowments & Foundations,
Sovereigns, Intermediaries & Fund Management,
Healthcare Providers and Corporate Treasury.
To help these clients build stronger portfolios to meettheir needs, we offer a global breadth and depth ofinvestment solutions across equities, fixed income,alternatives, solutions, global liquidity and beta.

Our investment platforms
Over USD 2.9tn AUMA
Equities

USD 835 billion

Largest U.S. equity fund run bya woman: Clare Hart, Equity Income

Fixed income

USD 753 billion

3x AUM growth since 2009

Multi-assetC

USD 263 billion

Target Date Series

Others4
Beta

USD 6 billion
USD 112 billionAwarded ETF Issuer of
the Year by ETF.com

Alternatives

USD 183 billion

Manager of the largest corereal estate strategy globally

Liquidity

USD 761 billion

The #2 institutional money
manager globallyB

Note: This view shows assets managed by portfolio management teams within J.P. Morgan Asset Management by asset type. Please note that
assets may be included in multiple categories. For example, certain asset classes such as Equities and Fixed Income AUM may include subaccounts of asset allocation accounts of Multi Asset solutions.
Source: J.P. Morgan Asset Management; as of 31 December 2023. Due to rounding, data may not always add up to the total AUM.
AUMs shown do not include custom glide path and retail advisory assets.
A
AUM by asset class includes AUM managed on behalf of other investment teams. B iMoneyNet Fund Analyzer, iMoneyNet and iMoneyNet
Offshore; based on AUM data as of 31 December 2023. C Includes $10bn of Solutions Direct AUM. D Others represent 55ip, Derivatives.

In actively managed assets deemed by J.P. Morgan Asset Management to be ESG-integrated under our governance process, we systematicallyassess financially material ESG factors including sustainability risks in our investment decisions with the goals of managing risk and improving longterm returns. ESG integration does not change a strategy’s investment objective, exclude specific types of companies or constrain a strategy’s
investable universe unless the offering document or investment policies for the strategy provide otherwise.
52
JPMorgan Chase & Co., CEO letter to Shareholders, 2022 Annual Report.
51

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How J.P. Morgan Asset Management considers ESG
J.P. Morgan Asset Management considers financially material environmental, social and governance (ESG)
factors as important considerations for investors when assessing an investee company’s performance.
Consideration of financially material ESG factors can be used both to mitigate risk and unlock opportunities
in an investment portfolio. ESG factors encompass a wide range of issues that can be important for investors,
including, but not limited to, climate risk, natural resources use, human capital management, diversity,
business conduct, governance practices, shareholder rights and executive compensation.

Our culture and values
We believe clients choose J.P. Morgan AssetManagement to manage their assets because
we have withstood the test of time and positioned
ourselves to be market leaders for decades to come.
Our management demonstrates these values byconsistently investing in the strength and resilienceof our business and fostering solid, long-lasting client
relationships.
We encourage this long-term focus as a foundational
aspect of our Firm-wide business principles, which callon all our employees to act and think like long-termowners and partners.
At the heart of J.P. Morgan Asset Management’s values
is a relentless focus on long-term performance, as
well as doing first-class business in a first-class way,
year after year, and decade after decade.
We uphold a culture that reinforces integrity, fairness
and responsibility and we are committed to creating
an environment of respect and inclusion where
our employees, clients and partners feel welcomedand valued.

53
54

As part of this approach, we undertake continuous
efforts to advance an inclusive workplace culture,
consistent with our expectations of the investee
companies with whom we engage as part of ourstewardship commitments.
Specifically within Asset & Wealth Management (AWM),
we are proud to count ourselves among a group ofindustry asset managers, globally, that is run by awoman – Mary Erdoes, Chief Executive Officer (CEO),AWM, who was recognized again as the Most Powerful
Woman in Finance.53 In addition, 23% of our fundmanagers, globally, are women and they manage or
co-manage 34.6% of our total global assets.54 We areproud of the diversity of our company, but recognizethat there is more work to be done. We are committed
to taking an inclusive approach to the work we do andto maintaining a first-class, sustainable business.
We believe our success and the success of our clientsare directly linked to our culture of respect, equity andinclusion, which promotes innovation and stronger
decision making within portfolio management. For more
information, please refer to the section on Our Approachto Promoting Diversity, Equity, and Inclusion.

American Banker Magazine, September 2023.
Source: J.P. Morgan Asset Management 2022.

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Actions taken to ensure our investment beliefs, strategy and culture enableeffective stewardshipAs part of our broader, overall focus on meeting
specific client needs by delivering strong investment
performance across a range of global investment
solutions, our stewardship efforts seek to contributeto long-term value creation by facilitating responsible
capital allocation.
We do this through the incorporation of financiallymaterial ESG factors in investment processes for
actively managed accounts that have gone through ourgovernance process as part of our investment decision
making. We also utilize our voice, as active owners,
in our investee companies to strive to encouragechanges that we believe manage risks and create longterm value for our clients.
Throughout 2023, we have taken several steps to further
embed these considerations across our business.
In concert with these efforts, as a reflection of ourbroader, ongoing commitment to take actions
that support effective stewardship across ourapproaches, to how we invest on behalf of our clientsas a fiduciary, and to how we foster our corporate
culture, we continue to take several key steps basedon opportunities that we have identified to improve,such as the following activities:• We have continued to enhance internal governanceto create greater oversight and accountability of oursustainable investing activities, by assessing theeffectiveness of the Sustainable Investing OversightCommittee (SIOC) during the reporting period.
Further information is detailed in the Governance ofStewardship section.
• We conducted a review of our proxy voting practices.

This resulted in a series of enhancements including
developing and rolling out a proprietary in-housevoting interface in our Spectrum technology
suite, which allows better proxy voting workflow,
including the integration of our voting decisionmaking practices with our research and investment
decision-making approach. We also harmonized theoperational practices to promote increased efficiency
and avoid duplication of effort.

J.P. Morgan Asset Management• For clients in separately managed accounts who havenot delegated proxy voting authority to J.P. Morgan
Asset Management, we helped facilitate their own
proxy voting by providing administrative support
to allow them to vote in accordance with a third
party or custom client voting policy as selectedby such clients. This provides clients with greater
choice in determining whether they want to maketheir own proxy voting decisions using their own ora third party’s proxy voting guidelines or delegate
proxy voting to us to be voted by J.P. Morgan AssetManagement’s proxy voting guidelines.
• We have taken steps to deepen our climate researchcapabilities by developing in-house tools that can beused for both investment and stewardship activities toassess sector specific decarbonisation targets set bycompanies in different industries. These capabilities
help us analyze whether a company’s stated plans foraddressing climate change risks and opportunities
are credible.
In 2023, we published JPMAM’s second reportunder the Task Force on Climate-related Financial
Disclosures (TCFD) framework as part of our own
transparency reporting.
These are detailed further in the report in therelevant sections.
Alongside these changes, in the summer we
conducted what has now become an annual strategy
implementation review into the effectiveness of ourstewardship practices to identify specific areas of
improvement to facilitate continuous improvement.
This process included considering insights on
industry stewardship practices from a wide range ofstakeholders, including clients, alongside regulatorsand relevant oversight bodies, such as the UK Financial
Reporting Council and the Taiwan Stock Exchange.
The most material areas where we improved ourpractices are highlighted in the table below. It also
shows areas for continuous improvement and potential
further review in 2024. Full details can be found in therelevant sections of this report.

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Key areas of reform
Key Areasof Reform

2023 Improvement Outcomes

2024 Next Steps

Governance

Provided ongoing education and training of SIOC
members on new trends as well as regulatory andindustry developments in sustainable investingand stewardship

Further strengthen governance and develop
oversight processes related to strategies that
employ values and norms-based exclusions.
This enhanced process started in late 2023 withthe establishment a new investor-led55 forum toanalyse companies that appear on third-party
values and norms-based exclusions lists.

Engagement
approach

Initiated an engagement program to understandhow companies are managing climate change,
including the credibility of any decarbonisation
targets they set, as part of managing risks andcontributing to long-term shareholder value.

Explore increasing engagement with mainland
Chinese companies which only have onshorelistings. This comes following the assumptionof ownership in early 2023 of our China joint
venture, which was renamed as JPMorgan AssetManagement (China) Company Limited

Increased engagement with sovereign andsovereign-linked issuers, especially in emerging
markets on sustainability issues that we believe
pose risks to and create opportunities for ourclient portfolios
Published a research report into a new priority
theme for 2023 - natural capital and ecosystems/
biodiversity. Initiated engagement on water andplastic waste to understand how companies
are managing resources and reputational risks
associated with resource usage and waste
Client needs

Organized a series of client education eventson climate investment and stewardshipfor European institutional clients, who are
implementing their own decarbonisation
strategies. This covered research, investment
and engagement with analysts, portfolio
managers and specialists travelling to multiple
cities across the region.

Expand client education events and workshops
to other countries and regions such as in Asia,
in response to requests from clients.

Hosted a presentation on the role of engagementin our investment process at our Asia Global
Research Summit for hundreds of regional client
representatives
Proxy voting

Developed climate change voting guidelines
which will be implemented for the 2024
voting season
Reviewed proxy voting practice and implemented
new technology to cast our votes

Leverage the existing North American
sustainable Voting Guidelines to develop
and implement Sustainable Voting Guidelines
for sustainable funds and mandates forother regions

Implemented provision of more voting choices forclients in separately managed accounts

55

For purposes of this report, the term investors refers to portfolio managers and research analysts within J.P. Morgan Asset Management.

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Outcomes
The actions we have taken during the 2023 reporting
period build on the significant uplift to our Stewardshippractices over the past two years. We have taken stockof the broad reforms implemented and reflected on
the effectiveness of our practices as well as extensive
feedback from external stakeholders such as
regulators and clients.
A particular focus has been to develop our research,data tools and technology in three key areas related to
our Stewardship practice:
1.	Climate change decarbonization target assessment
tool that allows us to better analyze a company’s
stated decarbonization plans;

All of these projects and initiatives helped to improve
our ability to conduct more in-depth research-driven
engagement and voting, and better understand theeffectiveness of our stewardship program over time.
The initiatives detailed above and our ongoing efforts
to assess their effectiveness are discussed in greater
detail throughout the report. As we continue to further
incorporate stewardship within our business, we lookforward to providing ongoing transparency into ourefforts as we further enhance our practices.
Our ambition is to continue to build a leading role instewardship, as well as to regularly assess how we can
improve on the journey.

2.	Natural capital and ecosystems/biodiversity
research; and3.	Proxy voting interface integrated with Spectrum, ourinvestment management and research tool.

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Governance of stewardshipWe believe investment stewardship creates value for our clients around the world, across asset classes.
Our governance practices in stewardship and sustainable investing are structured to meet the constantly evolving
challenges faced by a large, global, and complex asset management company.
We are one of the world’s largest investment managers
by assets under management, with investment teams
across multiple asset classes based in locations
around the world and clients globally across different
segment types with evolving needs (for further details
on our investment teams and clients please referto the ESG Integration and Meeting Client Needs
sections respectively). Our starting philosophy is thatstewardship should be enabled for investments globally
across all asset classes, investment styles, client types
and regulatory regimes.
In reflection of the size, scope, and complexity of
our company, J.P. Morgan Asset Management hasestablished governance practices around stewardshipand sustainable investing that are global andacross asset classes in remit, spanning the material
sustainability and corporate governance issues in ourinvestments. Throughout 2023, we worked to further
formalize and embed these practices as a standard
part of our investment decision-making and oversight.
This section contains further details about the actions
taken this year.
Our governance framework for effective stewardshipis designed with oversight from the top of JPMAM,
led by the Chief Executive Officer (CEO) of AssetManagement and fellow senior executives. Additionally,
J.P. Morgan Asset Management’s Sustainable Investing
Oversight Committee (SIOC), co-chaired by the Global
Head of Sustainable Investing and the Global Headof Sustainable Investing Integration, has the remitof directly overseeing stewardship and sustainable
investing activities. It is the central group which isaccountable for ESG-related matters.
SIOC serves as a single point of ongoing strategic
oversight, effective decision making, review, andassurance across the key components of sustainable
investing. This includes engagement, proxy voting,sustainable investment criteria, and oversight of
ESG integration, as well as regulatory developments.
Related policies, programs, targets and performanceare overseen by this group.
The committee is co-chaired by the Global Headof Sustainable Investing and the Global Head of
Sustainable Investing Integration. Members include
Chief Investment Officers (CIOs) and heads of control

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functions such as Risk and Compliance, as well as
non-voting members including the Global Head ofInvestment Stewardship and JPMAM’s General Counsel.
A direct line of senior responsibility derives from two
aspects so that SIOC is accountable, credible, andrepresentative of sustainable investing activities within
investment teams and senior management:• Strategic oversight of sustainable investing activities

provided to SIOC by the heads of investment teams,
the Global Head of Sustainable Investing and the
Global Head of Sustainable Investing Integration
through their participation in day-to-day management
meetings across their asset classes and withsenior management. This enables monitoring of
stewardship effectiveness and key performanceindicators and establishes a clear line of escalation
and accountability as invitees provide updates to
SIOC, where applicable. More information on the
responsibilities of the heads of investment teams/
CIOs can be found within the section on People
and Resources.
• Where and when required from a control and risk

oversight perspective, formal escalation from SIOC
is to the Global Asset Management Business Control
Committee (AM BCC) and the AM Bank Fiduciary
Committee (for specific fiduciary responsibilities).
The AM BCC Committee provides oversight of theoperational risks and control environment across theentire asset management business, with respect toproper identification, management and monitoringof existing and emerging operational risks, control
issues and trends. This committee, which is cochaired by the AM CEO and AM Business Control
manager, includes decision-making members
comprising all heads of controls functions, CIOs
across all asset classes/product groups and heads ofall major business areas.
SIOC’s original meeting schedule contemplated regularquarterly meetings with additional meetings as needed.
SIOC met six times in 2023 as part of its continuing
oversight of the issues of increasing importance to ourbusiness. Currently, SIOC is scheduled to meet seventimes in 2024, and at least once per quarter.

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Governance of stewardship continued
Below is an overview of J.P. Morgan Asset Management’s governance structure on Stewardship andSustainable Investing.

J.P. Morgan Asset Management’s Sustainable Investing Governance Structure
Global AM Business Control Committee (AM BCC)• AM BCC provides oversight of the operational risks and control environment across the entire AM business, to ensure
proper identification, management and monitoring of existing and emerging operational risks, control issues and trends.
• Co-chaired by the AM CEO and AM Business Control manager, includes decision making members comprising all headsof controls functions, CIOs across all asset classes/product groups and heads of all major business areas.

Global AM Sustainable Investing Oversight Committee (SIOC)• Single point of ongoing strategic oversight, effective decision making, review and assurance across the key componentsof sustainable investing. Related policies, programmes, targets and performance are overseen by this group.
• Chaired by the Global Head of Sustainable Investing and Stewardship. Members include Chief Investment Officers (CIOs),
Global Head of Investment Stewardship, heads of control functions such as Chief Risk Officer for Asset Management
and Global Head of Asset Management Compliance and AM’s Chief Administrative Officer.

Corporate
engagement

Proxy voting

Sustainable
investments
criteria

ESG integration

Regional committees and topic-specific working groups
Source: J.P. Morgan Asset Management, as at December 31, 2023.

This governance structure seeks to provide assurance
over our stewardship activities by reviewing ourpolicies, resources, priorities, engagement and voting
activities, as well as our reporting. The SIOC serves asa resource to provide review and credible challenges toour processes as part of our goal to improve. Ongoingoversight is an important remit of the SIOC, alongsideother key committees and working groups (further
described in the following pages). It is the committee’s
responsibility to review the process, raise important
issues for discussion and evaluate the need to further
amend policies and procedures with key stakeholders,
including what we refer to as the lines of defence.

56

In 2023, the SIOC reviewed and approved the
publication of a series of important publications forsustainable investing and investment stewardship,including our 2022 Investment Stewardship Report.
This was part of our ongoing efforts to promote a higher
standard of reporting. We were able to attain 2020 UK
Stewardship Code signatory status from the Financial
Reporting Council for the second year running basedon this report. Also, some sections of the report weretranslated into Chinese56 and included as part of
our Taiwan Investment Stewardship Report. We werepleased to have received a higher rating from the
Taiwan Stock Exchange for our 2022 Taiwan Investment
Stewardship Report, compared to both of the two
previous years, and the Taiwan Stock Exchange ranked

Our Chinese language Investment Stewardship Report from 2022 can be found at: https://am.jpmorgan.com/content/dam/jpm-am-aem/
asiapacific/tw/zh/supplemental/stewardshipreport2022.pdf

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Governance of stewardship continued
our 2022 report as one of the top nine best stewardshipreports submitted by local asset managers in that year.
For more details on how this year’s report strives
to meet the expectations set in the world’s various
Stewardship Codes which we support and sign on to,please refer to Appendix 4.
Also, the SIOC reviewed and approved JPMAM’s 2023
Taskforce for Climate-related Financial Disclosures(TCFD) Report.57 In this report, we disclosed how
we continue to consider climate-related risks andopportunities in the assets we manage on behalfof our clients. It includes information about how
climate considerations feature in our governance andmanagement structures as well as the key climaterelated components of our strategy: ESG integration
and research, our sustainable product offering andinvestment stewardship. It explores how we identify andmanage climate risks and discusses governance andcontrols through our risk management and compliancefunctions. It also includes the disclosure of the data
and metrics we currently use to assess and manage
climate risk for the assets we manage. This year’s
report highlighted how we expanded choices acrossour sustainable investment products during 2022,
continued to develop our climate analytics capabilities,
and maintained climate change as one of our six
Investment Stewardship Priorities.

• For example, 2023 saw the establishment of a

new forum comprized of key senior investment
professionals and investment directors. Also, cochaired by the Global Head of Sustainable Investing
and the Global Head of Sustainable Investing
Integration, this new forum has begun to meetmonthly with the aim of facilitating more in-depth
discussions and informed decision-making aroundsustainable investment exclusion and inclusion
criteria. The new forum will liaise closely with theInvestment Stewardship team.
• At the September 2023 meeting, SIOC approved

changes to the governance/oversight process for
ESG integration including changes requiring SIOC
review of new strategies. Previously, our governanceprocess contemplated SIOC review of ESG integration
at the investment group level and did not requirea review of individual strategies. Under the new
governance process, on an ongoing basis, ESG
integration is monitored by the applicable investmentgroup’s investment directors, or equivalent team,and overseen by the respective investment group’s
Investment Oversight Committee, or equivalentcommittee, as part of confirming that a strategy’s
investment process continues to be ESG integrated
in accordance with the strategy’s disclosuresand documentation.
• The SIOC will continue to be responsible for certifying

Review and evaluation of committee
effectivenessAs part of our ongoing review and evaluation of
SIOC’s effectiveness, in 2023 it was determined thatthe committee would benefit from a co-chairing
structure, whereby chair responsibilities would also be
assigned to the Global Head of Sustainable Investing
Integration – a recently created role. The aim of this wasto ensure senior representation from an operationaland business management perspective, in addition
to the subject matter-specific expertise brought by
the Global Head of Sustainable Investing as co-chair
and the Global Head of Investment Stewardship as amember of SIOC.
This additional perspective has led to a number ofchanges being implemented over the course of 2023,
with the aim of improving the SIOC’s credibility andeffectiveness with regard to its oversight duties.
57

new investment strategies as ESG integrated against
JPMAM’s multi-factor ESG integration framework.
We continue to assess the appropriateness of thecurrent sustainable investing governance structure
and its ability to ensure rigorous oversight of key
sustainable investing areas, including investment
stewardship. We consider it important to oversee andsupport effective stewardship within an organization
which is large in assets under management, broadin the range of asset classes and investment styles
offered, and global in our investments, operations,and clients. The committee has demonstrated in
2023 that its structure is flexible and dynamic enoughto modify its remit where it is deemed necessary
while continuing to fulfil its designated oversight
responsibilities.

J.P. Morgan Asset Management TCFD Report 2023: https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/sustainable-investing/tcfdreport.pdf

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Governance of stewardship continued
In 2024, we will look to broaden our efforts at training
and knowledge development for SIOC members toalso include members of the new forums and thosewith newly increased oversight responsibilities. We
will continue to review and refine our structure andprocesses as needed, with an ongoing annual reviewof the committee’s effectiveness as a key way to ensure
the continued effectiveness of the committee andhighlight any areas of concern.

Key stewardship-related regional
committees and topic-specificworking groups
Supporting the J.P. Morgan Asset Management
Sustainable Investing Oversight Committee (SIOC) is
a network of regional committees and topic-specificworking groups. This is to ensure that there are clear
forums for regular information sharing, discussion
and decision making on region or topic-specificissues. The members of these are typically investment
research analysts, portfolio managers, stewardshipand sustainable investing experts and client-facing
professionals. We consider that these are important
aspects of enabling the SIOC-led governance structure
at JPMAM and this seeks to manage the global, large,
and complex nature of our business.

J.P. Morgan Asset Management

The key stewardship-related groups include:• Regional Proxy Voting Committees are longestablished in our four key investing regions –North America; Europe, Middle East and Africa (EMEA);
Asia excluding Japan; and Japan. These meet on aquarterly basis and are composed of senior equity
investment analysts, equity portfolio managers,
investment stewardship team members, legal,
compliance and risk specialists. These committees
are responsible for formulating regional proxy voting
guidelines. They also provide an escalation point
for voting and wider corporate governance issues.
These committees in turn escalate into SIOC, which
receives periodic updates from these committees
and monitors effectiveness.
• Corporate Engagement working groups serve thepurpose of facilitating active discussion, information
sharing, and coordination of engagement activities
across asset classes at JPMAM. Members areheads of investment research, analysts, portfolio
managers and investment stewardship teammembers with representation from across asset
classes and investment styles, including large-cap
equity, small-cap equity, emerging market equity,
investment-grade corporate fixed income, high yieldcorporate fixed income, emerging market debt andmulti-asset investments. The groups also facilitate
assessment of ESG controversies (e.g. events
such as the Fundão dam collapse in 2015, whichcaused fatalities, environmental damage andresulted in high remediation costs and lawsuits
for the companies involved) and norms breaches,such as United Nations Global Compact (UNGC),
with investment analysts with a view to conducting
reactive engagements with investee companies foraccounts where such controversies are financiallymaterial and/or accounts that have norms-based
exclusions. Like the regional Proxy Committees, there
are engagement working groups in each of the four
major investing regions.

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Governance of stewardship continued
Oversight of ESG regulatory andindustry-led change
New and evolving ESG-related regulations and industry
standards (e.g. codes, guidelines, best practicerecommendations) continue to accelerate the shift
towards integrating sustainability into our investment
management ecosystems, be that the baseline‘consideration’ of financially material factors within
the investment decision-making process; the upliftof existing asset management and governanceframeworks to account for evolving ESG perspectives;
and/or the development of new products andportfolio construction.
In partnership with the Sustainable Investing team,
the global ESG regulatory change governance andimplementation structure is designed to support
internal business groups and functions to transformtheir operating models, practices, and processes tomeet emerging regulatory and industry developments.
Related projects and initiatives are governed by asteering forum comprized of senior cross-functional
leaders, which meets regularly to oversee various
workstreams. These workstreams include groups
dedicated to the implementation of (including but
not limited to) the European Union’s Sustainable
Finance Disclosure Regulation (EU SFDR) andTaxonomy Regulation (EU TR); TCFD-related initiatives
and the UK Sustainable Disclosure Requirements;
and preparing for future developments (e.g. the EU
Corporate Sustainability Reporting Directive and future
requirements related to EU ‘Names Rules’, EU SFDR 1.5
and 2.0).
ESG regulatory- and industry-led change has been oneof the most active areas of work within JPMAM in 2023,
successfully implementing and evolving the required orexisting ESG-related policies, frameworks, approaches
and related disclosures to further comply with thosedevelopments that are directly and/or indirectly
applicable to JPMAM. These initiatives have been
supported by other parallel internal programs designed
to evolve our ESG-related risk and oversight models,internal training, and awareness.

58

Sustainable investing leadershipworking groups with relevance tostewardshipTo further collaborate on supporting and advancing
J.P. Morgan Asset Management’s global leadership,a network of peer advisory working groups exists toconnect expertise across our extensive platform ofsubject-matter experts. To bring together the relevant
expertise to help our clients achieve their objectives,
these working groups focus on a variety of goals.
These range from achieving commercial objectives
to contributing to developing innovative investment
capabilities, to promoting a well-controlled approach
to internal ESG policies, processes, and procedures.
The membership of these groups consists ofsenior investment professionals, fundamental andquantitative investment research analysts, sustainable
investing team members, investment risk specialists
and client-facing team members. The working
groups include:• The ESG & Climate Research Working Group iscomposed of senior investment professionals,
across all investment classes, such as the headsof research, portfolio managers, analysts, andsustainable investing team delegates. The working
group is chaired by the Global Head of Sustainable
Investing Research. The ESG & Climate ResearchWorking Group advises on the development of ESGrelated research methodologies such as the JPMAM
Quantitative ESG score58 as well as climate changerelated research questions. The JPMAM Quantitative
ESG Score assesses the extent to which companies
face and manage financially material ESG risks
and opportunities. This group was instrumental inselecting climate-related metrics for the developmentof a climate insights toolkit. Another project includes
the development of an analytical tool to help
assess the scientific credibility of decarbonization
targets that are set by individual corporate issuers.
Following the transfer of responsibility for monitoringand overseeing ongoing ESG integration, this working
group will no longer provide formal review andfeedback on the ongoing ESG-integrated status of
the investment groups. For further details about thischange, please see the section on ESG integration.

The JPMAM Quantitative ESG score refers to the internal score developed by JPMAM’s Sustainable Investing team to support the investment groups’
quantitative ESG analysis and also to help inform qualitative assessments of individual companies. The purpose of the score is to provide portfolio
managers and research analysts with useful information they might otherwise not have access to in order to facilitate ESG integration andinvestment stewardship. The score provides another reference point to enhance the consideration of material ESG risks and opportunities in active
investment processes.

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Governance of stewardship continued• Our sustainable investing client strategy working

groups, organized into three regional chapters,
across the Americas, EMEA and Asia Pacific, arecomposed of investment specialists, distributiondelegates and cross-functional business partners.
They seek to propose and develop commercialization
strategies, including prioritization through theidentification of key clients, development ofeffective marketing efforts, and advancement of
key initiatives such as ESG educational and thought
leadership efforts.

J.P. Morgan Asset ManagementIn addition to the Sustainable Investing leadershipworking groups, JPMAM has a Global ESG Disclosure
working group that includes representation from AM
Legal, Control Management, Sustainable Investing,Communication Control Group, AM Marketing,Compliance and Risk. The working group meetsregularly to discuss disclosure topics related to ESG
integration and sustainable investing.

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People and resources
We believe that stewardship is a J.P. Morgan Asset Management-wide effort and that engaging investee companies
on financially material ESG issues is a responsibility across our investment teams around the world. They aresupported by a growing team of sustainability and governance specialists within the Sustainable Investing team.

J.P. Morgan Asset Management Investment Centers
We have more than 1,100 investment professionals around the world

The key leaders in JPMAM who drive forward the spirit and culture of stewardship are:Paul Quinsee
Global Head of Equities
The equities division consists of U.S. equities, International equities and Emerging Market
equities

Robert Michele
Chief Investment Officer and Head of the Global Fixed Income, Currency & Commodities group
The group covers investments into Corporate Credit (Investment Grade, High Yield, andEmerging Markets), Municipals, Securitized and Sovereigns.

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People and resources continued
Anton Pil
Global Head of Alternatives
The division covers a diverse range of investments including Private Equity, Infrastructure& Transport, Real Estate, Private Credit and Hedge Funds.
Jed Laskowitz
Global Head of Asset Management Solutions (AMS)
The team manages assets across the multi-asset and quantitative investment strategies.
AMS is also responsible for J.P. Morgan’s global ETF business and 55ip, a technology
platform for multi-asset portfolio model management and tax-smart index and active
separate account strategies.

John Donohue
Head of Global Liquidity
This division oversees short-term cash management and fixed income solutions. John also
serves as the CEO of Asset Management in the Americas.

Jennifer Wu
Global Head of Sustainable InvestingThis division is responsible for leading JPMAM’s strategic efforts in sustainable investing,
ESG integration, research and thought leadership, investment stewardship and thedevelopment of broader offerings of investment strategies.

James Barnett
Global Head of Sustainable Investing Integration
This division is responsible for leading strategic efforts in sustainable investing with a focus
on ESG integration across JPMAM.
Yo Takatsuki
Global Head of Investment Stewardship
The Investment Stewardship team is responsible for driving worldwide efforts on
engagement and proxy voting in close collaboration with investors across asset
classes. The team is part of the wider Sustainable Investing division. It is comprized of
15 stewardship specialists.
These investment platforms are represented on the Global Asset Management Sustainable Investing
Oversight Committee.
Our global Investment Stewardship team bring with them a variety of skills and experience in helping to deliver
effective stewardship at JPMAM. Biographies of the team members and their experiences can be found in the
Appendix.

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People and resources continued
Sustainable Investing Division
Our strategy for sustainable investing is led by Jennifer Wu, Global Head of Sustainable Investing. She heads theefforts across sustainability-focused investment research, solutions development, and investment stewardshipwith a dedicated division of sustainable investing specialists. As of December 31, 2023, the Sustainable Investing
Division has 36 personnel.
This team drives ESG-related research across asset classes, seeks to develop and publish sustainable investing
thought leadership pieces, and works with clients to build and implement sustainable investing solutions.
The division has members based in London, New York, Hong Kong, and Tokyo.

J.P. Morgan Asset Management
Global Sustainable Investing Platform

The Sustainable Investing Division is structured into
three distinct teams:• The ESG Research & Data team is focused on

developing dedicated ESG research by partneringwith our investors across asset classes and data
scientists. Within this team, there is a dedicatedClimate Research team.
• The client solutions pillar partners with our investment

and distribution teams to provide expertise and todevelop ESG solutions to meet our clients’ requests.
Research& Data114

ClientSolutions

Investment
Stewardship• The Investment Stewardship team is responsible

for our investment-led, expert-driven stewardshipapproach, engaging with companies and voting
proxies on behalf of clients. The team runs the JPMAM
engagement and voting program and works in close
conjunction with our investment team colleagues indifferent asset classes.

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People and resources continued
In focus: Investment Stewardship team
J.P. Morgan Asset Management’s Global
Investment Stewardship team consists of 15 members.
Each member has a specific thematic expertise in
one or two of our six Investment Stewardship Priorities.
The team members are based in four regions: North
America (New York), EMEA (London), Asia excluding
Japan (Hong Kong) and Japan (Tokyo).
We believe that a key aspect of promoting effective
stewardship for a large and global asset manager isby having regional stewardship teams of local market
experts located on the ground, working on a day-to-day
basis with our investors and engaging with companies.
Our team members include a breadth of nationalities
and languages. We consider the diversity of ourteam as a key enabler of success in many markets,
as we believe there is no substitute for being able toengage investee companies in their own languagewith the full understanding of local business norms.
Alongside English, our team members speak Spanish,
Japanese, Korean, and Mandarin amongst others.
We see that traction on engagements on complex,
often technical issues such as climate change risks ordiversity, is better when the discussion is taking place ina language which is native to the company.
We also consider that this regional presence is crucial
for understanding the evolution of local client needs,
regulatory expectations, and Stewardship Codes(see Appendix for how we meet the expectations ofvarious Stewardship Codes, which we are signatoriesto). For example, since 2022, our Asia ex Japan teamtranslated sections of the investment stewardshipreports to facilitate the assessment of our stewardshippractices by the Taiwanese Stock Exchange.
We received a higher rating from the Taiwan Stock
Exchange for our 2022 Taiwan Investment Stewardship
Report compared to the two previous years.

While Investment Stewardship is a long-running activity,
the single global team structure was established in
2021 and we have continued to implement and build on
this structure since. The outcome of this organizationalchange was broadly positive. It resulted in:• clear leadership and management structure;• a strategy based on global thematic expertise;• resource needs assessed and recruitment

conducted globally;• efficient sharing of latest research insights andindustry developments through sub-teams focusedon thematic areas aligned with our stewardshippriorities. These sub-teams (called Pods) facilitate
knowledge sharing across the global team;• effective coordination of stewardship activities

globally across asset classes on key priority themes,
between the Investment Stewardship team and theinvestment teams; and• pooling of resources to better strengthen ourstewardship-related operational practices such as
for engagement activity recording in our researchsystem, client reporting, managing service providers
and proxy voting reform implementation.
Team members bring diverse backgrounds,
qualifications, and experiences. These include equity
research, commercial banking, ESG research, climate
consulting, corporate sustainability reporting, public
policy, financial journalism, auditing, proxy research
and advisory, impact investment, and stewardshipspecialist roles at other asset managers. This rangeof backgrounds is a crucial aspect of being able
to credibly provide a breadth of ESG insights toinvestment teams. This is particularly important now,as the level of scrutiny from clients and regulatorson asset managers’ expertise on financially relevant
sustainability and governance issues has risenmarkedly. Against this backdrop, stewardship
continues as a pillar of managing assets in our clients’best interests.
Please see Our Approach to Promoting Diversity, Equity,and Inclusion section to understand our approach tothis topic.
Full bios of the Investment Stewardship team members
are in Appendix 2.

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People and resources continued
Other resources
Investment and Stewardship teams are supported bya wide range of internally developed and externallysourced sustainability and governance-related
research, data, and analytical tools. Alongside sellside broker research, we utilize third-party research
providers for ESG information.
For more information on our service providers pleaserefer to the section on Monitoring Service Providers.
In 2023, there were two areas of particular focus for
ESG-related research, data and analytical tools whichhave relevance to investment stewardship.

We are developing a proprietary tool that will allow
us to systematically assess the scientific credibilityof decarbonisation targets that are set by individual
investee companies. These insights will be available
to inform our research and engagement on
climate risk. We also assessed a range of climate
metrics across several sectors to look at how tomeasure decarbonisation progress on targets
that companies set and concluded that a broader
range of transition indicators should be used to
predict how likely companies are to meet their own
decarbonisation commitments.59
We also surveyed data solution providers for natural
capital and biodiversity loss risk. We concluded thatthe data is not as mature for systematic assessment asdata for climate, and we continue to monitor productdevelopment and data availability in this space.60

Managing investment portfolio for the carbon transition – how investors can perform decarbonisation analysis - Oct 2022, J.P. Morgan AssetManagement.
60
Integrating biodiversity into investment decisions – March 2023, J.P. Morgan Asset Management.
59

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As an asset manager, we are guided by our duty to act in the best interests of our clients. Certain actively managed
strategies deemed by JPMAM to be ESG integrated under our governance process systematically assess financiallymaterial ESG factors (alongside other relevant factors) in our investment decisions with the goals of managing
risk and improving long-term returns. This is known as ESG integration. Except for certain strategies that use ESG
integration as part of their investment process in addition to other sustainable investing strategies, ESG integration
by itself does not change a strategy’s investment objective, exclude specific types of companies or constrain astrategy’s investable universe. ESG integration is dependent upon the availability of sufficient ESG information
relevant to the applicable investment universe. ESG factors are not considered for every investment decision.
In order for a strategy to be considered ESG integrated,
JPMAM requires:
1.	Portfolio management teams to consider proprietary
research on the financial materiality of ESG issues
on the strategy’s investments;
2.	documentation of the research views andmethodology throughout the investment
process; and3. 	appropriate monitoring of ESG considerations inongoing risk management and portfolio monitoring.
The impact of ESG integration on performance is not
specifically measurable as investment decisions
are discretionary regardless of ESG considerations.
ESG integration does not happen in isolation and is
one element alongside other factors considered in ourinvestment processes.

Introduction
By considering financially material ESG factors,
we believe ESG integration can inform better longterm investment decision making and can help build
stronger portfolios for our clients.
We view ESG integration and stewardship ascomplementary practices working in tandem
to encourage investing in a way that ultimately
benefits clients.

Active ownership is a key component of both ourstandard investment processes and our commitment
to ESG integration. We use it to understand how
companies or issuers consider issues related to
ESG and encourage best practices, for the purposeof enhancing returns for our clients. We define
engagement as active interaction with investee
companies or issuers, exercising our voice as a longterm investor through engagement with individualcompanies, and proxy voting. Active ownership in thecontext of ESG integration allows us to manage ESG
risks and to systematically incorporate insights gained
from engagement into our investment decisions.
Please refer to Our approach to engagement section forfurther details on engagement practices.
The practice of integrating financially material ESG
metrics into investment processes aims to strengthenrisk management and may contribute to long-term
financial returns. Consequently, we believe ESG
integration can help deliver enhanced risk-adjusted
returns over the long run. It is important to note that thefinancial materiality of ESG metrics varies dependingon the time horizons under consideration, as well
as specific regional or macroeconomic influences.
We believe it is important to align the considerationof ESG metrics to the specific investment style, suchthat the integration of ESG information contributes toinvestment performance.

Our approach to ESG integration focuses on financial
materiality, with the understanding that not all ESG
factors are relevant to a particular investment, asset
class or strategy. Below you will find our approach to ESG
integration for a variety of our asset classes. Note, themethod by which an investment group performs ESG
integration is consistent across geographies.

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ESG integration
at J.P. Morgan Asset Management continued
As a global active manager using a variety ofinvestment styles, we integrate financially material ESG
metrics into the investment process of an investmentgroup in a manner consistent with the underlying
strategy, from the purely quantitative to those based on
a combination of fundamental research and qualitative
judgments. We define investment groups as investment
teams which share a common investment process and
ESG integration approach and common investment
strategies. Because of the variety of actively managed
investment strategies, types of investments andinvestment processes, financially material ESG metrics
will differ across investment groups, and we do notmandate that each investment group implement ESG
integration in the same way. For example, there may bedifferences in which equity and fixed income investors
evaluate governance practices of a company. Instead,
we apply key metrics that focus on the robustnessof the ESG integration process to determine if aninvestment group can be considered as ESG integrated
by J.P. Morgan Asset Management. We use a processfocused multi-factor framework to validate theapproach applied by the investment groups for therespective strategy.
We also offer a growing range of products designed
for clients who want to go beyond standard ESG
integration and invest in products with more defined
ESG characteristics or objectives. Nevertheless, we canmake no assurance that the integration or security
selection methodology used by our portfolio managers
and analysts will align with the individual beliefs orvalues of a particular client, nor that ESG integration will
apply to every security in a client’s portfolio.61

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Please note: ESG determinations may not be conclusive.
Securities of companies or issuers may be purchased
and retained that may be negatively impacted by suchfactors while the adviser may divest or not invest in
securities of issuers that may be positively impacted bysuch factors. The effect of ESG integration on a financial
product’s performance is not specifically measurable
as investment decisions are discretionary regardlessof ESG considerations. Unless stated otherwise ina financial product’s documentation and included
within its investment objective and investment policy,
ESG-integrated products are not designed for clients
who wish to screen out particular types of companies
or investments or are looking for products that meet
specific ESG goals. In other words, ESG integration by
itself does not change a product’s investment objective
or constrain the investment managers’ investable
universe, nor does it imply that a product is marketed or
authorized as an ESG product in any jurisdiction wheresuch authorisation is required.
The assessment of environmental, social andgovernance information and events requires subjective
judgments, which may include consideration of thirdparty data that may be incomplete or inaccurate.
There can be no guarantee we will correctly assess
such impact.

For further details on strategies that are ESG integrated, please reach out to your local JPMAM representative.

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Our ESG integration process
The following describes J.P. Morgan Asset Management’s current process for determining whether an investment
strategy has integrated ESG into its investment processes.

ESG integration validation process at J.P. Morgan Asset Management

1

2

3

4
Equities

Demonstration

Review

Approval

Implementation

Investment groups
present their
ESG integration
approach againstthe ‘framework’ forthe strategy

Assessment basedon framework
by Sustainable
Investing OversightCommittee (SIOC)62

SIOC approves orrejects the ESG
integration status- Investmentgroup applies
ESG integrationaccording to theirown approved
method- Regular monitoringby their respective
Investment Director
or equivalent teams

GFICC

Liquidity

Solutions

Alternatives

Source: J.P. Morgan Asset Management, as of December 31, 2023. Provided to illustrate the current governance process, not to be construed as
research or investment advice. Not all investment strategies are ESG integrated.

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Prior to the fourth quarter of 2023, JPMAM’s governance process contemplated a SIOC review of ESG integration at the investment group level and did
not require review of individual strategies/products by SIOC. During the fourth quarter of 2023, JPMAM enhanced its ESG integration governanceprocess to require all new strategies to be reviewed individually by SIOC prior to their presentation to JPMAM’s product steering committee (“PSC”)
in order for such strategy’s investment process to be considered ESG integrated. SIOC was established in 2021 as part of a comprehensive review of
our SI governance practices, with a particular emphasis on structures for oversight of investment stewardship and ESG integration. Prior to 2021,
a working group known as the Sustainable Investment Leadership Team determined ESG integration.

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As described in the chart on the previous page, the Sustainable Investing Oversight Committee (SIOC) will review
and if appropriate approve the ESG Integration status of the put forward strategy.
Our process for determining which investment groups are ESG integrated has continued to evolve and improve withthe development of the framework (see multi-factor framework for ESG integration).

J.P. Morgan Asset Management 6-metric framework for ESG integration

Research and Investment Management

Metrics
1.	Access to ESG Metrics &Indicators as part of Research& Investment Process

Sub questions• Are internal and/or external ESG metrics and indicators available to researchand portfolio managers? If yes, please provide examples.
• Please describe the mix of internal and/or external data sources anddue diligence conducted and/or selection criteria used on external data
sources?
2. 	Research Analyst, Portfolio
Management & Investment
Decision Considerations• Is ESG fundamental to the investment decision-making process?
• Do ESG factors lead to a reweighting of the portfolio?
• Do the portfolio managers and/or investment committee override or add

insights to analysts’ ESG analysis?
3. 	Company Engagement• Please describe the role of company engagement on financially material ESG

factors as part of the research and investment due diligence process?
• How is ongoing company engagement related to ESG topics documented,

Documentation

monitored and assessed, especially with respect to progress and success of
the activities?
4. 	Documentation of ESG
Integration Information

Investment team? If so, please describe.
• Are there other documents (e.g. investment process/prospectus) that

discusses ESG integration process?
5. 	Monitoring

Monitoring• Are there desk procedures that outline how ESG is integrated across the• Is the strategy subject to in-business first line risk review, including

discussion of ESG metrics and indicators? If so, please outline the frequency
and teams involved.
6. Oversight• What escalation oversight structure is in place?
• Is evidence of escalation and discussion available?

Source: J.P. Morgan Asset Management Sustainable Investing team and ESG & Climate Research Working Group. The framework above replaced
J.P. Morgan Asset Management’s 10-point framework as part of enhancements to its governance process during the fourth quarter of 2023.

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2023 Investment Stewardship ReportESG integration
at J.P. Morgan Asset Management continued
Although JPMAM’s ESG integration validation
framework is led by the SIOC, the ownership of
implementation and execution lies with investment
teams. ESG determinations may not be conclusive,and securities of certain companies or issuers may bepurchased, retained or sold by portfolio managers forreasons other than their ESG assessment.
Moreover, given the wide range of strategies we offer
and the regional and sectoral diversity of our portfolio
holdings, we emphasize that ESG integration does
not mean investment in certain sectors or countries is
prohibited. Please refer to the asset class level sectionsin the following pages for details about how ESG
integration works in practice at various asset classes.
The systematic consideration of financially material
ESG metrics in the investment process also informs
our investment stewardship activity. Where an analyst
identifies a financially material environmental,social or governance issue within a company, theinvestment team, in close collaboration with theInvestment Stewardship team, may wish to trigger,
or extend, an engagement or may inform a proxyvoting decision. The results of this engagement canbe tracked over time using Research Notes within
our investment management tool, Spectrum™. This
feedback loop, from both a bottom-up materialityfocused and top-down principle-based perspective, isdesigned to allow our views on the companies within
our investable universes to remain current, as wellas complemented by additional layers of insight as aresult of direct engagement.
Moreover, stewardship also plays a role in helping
our ESG integration process to remain effective andaccountable. Investment stewardship and engagement
sit explicitly within the ‘Research and Investment
Management, Investment Due Diligence’ criteria
within the 6-metric framework for ESG Integration,
as depicted above.
In 2023, JPMAM received its PRI Rating for the 2023
reporting period (data as of the end of 2022). Further
details on our PRI results can be found on our
website.63 UNPRI are a set of voluntary and aspirational
63

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principles; signatories to the principles are required
to report publicly on their responsible investment
activities each year. ESG integration is an explicit
factor in this assessment. The module is designed
to provide information concerning each signatory’s
overarching approach to responsible investment,
including governance, responsible investment policies,
objectives and targets, the resources that are allocatedto responsible investment and the incorporation offinancially material ESG issues into asset allocation.
Combining our ESG research capability with thediversified experience and skill of our investment
teams, and the expertise of our investment stewardshipspecialists, gives us a deep understanding of therisks and opportunities facing different sectors,
industries and geographies. We believe that thiscollaborative, well-resourced approach enables us totake an effective approach to both ESG integration andinvestment stewardship. While we follow an overarchingprocess to determine whether an investment groupis deemed to be ESG integrated, our ESG integration
processes for investment groups are designed toallow investors and stewardship specialists to take
into account specific risks and nuances as applicable.
For example, in the case of strategies investing inreal assets, many of the risks surrounding theseassets depends on physical location and regulatory
jurisdiction.

Resources we share across the
JPMAM system
In addition to the portfolio management teams, who use
ESG integration as part of their investment processes,
we have a suite of technology and research systems toenable the sharing of resources and insights across
JPMAM. Our extensive research capabilities allow us
to conduct in-depth research into the ESG profile ofmany of the companies in which we invest. The ability
to flag risks and opportunities early on through our
research resources means that we can conduct timely
and effective engagement on financially material ESG
issues that arise. Research is therefore a key partof both ESG integration and stewardship, enabling

Our PRI results can be accessed here: https://am.jpmorgan.com/content/dam/jpm-am-aem/emea/regional/en/communications/luxcommunication/jpm-pri-scorecard-per-ce-en.pdf.
The UNPRI survey includes modules that solicit information from signatories, including J.P. Morgan Asset Management, on topics including an overall
Policy Governance & Strategy module and a number of modules covering individual asset classes, such as Listed Equity, Fixed Income andInfrastructure. Information is self-reported by signatories, including J.P. Morgan Asset Management, and was not audited by any party, including
J.P. Morgan Asset Management, independent public accounting firms or UNPRI. Information on the UNPRI 2023 assessment methodology along with
FAQs on the 2023 reporting cycle are included in the following links: 2023 Reporting Framework: Overview and Structure Guide and FAQ Reporting
2023. UNPRI scores are not reliable indicators of current and/or future results or performance of underlying assets.

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ESG integration
at J.P. Morgan Asset Management continued
us to maintain oversight of a company’s activities
and engage where we feel it would be beneficial to
our clients.
J.P. Morgan Spectrum™, launched in 2017, is J.P. Morgan
Asset Management’s common technology platform,
built by combining our leading capabilities acrossthe organization. The platform is designed to optimize
internal communication by connecting sales,
investment and client service functions.
The platform standardizes and enhances our extensive
research, portfolio construction and risk management
capabilities. Spectrum™ is a single centralized source
for all critical data sets that helps provide consistencyof portfolio information throughout the full lifecycle.
The Spectrum™ platform strengthens J.P. Morgan AssetManagement’s investors’ collaboration and accelerates
the inclusion of our best ideas into solutions for ourclients. It also supports investment decision making
with integrated analytics, providing the ability toview and manage risks across multiple disciplines,
enabling us to build stronger portfolios.
Spectrum™ combines multiple operational oversighttools into an integrated suite with higher automation,
integrated workflows and timely alerts. It also enables
our client-facing specialists to deliver a high-quality
client experience – from onboarding through toportfolio management and reporting.

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ESG analysis and research are embedded inSpectrum™ and shared across investment teams
where appropriate. Spectrum™ thereby enables greatercollaboration, as expertise can be leveraged across
the J.P. Morgan Asset Management platform, subject toinformation barriers. For example:• Qualitative Research Notes: We share qualitative

ESG assessments of companies on Spectrum™ via
an application called ‘Research Notes.’ Investors,
as well as the Sustainable Investing team, are able
to record relevant ESG information arising froma company meeting or research, while specificenvironmental, social and governance issues canbe flagged through a tagging facility to alert othersystem users. For example, a sector research analyst
within global equities can view the ESG research notesof a company that a Global Fixed Income, Currency
and Commodities (GFICC) credit analyst wrote,and vice versa, allowing investment professionals toaccess the latest information and exchange views.
In addition, the engagement notes written by theInvestment Stewardship team can be viewed by the
global equities and GFICC investment teams. ESG
metrics that are deemed to be financially material arehighlighted through the engagement process.

Illustration of SpectrumTM “Research Notes” dashboard

Image source: J.P. Morgan Asset Management SpectrumTM.

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2023 Investment Stewardship ReportESG integration
at J.P. Morgan Asset Management continued• Quantitative ESG data: Investment teams can view

Back to contents• Portfolio management systems: Spectrum™ is also

the JPMAM Quantitative ESG Score within Spectrum™,
as well as the underlying metrics from which the scoreis derived subject to any required information barriers.
Investors are also able to access a historical view ofthe overall JPMAM Quantitative ESG Score over the last
five years. Illustration of Spectrum™ dashboard Image
source: J.P. Morgan Asset Management Spectrum™.

used as a portfolio management tool by many
investment teams. Within the respective system,
both the proprietary ESG assessment and third-party
data are embedded so that the information can bereferenced to inform investment decisions. For further
details on this, please refer to individual asset classsections in the following pages.

Illustration of SpectrumTM “ESG Company Insights” dashboard

Image source: J.P. Morgan Asset Management SpectrumTM.

PeopleJ.P. Morgan Asset Management’s approach to investingbuilds on our long heritage of active management
and stewardship. A key strength of our investment
process is our in-house research capabilities, on both afundamental and a quantitative basis.

• Central Sustainable Investing team: As of December• Research capabilities of our investment teams:• Dedicated Investment Stewardship team: As of

ESG information is integrated systematicallyinto actively managed strategies leveraging theexpertise of over 1,000 investors through proprietary
research, engagement and portfolio construction.
Subsequently, ESG metrics are monitored on an
ongoing basis for risk management purposes.
• In particular, J.P. Morgan Asset Management has over31, 2023, we have 36 dedicated specialists supporting
ESG integration from the perspectives of proprietary
ESG and climate research, investment stewardshipand products and solutions innovation.
December 31, 2023, we have 15 investment
stewardship specialists globally who work incollaboration with our portfolio managers andresearch analysts to direct interactions withcompanies/issuers across our six Investment
Stewardship Priorities and the specific researchframeworks utilized by each asset class.

300 experienced career research analysts – situatedglobally and organized by sector – whose knowledge
and experience provide an invaluable researchresource. They offer in-depth specialist analysis ofcompanies within their particular sector and region.

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at J.P. Morgan Asset Management continued

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ESG data64
To the extent that J.P. Morgan Asset Management uses
third-party providers, the criteria and rating systems
used by third-party providers can differ significantly.
There is no standard ESG scoring system and themethodology and conclusions reached by third-party
providers may differ significantly from those thatwould be reached by other third-party providers or
J.P. Morgan Asset Management. In addition, evaluations
by third-party providers may be based on data sets andassumptions that may, at times, be insufficient, of poor
quality, or contain biased information.
At the same time, the ongoing improvement in thequantity and quality of ESG-related data available
to investors has enabled us to introduce the next
generation of proprietary ESG data – a globallyconsistent, JPMAM Quantitative ESG Score that isavailable to our portfolio management and researchanalyst teams through Spectrum™. The purpose of thescore is to provide portfolio managers and researchanalysts with useful ESG information they might nototherwise have access to, in order to facilitate ESG
integration and investment stewardship. The scoreprovides another reference point to enhance theconsideration of material ESG risks and opportunities
in active investment processes. For most strategies,scores are not a definitive driver of investment
decision-making, and portfolio managers may continue
to hold low-scoring securities for reasons unrelated
to their ESG profile as the integration of ESG data is
one element alongside other factors considered in ourinvestment processes.

The JPMAM Quantitative ESG Score assesses the extent
to which companies face and manage financiallymaterial ESG risks and opportunities. This scoreis evolving from leveraging third-party ESG data toinstead draw on granular, outcomes-focused data,
making increased use of the significant increase in
ESG disclosures and data available over recent years.
Please note that investment teams are not required touse the JPMAM Quantitative ESG Score as part of theirinvestment process and not all JPMAM investment teams
use the JPMAM Quantitative ESG Score as part of their
ESG integration process.
The score provides additional insights that allow
internal users to drill down into individual data
points, such as greenhouse (GHG) emissions andsupply chain-related metrics, in order to understandthe specific risks and opportunities that individualcompanies face. This enhanced visibility means thatanalysts and our stewardship team are better able
to pinpoint issues with greater accuracy and havean improved ability to monitor company behaviour
and performance.
Having been developed in collaboration with the
Sustainable Investing team’s ESG & Climate ResearchWorking Group, the score also leverages our data
science capabilities, such as machine learning,algorithms and natural language processing, to enrich
our understanding of ESG metrics beyond corporate
disclosures and at scale.65• The JPMAM Quantitative ESG Score capability aims toenhance our understanding of what ESG information
is available for research and investment decisionmaking and provides a consistent view of thefinancially material ESG metrics within each sector.
This helps J.P. Morgan Asset Management to manage
the associated risks and opportunities.

While J.P. Morgan Asset Management looks to data inputs that it believes to be reliable, J.P. Morgan Asset Management cannot guarantee theaccuracy, availability or completeness of its proprietary system or third-party data. Under certain of J.P. Morgan Asset Management’s investment
processes, data inputs may include information self-reported by companies and third-party providers that may be based on criteria that differ
significantly from the criteria used by J.P. Morgan Asset Management, which often include forward-looking statements of intent and are notnecessarily fact-based or objectively measurable. In addition, the criteria used by third-party providers can differ significantly, and data can varyacross providers and within the same industry for the same provider. Such data gaps could result in the incorrect, incomplete or inconsistentassessment of an ESG practice and/or related risks and opportunities.
65
While J.P. Morgan Asset Management looks to data inputs that it believes to be reliable, J.P. Morgan Asset Management cannot guarantee theaccuracy, availability or completeness of its proprietary system or third-party data. Under certain of J.P. Morgan Asset Management’s investment
processes, data inputs may include information self-reported by companies and third-party providers that may be based on criteria that differ
significantly from the criteria used by J.P. Morgan Asset Management, which often include forward-looking statements of intent and are notnecessarily fact-based or objectively measurable. In addition, the criteria used by third-party providers can differ significantly, and data can varyacross providers and within the same industry for the same provider. Such data gaps could result in the incorrect, incomplete or inconsistentassessment of an ESG practice and/or related risks and opportunities.
64

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2023 Investment Stewardship ReportESG integration
at J.P. Morgan Asset Management continued• The score draws on granular data. This includes acompany’s management of natural resources andenvironmental impacts, effectiveness of its humancapital development programs, supply-chain risks,
customer welfare and risk management. For example,
we leverage company disclosures, third-party
estimates of environmental impact, data sciencesignals, which make use of our in-house natural
language processing tool, ThemeBot, and alternative
data sets provided by external vendors.66 We use anumber of different data providers in order to obtainas comprehensive and varied a set of informationas possible with which to measure ESG aspects.
We assess companies using a wide range of data
inputs, combined with fundamental analysis. While
we look to data inputs that we believe to be reliable,
we cannot guarantee the accuracy of our proprietarysystem or third-party data.
• The score harnesses our expertise and experiencein active asset management and ESG integration.
For example, the weights we attach to different ESG
issues reflect the insights of hundreds of sector
analysts who have many years experience identifying
financially material ESG metrics and who understandthe specific challenges within different industries
and regions.
• Our data science capabilities, such as machinelearning algorithms and natural language processing,can generate useful insights by processing
unstructured, alternative data to measure specific
ESG issues and complement companies’ selfreported and/or third-party ESG data.
A trend that has continued is the increasing availability
and quality of ESG data, which is supported bygovernments and regulatory bodies. Globally,
more organizations and governments are encouraging
or mandating compliance with recommendations laidout by the Task Force on Climate-related Financial
Disclosures (TCFD). In 2024, we expect to see greater
adoption of the International Sustainability Standards
Board’s (ISSB) sustainability and climate disclosure
standards, with the TCFD recommendations having
been fully integrated into the ISSB’s standards.

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However, corporate ESG disclosure remains a challenge.
Companies across a wide sectoral and geographic
spectrum are increasingly being scrutinized on data
points, such as Scope 3 GHG emissions and employee
satisfaction ratings, as well as the lack of disclosure ofthese data points. In particular, emerging markets are
an area where notable progress on disclosure is being
made. This is why engagement is an important elementof ESG integration at J.P. Morgan Asset Management,
as we encourage more companies to disclose on their
ESG efforts. As visibility of companies’ performance on
key ESG indicators improves, it will become possible
to make more informed and accurate forward-looking
financial materiality assessments and investment
decisions over time.

Ongoing Monitoring: ESG integration
J.P. Morgan Asset Management undertakes ongoing
monitoring to review the ESG integration work ofinvestment groups – specifically, the applicationof sustainability risks and financially material ESG
metrics within their ESG-integrated strategies.
Our Sustainability Risks Policy summarizes theintegration of sustainability risks in the investment
process. This forms part of an existing, regularinvestment review system.
For example, the Investment Director teams in equity,
global fixed income, currency & commodities andmulti-asset solutions oversee performance and risk
oversight of portfolio management. They do this tomaintain discipline around investment objectives
and processes in the context of client objectives orfund guidelines, performance, risk position and ESG
profiles. The Investment Director teams monitor ESG,
quantitatively and qualitatively, as part of their quarterly
review meetings.
Any material findings from the ongoing monitoringprocess will be escalated to the CIOs of the relevant
asset class using the existing investment oversight/
escalation process. We have regular monitoringprocesses in the global liquidity and alternatives
solutions, which are tailored to the nature of their asset
class. For more details, please see the relevant asset
class sections in the following pages.

Where J.P. Morgan Asset Management uses the proprietary system, any changes to an algorithm or underlying assumptions may have unintended
consequences, which could have an adverse effect on the performance of a strategy. Algorithms may not perform as intended for a variety ofreasons, including, but not limited to, incorrect assumptions, changes in the market and changes to data inputs. In addition, the data sets that the
proprietary system processes may be insufficient, of poor quality or contain biased information. Although J.P. Morgan Asset Management obtains
data and information from third-party sources that it considers to be reliable, J.P. Morgan Asset Management does not guarantee the accuracy and/or completeness of any data or information provided by these sources.

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ESG integration
at J.P. Morgan Asset Management continued
In addition, AM Independent Risk has the Sustainable
Investing Risk Oversight framework to monitor theconsideration of financially material ESG metrics
in the investment process of our active strategies.
This process has the objective of identifying investment
strategies with ESG metrics scores that are materiallydifferent from their benchmark and understanding
the rationale for such differences. The analysis will beshared with AM Risk and AM CIOs periodically. This
process aims to increase the transparency of specificexposures or strategies with ESG ratios that may be
inconsistent with the strategy’s name, investment
objective or disclosures. This process is not expected
to limit an exposure identified as an outlier or to trigger
changes in positions that would negatively impact
portfolio returns.

Refining our process through review
from multiple dimensions
Given the evolving nature of ESG data, technology andresearch capabilities, we encourage investment teams
to continue to improve their ESG Integration process.
Financially material ESG factors are integrated into
each investment process in a manner consistent withthe underlying investment style. However, JPMAM’s
governance process for oversight of ESG integrationis uniform. We follow an approach of ‘Demonstrate,
Review, Approval and Implementation’.
Investment groups present their ESG integration
approach against the ‘framework’ for the strategy to
the SIOC. For consistency, this is done against a multifactor framework. After the assessment, the SIOC
approves or rejects the ESG integration status.
Prior to the fourth quarter of 2023, JPMAM’s governanceprocess contemplated SIOC review of ESG integration
at the investment group level but did not require a
review of individual strategies/products by SIOC.
During the fourth quarter of 2023, JPMAM enhanced
its ESG integration governance process by requiring
all new strategies to be reviewed individually by
SIOC prior to their presentation to JPMAM’s productsteering committee (‘PSC’) in order for suchstrategy’s investment process to be considered ESG
integrated. SIOC was established in 2021, as part of acomprehensive review of our sustainable investment
governance practices, with a particular emphasis on
structures for oversight of investment stewardship and
ESG integration. Prior to 2021, a collection of working

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Back to contentsgroups including the ESG & Climate Research Working
Group determined ESG integration status. Historically,such working groups were referred to collectively as theSustainable Investment Leadership Team (‘SILT’).
As of the fourth quarter of 2023, ESG integration ismonitored by the Investment Directors, or equivalentteams, as part of confirming that a strategy’s
investment process continues to be ESG integrated
in accordance with the strategy’s disclosures anddocumentation.

Global Equities
Research/due diligence:
A key strength of our investment process is our inhouse research, produced by over 100 fundamental
and quantitative equity analysts. Our ESG views on
specific companies are the product of proprietary
research and one-on-one engagements withcompanies. We also draw on data from external
providers. These ESG views are one of multiple
informational inputs into the investment process,alongside data on traditional financial factors, and are
not the sole driver of decision-making.
Our research framework uses several internallydeveloped processes to assess the financially material
ESG credentials of any business:• An ESG Checklist applies the same detailed questions

to the approximate 2,500 companies under coverage,
globally. This generates the JPMAM Fundamental
ESG Score. The ESG checklist asks 12 questions
specifically addressing environmental considerations,
14 on social and 14 on governance. Analysts acrossequities and fixed income collaborate on the ESG
Checklist, with questions about governance tailored
to reflect the investment angles of each asset class.
The checklist includes both negative and positive
questions, as well as a severity assessment. The
checklist is not a ‘pass/fail’ exercise but rather a tool
to inform discussions between portfolio managers
and fundamental analysts and our engagements withthe companies we cover.
The Investment Stewardship team work closelywith research analysts to update the ESG Checklist
periodically, with the aim of making it more suitable
for the purpose of ongoing monitoring and targeted
corporate engagement. For example, new questions
around supply chain environmental risks, workforce

2023 Investment Stewardship ReportESG integration
at J.P. Morgan Asset Management continued
diversity and disclosure on social and diversity wereadded in 2022, as well as detailed guidance as to how
analysts should think about responding to these.
This helps to identify leaders and laggards in the key
ESG issues for each sub-sector and brings more
depth to our ongoing ESG research while serving as
helpful guidance for more focused ESG engagementwith companies.
In addition, analysts conduct deep-dive research into
ESG topics identified as material to our investment
process. Among the topics examined are flaring in
U.S. oil fields, the environmental impact of fast fashionin Europe and corporate governance in insurancecompanies in Asia.
• The JPMAM Quantitative ESG Score is a proprietary,

data-driven ESG score. This score draws on granular,
outcomes-focused data, making full use of thesignificant increase in ESG disclosures and available
data over recent years. The score also leverages ourdata science capabilities, such as machine learning,algorithms and natural language processing to enrich
our understanding of ESG factors beyond corporate
disclosures, at scale. For further details, please see
the section on ESG data.
• A fundamental materiality framework across 2,000+

companies. The basis of ‘materiality’ is to identify the
ESG issues that are most likely to have a financiallymaterial negative impact on a company were it tobe mismanaged, or conversely, the material positive
impact in the case of good management. Acrossmore than 50 different sub-industries, financiallymaterial issues are identified by research analysts
within our 100+ strong global network, who cometogether to share perspectives with their sector grouppeers. Each company under coverage receives ascore from 1 (best) to 5 (worst) on each of the material
issues that have been identified. The implementationof this research framework has deepened ourunderstanding of what best practices look like forsustainability, and we use this template to engage
with companies. However, the score does not define
or limit a team’s investment options.

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Engagement
Active engagement with companies is an integral partof our approach to investment and ESG. We use it not
only to understand how companies consider issues
related to ESG but also to try to encourage companies
to develop and adopt best practices, for the purposeof enhancing returns for our clients. Engagement is acollaboration between portfolio managers, researchanalysts and the Investment Stewardship team. Eachbrings a different perspective to our interactions withcompanies across our six Investment Stewardship
Priorities and our research framework. Alongside the
top-down guidance provided by the six Investment
Stewardship Priorities, our bottom-up researchframework captures the ESG insights of our investors
through the research elements detailed in the previous
section. Our investors often identify issues related to
ESG through their day-to-day work and interaction withcompany management teams. In these instances,
investors may choose to involve the Investment
Stewardship team.
Methods of engagement typically include regularmeetings, video conferences or email exchanges
with senior executives and non-executive
management. Proxy voting is also a valuable meansof communication. Where our concerns are notadequately addressed by our initial engagement,
we will consider an escalation of our approach using
the various means at our disposal. Decisions toescalate will always be made on a case-by-case basis.
More formal approaches include private meetings with
the Chair or other board members, formal letters to the
Chair and board or collaborative engagement.

• A strategic classification framework provides a rating(Premium, Quality, Standing and Challenged) for
stocks, based on our judgment of the quality of thebusiness, including financially material ESG issues.

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ESG integration
at J.P. Morgan Asset Management continued
Global Fixed Income, Currency andCommodities (GFICC)
Research/due diligence
We utilize a disciplined and systematic process toevaluate and identify attractive investment opportunities
through the analysis of fundamental, quantitative andtechnical investment factors. Proprietary research forms
the foundation of our approach to ESG integration, withover 70 career research analysts dedicated to thoroughly
analyzing every aspect of investments, including
financially material ESG factors. As part of this in-depth
fundamental research, credit analysts assess the impactof ESG risks and opportunities on issuers’ current andfuture cash flows. If the analysis of ESG factors showsthat they are financially material and relevant, analysts
will reflect this view in their assessments.
Our proprietary research process incorporates
inputs such as company regulatory filings, annual
reports, company websites, direct communication
with companies and government issuers, media,
third-party research and proprietary J.P. Morgan AssetManagement research. Other inputs include sell-side
investment research and reports from industry groups.
Our fixed income sector teams have developed
quantitative ESG rating systems that capture thenuances within their specific markets and align with
their existing investment processes. These include an
ESG Checklist for the corporate bond market, country
ESG rankings for both developed and emerging market
sovereign bonds and systematic identification of
ESG leaders and laggards in the securitised space.
These scoring frameworks serve as useful tools for
aggregating the numerous ESG metrics for eachissuer and allow for comparison across issuers in
the universe. Importantly, the scores are applied toportfolios in a judgmental, not formulaic, fashion andthey are accompanied by analysts’ qualitative research.
Within Spectrum™, our centralized technology platform,
analysts also have access to third-party ESG data foreach issuer. This data is displayed in various ways to
track individual environmental, social and governancescores, as well as to observe changes over time. This
third-party data serves as a supplement to our analysts’
views. Our analysts form their own opinions based on
their research and judgment, and this is articulated in
written research reports, which contain specific sections
for ESG comments when material and relevant.

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ESG analysis and research are visible on Spectrum™
and shared across all investment teams, including
fixed income and equities, enabling greatercollaboration and leverage across the J.P. Morgan AssetManagement platform.

Engagement
As bondholders, although we do not typically carryvoting rights, we believe our role in providing financing
to issuers means we have the ability to advocate forand influence positive change. As such, we engage ona wide range of financially material ESG issues with avariety of market participants. Our large global scaleand status within the asset management industry allow
us significant representation across asset classes.
We often conduct engagement in conjunction withmembers of the Investment Stewardship team; we alsocollaborate with our equity colleagues to engage withcompanies to which we have exposure in their bonds
as well as their equity. We participate in many meetings
with issuers from across the fixed income investment
universe (companies and countries) every year.
The C-suite relationships that our research analysts
have developed over their careers, enable us toengage regularly with company management andrepresentatives of government issuers on mattersthat are material to our credit assessment, including
financially material ESG factors. We also regularly meetwith originators of securitised products and regulators.
During these engagements, research analysts raiseissues they have identified as material and relevant,including ESG concerns, in an effort to positively
influence issuers to adopt best practices.
We also aim to contribute to positive change byparticipating in industry forums and regularly
consulting with third-party data providers. For instance,
we have board representation on industry bodies,such as the European Leveraged Finance Association,
allowing us to encourage closer cooperation amongissuers on key ESG initiatives and to advocate for better
disclosure and transparency across the industry. We
also scrutinize the data from third-party ESG data
providers, working closely with them to improve theircoverage of the fixed income universe, data accuracy
and timeliness.

2023 Investment Stewardship ReportESG integration
at J.P. Morgan Asset Management continued
In the sovereign space, we recognize that engagement
is critical, but it can be more nuanced compared to thecorporate market given the inherent politics involved.
We seek to engage with the sovereign market in avariety of forms, including investing in sovereign debt
to finance specific sustainable projects, meeting withgovernment officials regularly to understand progresson climate goals and participating in industry groups
to encourage better disclosure and improved practices
from state-owned companies.
The results of our ESG engagement are reflectedin the research reports produced by analysts,
and they feed back into the overall view of an issuer,
thereby influencing investment decisions whenfinancially material.

Global Liquidity
Research/due diligence
As part of our security selection strategy for our
strategies that are ESG integrated, we seek to assess
the impact of ESG factors on many issuers in theuniverse in which we invest. We utilize both top-down
and bottom-up approaches to thoroughly analyse such
issuers, including ESG risks and opportunities that may
affect issuers’ current and future cash flows.
Proprietary, fundamental bottom-up credit
analysis forms the foundation of our approach to
ESG integration. We analyse companies acrossa range of inputs including company regulatory
filings, annual reports, company websites, directcommunication with issuers, media, and third-party
and proprietary research.
Proprietary quantitative ESG rating systems have also
been developed to capture the nuances across specificfixed income markets. These include a proprietarymulti-question ESG checklist for the corporate bondmarket, at both the ticker and specific bond level,country ESG rankings for developed markets andsystematic identification of ESG leaders and laggards inthe securitised market. These ESG-related frameworks
allow analysts to make informed decisions on the ESG
profile of issuers within their respective sectors.
In addition, the JPMAM Quantitative ESG Score
developed by the Sustainable Investing team provides
further breadth of ESG data using proprietary
methodology.

J.P. Morgan Asset Management

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As a supplement to these proprietary tools, ourcommon technology platform – Spectrum™ – displays
third-party ESG data for each issuer, tracking individual
environmental, social and governance scores andchanges to those scores, over time.
Our analysts form opinions based on their independent
research and judgment and produce reports
containing specific sections for ESG commentsthat are leveraged across different asset classes
when appropriate. The analysts apply a fundamental
credit rating to each issuer, and this rating, which
can be adjusted based on ESG concerns, ultimately
determines an issuer’s maximum lines using Global
Liquidity’s credit guidelines. These guidelines set
maximum tenors (duration) and exposures at both theplatform level and within each fund and account.
For a more detailed review of the research/due
diligence process, please refer to the GFICC section ofthis report.

Engagement
As bondholders, we do not typically carry voting rights.
However, as providers of financing, we have the ability to
advocate for and influence positive change by actively
engaging on a wide range of ESG issues with a variety
of market participants.
Frequent meetings with company management
teams or governmental issuer representatives help
illuminate ESG risks and opportunities identified asmaterial and relevant in an effort to positively influenceissuers to adopt best practices. This information
informs the overall ESG analysis within the proprietary
fundamental ESG checklist analysis. The results of our
ESG engagement are reflected in the research reports
produced by analysts, and feed back into the overall
view of an issuer. Portfolio managers work with researchanalysts to understand how engagement opportunities
are impacting the overall view of a credit.
Below are a few keyways we engage with management
teams and other stakeholders:• Have board representation on industry bodies, where

we encourage closer cooperation among issuers on
key ESG initiatives.
• Work with rating agencies to promote better corporate

behavior in certain sectors and encouraging
cooperation between legislators, issuers and otherindustry bodies.

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ESG integration
at J.P. Morgan Asset Management continued• As previously stated, ESG integration is dependent

on the availability of sufficient ESG information
on investee issuers. Recognizing the existing
limitations around ESG data quality and availability,
we collaborate with data providers to encourage themto improve the overall coverage of the fixed income
universe with timely and accurate data.

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Engagement
Engagement functions are a collaboration between
J.P. Morgan Asset Management portfolio managers,
research analysts and the Investment Stewardshipteam. Each brings a different perspective to ourinteractions with companies across our six Investment
Stewardship Priorities and our research framework.

The results of our ESG engagement are reflected in theissuer reports produced by research analysts, which inturn feed back into the investment process alongsideother factors.

From a Multi-Asset Solutions perspective, we leverage
the expert insights of the Investment Stewardship teamand underlying investment teams on issues related toproxy voting and engagement activities.

Asset Management Solutions MultiAsset Solutions

Quantitative Solutions

Research/due diligence:• In order to integrate financially material ESG

The Multi-Asset Solutions team designs and manages
multi-asset portfolios, integrating the breadth anddepth of investment talent within J.P. Morgan AssetManagement, drawing on its proprietary quantitativeand qualitative research capabilities, strategy andsecurity selection, asset allocation and risk-focused
portfolio management expertise.
For our ESG research in Multi-Asset Solutions, weleverage the following teams: Multi-Asset Manager
Research, Sustainable Investing and corresponding
asset class research analysts.
Within the manager/strategy evaluation process,we focus on understanding how financially material
ESG considerations influence the capabilities of theunderlying manager/ strategy and the investment
process. The emphasis is on understanding how ESG
metrics, where financially material, are considered
and how the manager/strategy defines, evaluates
and rationalizes inclusion of securities that may scorepoorly and/or contain perceived headline risk. MultiAsset Solutions portfolio managers consider thisinformation, among other variables, when reviewing
managers/ strategies within the overall portfolio
construction process. At Investment Director quarterly
meetings, ESG characteristics can be challenged
and discussed.

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Research/due diligence
considerations in factor-based strategies (long-only
and long/short) and thematic, we rely upon a thirdparty vendor to evaluate companies based on aquantitative ESG metric.
• Third-party vendor coverage for our full long/short

universe is approximately 95%, with most in Europe
and least in Asia, emerging markets and small cap,
and is increasing over time. The result of the ESG
evaluation provided by the third-party vendor isreflected in scores that are normalized by sector, but
not by region. The scores range from 1-10 (10 being
the best score), with most benchmarks’ ESG scoreaveraging around 5.
ESG integration is dependent on the availability ofsufficient ESG information on relevant companies or
issuers and the investment universe. We recognize thelimitations around ESG data quality and availability.

Engagement and voting• JPMAM votes according to J.P. Morgan AssetManagement Global Proxy Voting Guidelines. The
Stewardship team may engage with companies heldin Quantitative Solutions’ portfolios as part of its
stewardship program.
• When there are significant proxy voting issues oncompanies without fundamental analyst coverage, theStewardship team will engage with the Quantitative
Solutions portfolio managers. The two groups will
evaluate the resolution, discuss the issues and cometo a decision.

2023 Investment Stewardship ReportESG integration
at J.P. Morgan Asset Management continued

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Alternatives Macro Strategies
Research/due diligence
Our research process consists of an assessment ofmateriality and ESG scoring: Assessment of materiality:
Our proprietary analysis aims to capture key ESG
topics pre-trade and on an ongoing basis for all
long exposures in individual companies, bond and
FX investments. We have determined distinct ESG
materiality frameworks for corporates and sovereigns
that facilitate a repeatable process for assessing ESG
across industries and countries and identifying themost relevant ESG topics.
Our framework for corporates leverages multiple
considerations. This includes inputs such as ISSB,
and relevant data for the sub-industry. We also lookat third-party research as appropriate. We may add
as needed an additional ESG area for review that
we believe could be material for a particular activity
or company. For sovereigns, we assess debt andFX positions against the UN PRI ESG topics from its
guide to sovereign debt investing and have added‘central bank credibility’ as an additional standalone
Governance topic.
The portfolio managers have the discretion to add
further ESG topics they believe could be financiallymaterial to specific positions. Our materiality
assessment draws on the managers’ understanding ofinherent ESG risks and opportunities across countries,
sectors, industries and activities, and their knowledgeof their sector of coverage and specific companies.
We integrate proprietary, broker and ESG-specificthird-party research and company disclosures into ourassessment as well as insights from scoring and active
ownership. The final analysis is documented as partof a security’s investment thesis, which supports theability to monitor exposures over time.

J.P. Morgan Asset Management

ESG scoring: Third-party scores provide a complement
to our own assessment of materiality and are an
objective quantitative framework for the considerationof ESG credentials. We leverage ESG scoring and theassociated analysis from MSCI, using the All Country
World Index (ACWI) scores for equity and credit, andthe country scores for sovereign debt, which feed
into Spectrum™. Within Spectrum™, we can view ourportfolios’ aggregate scores, the component parts andthe scores for the broader universe. We also leverage
the norm-based scoring assessment from ISS-ESG,
referring to its red/amber/ green flags. In addition,
the JPMAM Quantitative ESG Score provides further
insights of ESG data using JPMAM’s proprietary
methodology.

Engagement
To enhance our ESG analysis and ensure active
ownership on behalf of our clients, the Macro Strategies
team leverages the expert insights of the Investment
Stewardship team, specifically relating to proxy voting
and engagement activities. Further, we engage directlywith companies on certain issues where we believe
additional discussion may be materially beneficial.

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ESG integration
at J.P. Morgan Asset Management continued

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Alternatives
Research/due diligence

Engagement

J.P. Morgan Alternative Asset Management (JPMAAM)
Hedge Fund and Alternative Credit Solutions believes
that sustainability is a key factor, alongside others,
in managing risks and identifying opportunities, andwe have developed a holistic investment approachthat reflects this belief. Our ESG framework primarily
focuses on ESG integration in our manager due
diligence process. Our proprietary framework forevaluating managers includes an extensive list ofquestions on ESG metrics across 25 categories inrelation to their operational and investment processes.
We apply the framework to every manager while
recognizing that the financial materiality of certain ESG
risks and opportunities may vary by manager type, sizeand strategy. This comprehensive analysis informs ourview of ESG-related risks and is an important part of ourinvestment decision-making process.

After evaluating managers on financially material
ESG metrics throughout our due diligence process,we actively engage them on any identified financiallymaterial environmental, social or governance risks.
We work closely with our managers to help them
improve on financially material ESG metrics where
we believe they are lacking, providing guidanceand support to help them to improve practices.
We believe this improves a company’s ability tooperate successfully, both now and in the future,
thereby enhancing the potential of our investment.
The platform has helped many hedge fund and private
credit managers to incorporate financially material
ESG metrics into their businesses and investment
processes. Notably, over 90% of managers on the
J.P. Morgan Alternative Asset Management platform
already have or are actively drafting an ESG policy
focused on investment and/or business practices,up from less than 20% at the start of 2018.

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Client and beneficiary needs
Our investment stewardship approach aims above all to generate long-term, risk-adjusted returns for ourclients. We manage assets on behalf of a broad base of both institutional and retail clients, with more than 9,500
institutional accounts and over 700 funds in over 70 countries. On the institutional side, we serve corporate andpublic institutions, endowments, foundations, charities, insurers, consultants, financial advisors and governments
worldwide. On the retail side, we offer our services through third-party and direct distribution, high-net-worth
individuals, families and business owners.
As of December 31, 2023, our total assets under management were USD 2.9 trillion, broken down as follows by asset
class, client region and client type:

Asset class67
Total assets under management (in USD millions)
Alternative Investments

202,338

Equity802,907

Fixed Income

1,675,664

Multi-Asset Solutions

266,212

Total

2,947,121

Client region
Total assets under management (in USD millions)
Europe ex-UK

334,287

Japan

26,985

North America

2,125,201

Other

152,810

Pacific ex-Japan

159,506

UK

148,330

Total

2,947,121

Client type
Total assets under management (in USD millions)
Institutional

1,499,558

Retail

1,447,562

Total

2,947,121

Portfolio management by country
Total assets under management (in USD millions)
Australia / New Zealand

77

China

12,116

Hong Kong

51,688Japan

20,040

Other Latin America

We seek to understand clients’ views and positions onsustainable investing and stewardship from the startof the relationship. This can be via direct discussion,or through the request for proposal stage. We areseeing clients asking for more detailed qualitative
information on a wide range of sustainable investing
issues, including resourcing and commitments,
industry memberships, ESG investment process andstewardship. We also receive increasing requests
on quantitative aspects, including the ESG rating
characteristics of portfolios, carbon metrics, alignment
to net zero emissions reduction pathways, engagement
activity breakdowns and voting records, among others.
This provides significant insight into the extent towhich sustainable investing-related issues matter toour clients.
Client feedback is also sought on a more ad hoc basis,through industry events, training webinars and due
diligence feedback. We have continued to work tostrengthen the communication channel with our sales
and distribution teams, which has allowed us to collectfeedback more efficiently on how our stewardshippractices correlate with clients’ needs.

164

Singapore

2,776

Taiwan

6,435

U.K.

394,193

U.S.

2,459,632

Total

2,947,12167

At J.P. Morgan Asset Management, we are constantly
looking to evolve and improve our approach tostewardship, and we consider our clients andstakeholders as a vital source of insight into how thiscan best be done. Throughout the year, we continued
our efforts to obtain additional insight from clients andstakeholders through a number of formal and informal
feedback mechanisms.

Unlike the presentation on p101, ‘beta’ and ‘others’ AUM are incorporated into the four asset class categories shown here. Currency is includedin Alternatives.

J.P. Morgan Asset Management

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Client and beneficiary needs continued
Soliciting client feedback
In 2023, we conducted the second instalment of the
J.P. Morgan Asset Management Future Focus Survey on
ESG and sustainable investing Trends. Surveying 830
professional investors and 2,000 end investors acrossEurope, it covered questions such as how investor
behaviour and preferences are evolving, advisers’ asset
allocation intentions, and the drivers behind thesechoices. Our findings paint a detailed picture of thesustainable investing landscape and what advisers
see as the key topics for today and the future. Overall,
we found that the sustainable allocations and views
are broadening, with investors now considering more
asset classes, themes and approaches to sustainable
investing. The survey revealed that investors areinterested in a wider set of ESG issues. For instance,
while climate change remains a firm priority withclients, there were other areas such as healthand wellbeing, sustainable water and wastewater
management, and food security and sustainableagriculture which the survey responses showed clientswere interested in for potential investment solutions
to be provided. In terms of asset classes, responses
indicate that fixed income and multi-asset portfolios
are seen as a strong source of ESG opportunities in
the months to come. Findings from the survey will help
to shape our client conversation and will enable us tocontinue to support our clients in areas that are mostimportant to them.
Building on client surveying activity carried out inprevious years, JPMAM’s Client Operating Committee
wanted to gain a better understanding of theimportance of a range of ESG issues to consultants
and their clients. A series of calls was set up tocollate feedback on market best practice and how
we can improve our own approach to matters suchas remuneration linked to ESG outcomes, consistentglobal messaging on ESG, and clear communicationof JPMAM’s approach to sustainability. Through theexercise, we were made aware of several areas where
we could learn from industry peers, for example inrelation to senior-level leadership on ESG, use ofoutside subject matter experts to bolster in-house
knowledge and capabilities, more proactive sharingof expertise with clients and internal stakeholders,leadership on ESG, and use of best-available metrics
and measurement tools whilst acknowledging current
limitations around data quality and availability.

134

We have different working groups and committees suchas ESG & Climate Research Working group and SI Client
Strategy Working Group that have worked on several of
the issues outlined above.
In 2023, we held dedicated sustainable investing
sessions at the J.P. Morgan Asset Management
Global Research Summit in Europe and Asia, which
is our flagship annual regional client event for ourinvestment fund clients in wholesale channels. We
dedicated a session in Hong Kong on the role ofinvestor engagement in delivering long-term returns forinvestment portfolios and provided specific examplesof the work we were doing with investee companies inthe Heating, Ventilation and Cooling sector. This wasin response to earlier client discussions and surveys
which showed that clients in Asia wanted more detailed
and tangible information on engagement.
As part of an ongoing effort to connect with our clients,
share insights into our ESG-related investment andstewardship activity, and hear directly from them inorder to better tailor our product offering to their needs,
in 2023 the Sustainable Investing team and colleagues
hosted net zero roundtables with large institutional
clients across Europe. We travelled to five countries witha range of clients at different stages on their journey
to implementing net zero targets. The roundtables
aimed to provide a forum to share challenges andopportunities presented by net zero target setting fromdifferent perspectives, as well as showcase the depthof climate expertise at JPMAM and collaboration acrossinvestment teams and the Sustainable Investing teamon integrating net zero considerations into portfolios forclients who have adopted their own net zero targets.
In addition, we participated in a range of events androadshows for ETF clients around active insights andinvestment stewardship, discussing how both active
management and engagement can benefit theirportfolios to achieve long-term investment outcomes.

2023 Investment Stewardship Report

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Client and beneficiary needs continued
Client and stakeholder education
We view client and stakeholder education as a two-way
and interactive process, taking the view that knowledge
should be shared as far as possible. We offer a broad,internal education program to investment teams andclient advisors, and this has gradually developed toencompass a comprehensive range of sustainable
investing-related content.
The Sustainable Investing team, in partnership with
our Client Skills Training team, worked to update andenhance our online Sustainable Investing Academy.
This included a new internal website and the recordingof new content to supplement our existing sustainable
investing materials. The Sustainable Investing Academy
is reinforced by regular in-person sustainable investing
training workshops on key topics, such as sustainable
regulation, fundamentals of climate change andsustainable investing and net zero. These workshops
aim to equip client advisors with a solid foundationin sustainable investing knowledge to support theirinteractions with clients. In this way, we seek to create
the basics for more meaningful discussions with clientson key sustainability issues.
With the aim of providing opportunities for client
education in mind, we held a number of client eventswith a focus on sustainable investing and stewardship,such as our online Sustainable Investing Summit
and our 2023 Global Research Summit. This included
dedicated sessions on the role of alternatives insustainable investing, sustainable ETF investing, andsustainability in practice, where we heard from solution
providers leading the way in the low-carbon transition.
We also moderated a discussion for the CIOs of
endowment clients on opportunities for investing in the
low-carbon transition at our CIO Summit in New York inthe second half of the year.
This year we took part in a range of sustainable
investing industry events, where we were able toengage with clients and stakeholders whilst also
contributing to topical industry debates. JPMAM cohosted an event on nature and biodiversity with the
PRI in our London offices, where our Global Headof Sustainable Investing spoke to clients about theimportance of nature to the global economy and how
investors can make decisions with nature in mind.

J.P. Morgan Asset ManagementWe sponsored the GIIN (Global Impact Investor
Network) conference in Copenhagen, where we hosted
a session with colleagues from our sustainable forest
management subsidiary, Campbell Global, to highlightthe role of timber investing in decarbonisation,
carbon markets, promoting biodiversity, and enabling
negative emissions.
In 2023, we continued to produce sustainable
investing-related content on a wide range of topics forour clients and end-beneficiaries. We published regularthought leadership pieces including two sustainable
investing market outlooks and an in-depth series offour pieces on investable opportunities around climate
adaptation. We also produced insights on topics thatclients had shown a keen interest in, such as ESG
considerations around mining for critical minerals andthe role of hydrogen in the energy transition. In addition
to this, JPMAM’s Market Insights team produced arange of materials as part of our sustainable investing
insights program. Topics this year included the ESG
implications of food price inflation, sustainability
and portfolio returns, explaining carbon credits, andassessing the risk of another energy crisis in Europe.
A full list of publications can be found in the Appendix 3.

Articulating and addressing the clientneeds
An important part of our Sustainable Investingteam’s remit is to work with clients and distribution
teams to advise on the design and implementationof sustainable investing solutions. This involves
understanding the needs of individual clients
regarding their ESG approach, including discussions
on sustainable investing policy development,
investment strategy and stewardship. Over the last few
years, we have been working to formulate strategies
that both proactively anticipate market trends insustainable investing, and which respond to specificclient demands.
We have noted that some of our clients haveclimate objectives that focus on decarbonisation,in connection with the transition to a low-carbon
economy. This year we launched our first Paris-aligned
benchmark products, aimed at clients with portfolio
decarbonisation objectives.

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Client and beneficiary needs continued
In recognition of that fact that themes beyond climate
are also gaining traction with sustainability-focusedclients, in 2023 we launched an emerging marketsfocused social advancement strategy. We havecontinued to see client demand for core sustainable
fixed income strategies, in response to which welaunched our first ‘Best-in-Class’ Fixed Income
Sustainable strategy (Global Short Duration Corporate
Bond Sustainable strategy). This builds on the Green,
Social and Sustainable Bond strategy which welaunched in late 2022.

Strategy specific exclusions
With regards to exclusions of specific securities/
issuers due to ESG-related criteria, we consider theneeds of specific clients and/or compliance withlaws and regulations, including the European Union’s
Sustainable Finance Disclosure Regulation, and/or
expectations set in sustainable investing-related fundlabelling regimes. Sustainable investing represents
a broad set of approaches, and on top of our own
firmwide minimum exclusions framework for EU SFDR
Article 8/9 funds, we have recognized that clients
have specific ways they need us to implement theirsustainability objectives. This includes having theirown custom exclusion list of companies. With that inmind, we seek to meet client needs by advising themon exclusions and providing support to implement
clients’ tailored exclusion lists. These cover a range ofareas including:• Fossil fuels including thermal coaland (un)conventional oil and gas.
• Electric power generation• Tobacco• Alcohol

Facilitating and supporting clientinterest in engagements
We are conscious that our clients are themselvesoften tracking current ESG issues and the activityof the companies in which their money is invested.
An example of this was our decision to join a rangeof new industry initiatives aligned with issues thathave been brought to our attention by clients.
For example, we are members of an industry groupcalled Pensions for Purpose and this reflects ourcommitment to continually assess the avenues via
which we manage and invest our clients’ assets,
as well as our determination to maintain visibility ofindustry developments in the sustainability space.
Throughout the course of 2023, we have partneredwith Pension for Purpose on a series of teach-ins andwebinars. For example, we delivered a bespoke training
session, on the topic of ‘outcome-driven/impact
investing’ to UK pension fund clients. The training
focused on definitions/terminology, the evolving
landscape and trends, and also spoke to the regulatoryenvironment as it pertains to impact. We also spokeon engaging on climate change to their members(which are also some of our clients) at a conference
they hosted.
In 2022, we became members of FAIRR, an industry
initiative focused on managing ESG risks in the
global food sector and promoting sustainable foodsystems. This demonstrated our strengthened focus
on issues related to natural capital and biodiversity,
also exemplified by the addition of our sixth Investment
Stewardship Priority, natural capital and ecosystems.
In 2023, with FAIRR we were able to take part in aroundtable focused on regenerative agriculture.
FAIRR has now released a report on ‘Regenerative
Agriculture- Why it should be on investors’ agenda’.

• Controversial weapons• Conventional weapons• Nuclear weapons• Gambling• Adult entertainment• International norms-based breaches (such as United

Nations global compact).

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Client and beneficiary needs continued
Setting clear and measurable goals

Voting on behalf of our clients

The close working relationship we maintain with ourclients means that we can offer them the opportunity
to play a key role in defining their own ESG priorities.
Like education, goal setting should be a two-way street,building off both our Investment Stewardship team’s
own insight and analysis and clients’ responses when
this is communicated to them.

We vote shares held in our clients’ portfolios in a
prudent and diligent manner, based on our reasonablejudgement of what will best serve the long-term
interests of our clients. To help ensure that proxies are
voted in the best interests of clients, J.P. Morgan AssetManagement has adopted detailed, regional, proxyvoting guidelines that incorporate comprehensive
guidelines for voting proxies on specific types of issues,and these are publicly available on our websites.
We aim to keep abstentions to a minimum. In certain
instances, however, it may be in a client’s best interests
to intentionally refrain from voting.

We always aim to clarify intentions and expectations
at the beginning of any client relationship, to set clear
and measurable deliverables for the companies inclient portfolios and to articulate the time horizon
within which these should be met. When considering
companies’ risks and opportunities, and how best
they can be mitigated or maximized, we believe targets
should be set for a time horizon based on considerationof the full economic cycle. The investment time
horizon should be appropriate to the region or asset
class in question and be set with the aim of driving
accountability and transparency throughout theinvestment and engagement process.
For us, investment stewardship is not about adhering
to one set of norms or limiting our scope to one
collection of standards. Rather, we strive to understandhow factors impacting sustainability are financiallysignificant to companies over time, understanding thatthe regions, cultures and organizations in which weinvest differ greatly from one another. Recognizing thatthe engagement issues are not the only reason we may
invest in or continue to invest in a company, we may
continue to hold an investment even if an engagement
is unsuccessful when consistent with client guidelines
and when we believe that the investment continues
to be in the best interests of our clients. That said,
we may sell out of a stock completely if the company
is unresponsive within the established time horizon,
or if we feel that it is in the best interests of our clientsto do so.

At the same time, we are conscious of changing
market trends and recognize the importance of aclient-centric approach to proxy voting. While we areconsidering the interests of stakeholders in developing
our stewardship/engagement program, we vote in
the best interests of clients in accordance with thestrategy and our view as an asset manager; we cannot
always reconcile our view with the views of individual
clients. However, we understand client needs areconstantly evolving and are committed to reviewing ourapproaches as practices evolve.

Improving client reporting andinformation
Expectations from clients on communication andreporting on stewardship have rapidly evolved in recent
years. We have provided clients with detailed reporting,especially in our equity investments for a number ofyears. The following documents are readily available on
our website:• Stewardship philosophy• Investment stewardship Report• Voting policy and guidelines• Voting record• Conflicts of interest policy• Case studies on each of our six Investment

Stewardship Priorities.
• ESG fund reports for certain funds.

J.P. Morgan Asset Management

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Client and beneficiary needs continued
To address our action plan in 2023, we have built out
an interactive online proxy voting dashboard for our
European fund range, to enable clients to explore
our voting activity on their behalf in more detail andon a continuous basis. This year we also enhanced
our engagement reporting capabilities. At European
fund-level, we show a breakdown of engagementsthat have occurred throughout the year, including
number of companies engaged across ESG pillars
with a further breakdown on specific ESG themes.
The report also shows engaged on a regional andsectoral basis. This forms part of a wider sustained
effort to increase transparency and accountability
regarding our stewardship practices, providing clientswith the information necessary to make informed
decisions about the assets that they entrust to us
for management.

138

Action plan for 2024
• We will continue to strengthen our client

reporting capabilities for engagement andproxy voting. We see the demand for increasedtransparency in stewardship activities growing.
• We will work to build on the momentum andfollow up with clients with decarbonisation
goals, looking to host more roundtables andevents to best support our clients.

2023 Investment Stewardship Report

Structures, processes, policies andprocedures supporting stewardship

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J.P. Morgan Asset Management has a control framework that incorporates, among other things, policies,
and procedures.
Typically, policies set out the requirements for any given
topic, e.g., Firm-wide Conflicts policy, while procedures
describe how we implement processes to meet policy
objectives, e.g., Proxy Voting Guidelines are line ofbusiness specific document that include a section on
how we handle conflicts.
Policies are reviewed at least annually and procedures
periodically; however, reviews may happen more
frequently as circumstances arise, for example,
changes in regulation. Typically, J.P. Morgan AssetManagement policies and procedures are for internal
use only. However, under some circumstances, forexample, if required by law, those documents may
be made publicly available. The following describes
the most relevant policies and/or procedures for theInvestment Stewardship team and links for documentsthat are in the public domain.
Conflicts of Interest Policy - Firmwide: the objectiveof this policy is to outline how JPMorgan Chase & Co.
handles actual, potential, and perceived conflictsof interest (collectively, ‘Conflicts of Interest’ or‘Conflicts.’). Types of Conflicts identified can befirm versus client, workforce member versus client,client versus client and workforce member versus
firm. Management of Conflicts includes policies
and procedures, training, management oversight,
governance, and other controls, for example,
separation of job functions and disclosure. Please see
section on Stewardship material conflicts of interest for
more details on corresponding mitigants and examples
of how we’ve handled Conflicts.
Proxy Voting Guidelines (Guidelines): J.P. Morgan
Asset Management has comprehensive proxy voting
guidelines in our four key investing regions. The
guidelines are consistent with law and expectationsof good governance practices in these different
locations. As standards of corporate governancevary widely, for non-EMEA markets we have generally
adopted a principles-based rather than rules-based
approach to voting in international markets, basedon local corporate governance codes and recognized
standards and best practices. These include goodpractice recommendations from the International
Corporate Governance Network (ICGN) and the OECD,
among others. Updates to the proxy voting guidelines,
as a result of discussions within the proxy committee
meetings and equity investors around the world, are

J.P. Morgan Asset Managementmade public at least annually. As described in thesection on Proxy Voting, overall responsibility for thereview and approval of the proxy guidelines rests withthe regional proxy voting committees.
External Engagement and Proxy Voting Statement
and Internal Engagement Policy: the objective of
these documents is to outline the J.P. Morgan AssetManagement global framework on engagement to
be undertaken by the Investment Stewardship teamand the investment teams across J.P. Morgan AssetManagement sub- lines of businesses. The internal
policy outlines minimum standards with regards to
how J.P. Morgan Asset Management: 1) integrates
engagement in its investment strategy; 2) monitors
investee companies on relevant matters, including
strategy, financial and non-financial performanceand risk, capital structure, social and environmental
impact and corporate governance; 3) conducts
dialogues with investee companies; 4) exercises voting
rights; 5) cooperates with other shareholders and with
relevant stakeholders of the investee companies; and6) manages actual and potential Conflicts of Interests
in relation to their engagement. The External Policy on
Engagement and Proxy Voting sets out how J.P. Morgan
Asset Management integrates engagements withissuers into its investment strategies and should beread in reference to the requirements of the EU Directive
2017/828 and its implementing measures (collectively,the ‘EU Shareholder Rights Directive II’), and Article 4 of
the EU Sustainable Disclosure Regulation (EU SFDR).

Stewardship material Conflicts ofInterest
J.P. Morgan Asset Management has policies andprocedures in place to address material Conflictsof Interest, in order to maintain the integrity andindependence of J.P. Morgan Asset Management’s
investment processes and decisions, including proxyvoting decisions, and to protect J.P. Morgan AssetManagement decisions from influences that could
lead to a vote other than in its clients’ best interests.
JPMorgan Chase & Co. (including J.P. Morgan AssetManagement) has adopted several policies including
the Conflicts of Interest Policy – Firmwide, Information
Safeguarding and Barriers Policy – Firmwide andInformation Safeguarding and Barriers Policy – MNPI.

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Structures, processes, policies andprocedures supporting stewardship continued
J.P. Morgan Asset Management Conflictsof interest
J.P. Morgan Asset Management also has a standalone
Conflicts of Interest policy for corporate governance.
Material Conflicts of Interest are further avoided
by voting in accordance with J.P. Morgan AssetManagement’s prescribed guidelines (Prescribed
Guidelines), which can be downloaded on J.P. Morgan
Asset Management’s investment stewardship website.
Given the breadth of J.P. Morgan Asset Management’s
products and service offerings, it is not possible
to list every circumstance that could give rise to amaterial conflict. Examples of such material Conflictsof Interest that could arise include, without limitation,
circumstances in which:Management of a J.P. Morgan Asset Management
client or prospective client, distributor or prospective
distributor of its investment management products
or critical vendor is soliciting proxies and failure
to vote in favor of management, which may harm
J.P. Morgan Asset Management’s relationship withsuch company and materially impact J.P. Morgan AssetManagement’s business.
A personal relationship between a J.P. Morgan AssetManagement officer and management of a company
or other proponent of a proxy proposal could impact
J.P. Morgan Asset Management’s voting decision.
• The proxy being voted is for JPMorgan Chase & Co.

stock or for J.P. Morgan Funds.
• When a J.P. Morgan Asset Management affiliate is aninvestment banker or has rendered a fairness opinion
with respect to the matter that is the subject of theproxy vote.
Please note that third party U.S. mutual funds and ETFs
are voted by an independent voting service provider.
Depending on the nature of the Conflict, J.P. Morgan
Asset Management may elect to take one or more of thefollowing measures, or other appropriate action:• Removing certain Advisor personnel from the proxyvoting process.
• Walling off personnel with knowledge of the Conflictto ensure that such personnel do not influence therelevant proxy vote.

140• Voting in accordance with Prescribed Guidelines, ifany, if the application of the Proxy Guidelines would
objectively result in the casting of a proxy vote in apredetermined manner.
Deferring the vote to an independent third party, if any,that will vote in accordance with its own determination.
However, J.P. Morgan Asset Management may request
an exception to this process to vote against a proposal
rather than referring it to an independent third party‘Exception Request’ where the proxy administrator,
the one charged with oversight of the entire proxyvoting process, has actual knowledge indicating that a
J.P. Morgan Asset Management affiliate is disclosed in
the public domain as an investment banker or rendereda fairness opinion with respect to the matter that is
the subject of a proxy vote. The Proxy Committee shallreview the Exception Request and shall determine
whether J.P. Morgan Asset Management should voteagainst the proposal or whether such proxy should still
be referred to an independent third party due to thepotential for additional Conflicts or otherwise.

Potential conflicts
In the course of its proxy voting or engagement
activities, the following circumstances may occur:• J.P. Morgan Asset Management may cast proxy votes

consistent with client(s) investment strategies that
may conflict with the investment strategies of otherclients of ours, and notably, individual proxy votes may
differ between clients.
• J.P. Morgan Asset Management clients may invest

in the same company, or a single client may invest
in the same company but in multiple accounts. In
those situations, two or more clients, or one clientwith different accounts, may be invested in strategies
having different investment objectives, investment
styles or portfolio managers. As a result, J.P. Morgan
Asset Management may cast different votes on behalfof different clients or on behalf of the same client withdifferent accounts.
• J.P. Morgan Asset Management, or our clients, may

participate in securities or stock lending programsor lend stock to third parties whose investment
objectives may be different to ours and as a result thethird parties may cast proxy votes that conflict with theinvestment strategies of our clients.

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Structures, processes, policies andprocedures supporting stewardship continued• J.P. Morgan Asset Management may engage withcompanies on behalf of impact and sustainable funds
that have different objectives to other funds.
J.P. Morgan Asset Management may have a different
position on environmental, social and corporate
governance matters than its parent company (JPMC).
J.P. Morgan Asset Management clients may want us
to engage or vote on corporate governance issues
that further their interests but are not consistent with
our policies.
J.P. Morgan Asset Management may participate
in collaborative engagements with other industry
participants, which may include joining a coalition,
working with other asset managers/owners on issues
relating to the Investment Stewardship priorities and/or signing of public statements and resolutions that
may have conflicting or differing positions on corporate
governance matters.
To the extent that the regional proxy administrator(Proxy Administrator), the individual charged withoversight of the JPMAM Proxy Voting Guidelines andthe entire proxy voting process, determines that anyof the above activities or any other activities give riseto the potential for a material conflict of interest fora particular proxy vote, the Proxy Administrator shallescalate to the relevant Proxy Committee to determine
if the matter gives rise to a material conflict of interestand if so, what actions should be taken.
Sales and marketing professionals will be precluded
from participating in the decision-making process. The
resolution of all potential and actual material conflictissues will be documented in order to demonstrate that
JPMAM acted in the best interest of its clients.

Material conflicts of interest in practice
A recurring Conflict of Interest relates to a JPMorgan
Chase & Co employee being a director on the board of apublic company for which we need to cast a proxy voteelecting said Director.

Example of an actual conflict
In August 2023, a JPMorgan Chase & Co employee waselected to the Board of Cencora, Inc. (formerly known
as AmerisourceBergen); her election was made after
the annual shareholder’s meeting and therefore, a votefor the director will not occur until 2024. We noted the

J.P. Morgan Asset Management

director’s election and promptly added her to the list of
JPMorgan employee on boards. Assuming she remains
on the board, we will refer the vote to an independent
voting provider to avoid the conflict, i.e., supporting
the election of the director because the director wasan employee.
This demonstrates our existing processes on Conflictof Interest. These Conflicts were included in Conflictsummaries that are presented to the Proxy Committee
on a quarterly basis to ensure adequate oversight.

Delegated conflicts of interest votes
In 2023, there were 108 meetings referred to anindependent voting service due to conflicts of interest.
We retain records of Conflicts for which voting wasreferred to an independent voting provider in ourinternal system.

Internal assurance• First, second and third lines of defense: J.P. Morgan

Asset Management uses multiple lines of defense toassure adequate oversight over its activities, including
stewardship. Our control environment can be thoughtof in terms of the lines of business or ‘first line’
including the ongoing management of embedded
risk, independent risk management or ‘second line’and Internal Audit or ‘third line.’ Given the size andcomplexity of J.P. Morgan Asset Management anddiverse set of professionals working together, it was
important to clearly establish specific roles andresponsibilities to coordinate effectively and efficiently
among the lines of defense. This enables a soundcontrol framework by minimizing gaps in risk andcontrol coverage, creating separation of duties andan oversight framework. The below lays out our linesof defense and include examples of how they relate to
the Investment Stewardship team.
• Lines of business: The lines of business each areresponsible for developing and maintaining effective
internal controls. They also are accountable for
identifying and addressing the risks presented bytheir respective business and for operating within asound control environment. Control management
is in place within each line of business to ensure astrong and consistent control environment acrossthe organization. The Investment Stewardshipteam facilitates a sound control environment by
developing appropriate guidelines and procedures

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Structures, processes, policies andprocedures supporting stewardship continued
that incorporate risk mitigation practices, establishinggovernance to monitor and escalate risk or control
matters, etc. For example, the formation of the
J.P. Morgan Asset Management Sustainable Investing
Oversight Committee (SIOC), as described inprevious reports.
• Independent risk management: Independentrisk management includes risk management
and compliance. They each have their own setof responsibilities but work together to provide
oversight of the business and set Firm-wide control
policies. Risk and Compliance both participate in
the relevant stewardship governance committees
to provide credible challenge and may provide
independent review, consult and advise on line ofbusiness responsibilities to comply with regulatory
requirements and best practices and develop
training. For example, the Compliance is part of thereview of the proxy voting changes on an annual basis• Internal audit: The Internal Audit function operates

independently from other parts of the company,
providing testing and evaluation of processes andcontrols across the entire enterprise. The Internal
Audit team assesses the effectiveness of ourgovernance, risk management and internal controls;
evaluates our compliance with laws and regulations;and identifies opportunities for improvement.
Through this structure, we seek to subject businessdecisions and actions to rigorous consideration,
testing and review for compliance with relevantlaws and regulations, as well as consistency withour business principles.Assurance of our proxyvoting process: In addition to the Proxy Committee,
additional measures are in place to support thequality of the proxy voting process. This includes
account setup and account reconciliations toensure we are voting as required for client accounts,
proxy vote end of day reviews and daily prioritisation
to tackle timely escalation, reconciliation of voterecommendations, e.g., as part of the annual N-PX
filing process in the U.S. and other checks performedby our operations teams. Additionally, given that proxyvoting is identified as a key process for J.P. Morgan
Asset Management, associated risks and controls are
identified and evaluated as part of regular monitoring.
The Investment Stewardship team in concert with
Control Management will periodically test relevant
controls to assess control design and effectiveness,
identify gaps or weaknesses and create corrective

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action plans to address weaknesses. Any weaknesses
in control would be identified and escalated to therespective regional proxy committees.
• Oversight of proxy advisors: J.P. Morgan AssetManagement evaluates on a regular basis our thirdparty proxy advisor(s). The evaluation is intended toaddress several key areas including the vendor’s
general business matters, competency andcapabilities and the handling of Conflicts of Interest.
A summary of the results is shared at a regional
Proxy Committee meeting and disseminated to theglobal Investment Stewardship team for awareness.
If deficiencies are identified, we may put additional
processes in place to mitigate such issues until aneffective resolution is reached.
• Review of our stewardship report – In 2021, when we

initiated the preparation of our annual stewardshipreport, we took concerted effort to ensure thatthe document is responsive to the requirements
set out by the various global stewardship codes.
To that end, we formed an initiative, under theleadership of the newly appointed Global Head ofInvestment Stewardship, that spanned the Investment
Stewardship team, Legal, senior management and athird-party audit firm. The entirety of our document
was reviewed by a third-party firm against the various
stewardship codes including the UK Stewardship
Code. Robust discussions were had with our thirdparty firm and feedback was incorporated into the
document followed by internal review including review
by members of senior management. The purposeof these reviews was to ensure our document
adequately described our practices and indeed werefair, balanced and understandable. This document is
the third and iterative version of the 2021 document.
We have incorporated updates to reflect initiatives
undertaken in 2023. Final approval to publish thisreport is also made by SIOC who has oversight ofstewardship and sustainable investing activities
for JPMAM.

External assurance of stewardship
activities• Sustainable fund label external assurance:

Many European industry bodies have establishedtheir own sustainable finance labels. They serve
as benchmarks for responsible investment
practitioners and signal to clients the sustainable

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Structures, processes, policies andprocedures supporting stewardship continued
investing processes have been assured against their
independent quality standards. Today, J.P. Morgan
Asset Management has seven funds that hold theBelgian ‘Towards Sustainability’ label and five holdthe French government’s ‘‘SRI Label.’ At a fund level,
the investment teams are subject to periodic external
audits driven by the label issuer but conducted bya third party. A number of these audits took placein 2023.
• External audit: J.P. Morgan Asset Management has

operations that span the globe and given operating
across many jurisdictions, we are subject to theoversight of many regulatory regimes. Our proxyvoting activities, when required by regulation, may be
audited by an independent external auditor.

Stewardship continuous improvements
Through our interactions across the lines of defence,
governance committees, day-to-day activities
and changing market and regulatory landscape,
J.P. Morgan Asset Management will identify
opportunities to evolve and improve our practices.

Example 1
We conducted a review of our proxy voting practices.
This resulted in a series of enhancements including
developing and rolling out proprietary in-house votinginterface in our Spectrum technology suite which allows
better proxy voting workflow, including the integrationof our voting decision making practices with our
research and investment decision making approach.
We also harmonized the operational practices topromote increased efficiency and avoid duplicationof effort.

Example 2
For clients in separately managed accounts who havenot delegated proxy voting authority to J.P. Morgan
Asset Management, we helped facilitate their own
proxy voting by providing administrative support toallow them to vote in accordance with a third party or
custom client voting policy as selected by such clients.
This provides clients with greater choice in determining
whether they want to make their own proxy voting
decisions using their own or a third party’s proxy voting
guidelines or delegate proxy voting to us to be votedin accordance with J.P. Morgan Asset Management’s
proxy voting guidelines.

J.P. Morgan Asset Management

Example 3
We have taken steps to deepen our climate researchcapabilities by developing in-house tools that can beused for both investment and stewardship activities toassess sector specific decarbonisation targets set bycompanies in different industries. These capabilities
help us analyze whether a company’s stated plans foraddressing climate change risks and opportunities are
credible. In 2023, we published JPMAM’s second reportunder the Task Force on Climate-related Financial
Disclosures (TCFD) framework as part of our own
transparency reporting.
These are detailed further in the report in therelevant sections.
Alongside these changes, we conducted what has now
become an annual strategy implementation review inthe summer into the effectiveness of our stewardshippractices to identify specific areas of improvements
to facilitate continuous improvement. This processincluded feedback from a wide range of stakeholders,
including clients, as well as incorporating changes
in response to changing regulations and industry
guidance from relevant oversight bodies such as the UK
Financial Reporting Council. The most material areas
where we improved our practices are highlighted in the‘Key areas of reform’ section.

Update from 2022
As referenced in example 1 above, we took steps toharmonize operational practices to improve efficiencies
and avoid duplication of efforts. In resolving someof these underlying challenges, we postponed the
expansion of additional voluntary vote disclosure
reporting for the North America and Asia regions.
We are currently considering timelines for such votedisclosure implementation, which we consider a market
priority. Please not we do provide vote disclosure forcertain markets as required to clients and pursuant toregulation, such as reporting the mutual fund and ETF
proxy voting records on SEC Form N-PX.

Managing risk
At J.P. Morgan Asset Management, our overall objective
is to manage the business and its associated risks
in a manner that balances serving the interests ofour clients with our fiduciary responsibilities, while
protecting the organization’s reputation. We believethat a well-functioning financial system is critical for143

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Structures, processes, policies andprocedures supporting stewardship continued
our success as an organization and in fulfilling theseobjectives. As a responsible long-term investor, we arecommitted to contributing to well-functioning financial
markets and maintaining prudent risk management
frameworks, as well as to participating, as appropriate,
in regulatory and industry-wide bodies to achievethese outcomes.
At J.P. Morgan Asset Management, we employ amultilayer risk management governance frameworkthat operates by means of the three lines of defence.
The first line of defence is the line of business, including
portfolio managers and the embedded risk teams. The
portfolio managers have primary responsibility for therisk oversight of the client investments, they operate
within guidelines and risk parameters and make active
investment decisions to generate excess returns to theportfolio. As part of the first line, the portfolio managers
also work with embedded risk teams who help executerisk and performance oversight of the portfolio
including the review and challenge of the investment
process. The second line of defence is comprized of
the independent risk management function that is
responsible for providing independent oversight andeffective challenge of the risk management process.
The independent risk management team measures,monitors and manages risk thresholds to review
the risk profile of the portfolio. The independent risk
management team will also activate the stressedmarket protocol during periods of high market volatility
when appropriate. As part of its responsibilities,
the independent risk management function has theability to escalate risk matters to portfolio managers,
chief investment officers or the Asset Management
CEO. The third line of defence is Internal Audit,
responsible for providing an independent assessmentof the adequacy and effectiveness of the investment
processes, controls, governance and risk management.
We have established robust governance frameworks tomanage different types of risks, including:• Investment risk: The risk of investments declining in• Counterparty risk: The risk of the other party in

an investment, credit or trading transaction not
fulfilling its part of the deal and defaulting on its
contractual obligations.
Our investment and risk management processes
have evolved over time, including the integration ofenvironmental, social and governance (ESG) metrics
with the objective to build stronger portfolios forour clients. A Sustainable Investing Risk Oversight
Framework aims to monitor material ESG and carbon
metrics and their consideration in the investment
process of our strategies. The framework helps identify
investment strategies with ESG and carbon metrics
that are materially different from its benchmark andunderstand the rationale for such differences.
In addition to our extensive risk governanceframeworks, we employ the Stressed Market Protocol
to address periods of high market volatility and market
crises, which enables us to focus on accounts that areunder current stress, performance or flow concerns.
The Asset Management Chief Risk Officer (AM CRO)
and/or the Asset Management Chief Executive Officer(AM CEO) can initiate the Stressed Market Protocol,
considering a number of quantitative and qualitative
factors including but not limited to macroeconomic
indicators with a direct impact on stress as well as
idiosyncratic political events, climate events or otherindicators. Once the protocol is enacted, AM leadershipholds regular meetings to focus on key risk-related
topics such as swing pricing, market re-pricing in
response to volatility, market trends, bid-ask spreads,
regulatory responses, fund valuation considerations
and operational concerns in real-time.
We produce a Rapid Response Report for all asset
classes included in Independent Risk Management’s
oversight, which highlights key metrics and areas ofconcern contributing to market-wide and systemicrisks. In response to volatility in the global financial
services sector, we initiated the protocol in March 2023.
(See case study below.)value due to economic developments or other events
impacting the entire market.
• Liquidity risk: The risk that a fund not meeting

requests to redeem shares issued by the fund without
significant dilution of remaining investors’ interests inthe fund.

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Structures, processes, policies andprocedures supporting stewardship continued
Case Study – Stressed Market Protocol andVolatility in the Global Financial Services
Sector in March 2023
In response to the news of turmoil at Silicon Valley
Bank, we activated the Stressed Market Protocol,
which included:
1.	A Rapid Response Report highlighting key
metrics, regular discussions of key risk-related
topics with AM leadership and real-time,
deep-dive presentations and product-specificupdates led by various portfolio managers.
2. 	Daily discussions among key AM stakeholders
supported by standard and ad-hoc reporting
during periods of high market volatility ormarket crisis. The goal is to share and escalate
information in a timely manner and quickly act
to adjust and protect client investments acrossthe platform accordingly. Immediately following
the news of the turmoil at SVB, AM Risk invoked
the protocol and gathered senior stakeholders
to discuss overall exposure to the banking
sector and reassess exposures in other sector
names such as Signature Bank and First
Republic Bank. As events evolved, similar
conversations and actions followed regarding
European banks.
3. 	Portfolio Managers executed exposure
reductions, as appropriate, in an informed
manner throughout the stressed period. The
protocol focus then turned to discussions
about the heightened volume of client
onboarding and the processing of increased
inflows into Money Market Funds.
4. 	We continued to provide our key function ofproperly identifying, measuring and reporting
risks to fulfil our fiduciary duties as risk
managers while looking after our clients’investments.

J.P. Morgan Asset Management

Climate change
We view climate change as a core investment topic andone of the most significant market-wide and systemicrisks that cannot be ignored. We have an importantrole in identifying the risks of investing or remaining
invested in companies unprepared to navigate
the transition and investing in companies that will
benefit from the opportunities that arise. You will see
throughout this report the many steps we have taken toaddress climate change.
Further, we are committed to understanding how
climate change may drive or influence the risks andopportunities identify. We view climate risk as a driverthat is being integrated into existing risk types andis not being treated as a new standalone risk type.
Our Sustainable Investing Research Team includes
team members with climate experience. One of theteam’s priorities is to extend existing ESG investment
capabilities to provide an enhanced set of climaterelated metrics and analytics. This includes providing
the framework for calculating carbon exposure metrics,
advancing portfolio-level climate scenario analysis
capabilities and developing tools to measure portfolioalignment, as well as identifying companies that are
better prepared for the transition to a low-carbon
economy. We recognize that climate scenario analysis
is becoming an increasingly important consideration
for asset managers as a result of client and regulatory
demand to understand their exposure to climaterelated risks and opportunities.
As part of our advocacy and public policy work on
climate, we support organizations that encourage
voluntary disclosure, such as the Sustainability
Accounting Standards Board and the Financial Stability
Board’s Task Force on Climate-related Financial
Disclosures.
More in-depth details of our work on climate change
can be found in our Climate Engagement and Voting
Report section.

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Structures, processes, policies andprocedures supporting stewardship continued
Advocacy and public policy

Case study

A robust internal risk management framework can
only be as strong as the wider financial system it sits
within. As a global asset manager, we undertake policy
engagement with regulators, governments, standard
setters and nongovernmental organizations, to advanceeffective disclosures and good governance by asset
managers and other financial institutions. This includes
engaging with policymakers and regulators directly andproviding input to public consultations.

An example of our continuing work and contribution inpromoting well-functioning markets is our participationin collective engagements through the European
Leveraged Finance Association (ELFA).

The Firm’s political and regulatory engagement iscoordinated by the Global Government Relations (GGR)
team. The GRR team ultimately reports to the Firm’s Headof Corporate Responsibility, who reports regularly to the
Public Responsibility Committee. This organization andleadership help us focus the Firm’s external engagement
efforts on those public policy issues most relevant to thelong-term interests of the Firm and our ability to serve
our clients.
We also commit our time and expertise as participantsof trade associations or bodies that advocate goodstewardship practices, such as the UNPRI, the UK
Investment Association, the Financial Reporting Council,
Institutional Investors Group on Climate Change,
International Corporate Governance Network and theInvestor Forum.
We maintain a prudent approach in selecting initiatives
we will participate in or support, dedicating time andresources to areas where we can leverage our expertiseto have a material influence and impact consistent with
our fiduciary duties.
For example, JPMAM supports the goal of effective andconsistent disclosure regarding ESG-related products
and services by those asset managers that offer
them. Investors that may be interested in strategies
incorporating financially material ESG elements will
benefit from such disclosures, which should help themunderstand the fundamental characteristics of an ESG
fund and/or an adviser’s ESG strategy and make more
informed investment decisions. Given the ongoing focus
on ESG disclosures, we have engaged directly with boththe Securities and Exchange Commission in the U.S.
as well as the Financial Conduct Authority in the UK on
this topic.

The ELFA is a trade association comprized of European
leveraged finance investors that seeks to create amore transparent, efficient and resilient leveraged
finance market while acting as the voice of its investor
community. The ELFA was co-founded by a member of
our European high yield team and various members
continue to serve in different capacities such as ESG
co-chair, D&I co-chair, engagement member and board
member.
We participated in collective engagements through the
ELFA where we felt value could be gained to advocate
on behalf of the wider market. Through the engagement
committee of ELFA, we:• Spoke with the Lux regulator (CSSF) on theparticipation of UCITS in New Money Financing inorder to increase liquidity and broaden participant
limits.
• Through the ESG committee, we collaborated with

the International Capital Market Association (ICMA)to publish Practical Recommendations for high yieldsustainability-linked bonds to increase disclosure andaccountability of these instruments in the leveraged
finance market.
• The ELFA ESG committee also collaborated with

Initiative Climate International (iCI) to publish Footprint
Measurement Guide for companies and theirlenders—a digestive insight piece for companies inthe beginning of the ESG journey providing tangible
resources such the Task Force on Climate-related
Financial Disclosures (TCFD).
• Through the Disclosure and Transparency Committee,

we developed an ELFA gold standard for issuers todemonstrate best-in-class disclosures.

In addition to these, we are also signatories/members of
a number of organizations and initiatives. More detailed
information on this can be found in the Appendix.

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Structures, processes, policies andprocedures supporting stewardship continued• In high yield, some issuers provide financial

documentation behind password protected websites
thereby limiting investor access. Therefore, we
continue to push on improving disclosure practices in
the high yield market.
• We’ve also held teach-in sessions open to all ELFA

members on Special Situations: Creditor on Creditor
Aggression to raise awareness of the scenarios andbuild resilience in the investor community.

Effectiveness in identifying andresponding to market wide and systemicrisks, and promoting well- functioning
financial markets
J.P. Morgan Asset Management continues to play animportant contributory role in a number of initiatives,
whether driven by policymakers and regulators orindustry associations and bodies to which we belong,to further promote well- functioning markets.
As part of a review into the effectiveness of our work inthis regard and to further collaborate on supporting
and advancing J.P. Morgan Asset Management’s global
leadership on sustainability, we strengthened ourinternal governance framework and in 2023, monitored
the effectiveness of some of these changes throughfeedback and surveys. Alongside this strengthened
internal governance, greater co-ordination was
also undertaken by risk teams with the Sustainable
Investing team enhancing internal coordination acrossthe organization on all aspects of sustainability.

We conduct careful due diligence before the decision istaken to onboard each service provider. When selecting
and onboarding any new provider, we conduct anin- depth evaluation of its capabilities, resourcing,costs and controls of vendors/memberships in linewith an oversight program established by JPMC
Corporate Third-Party Oversight (CTPO). We also assess
alternative services and, as applicable, consider what
an alternative provider would add beyond the current
provision from existing providers. We evaluate service
providers ongoing, periodic basis during the term ofsubscriptions to understand whether the provider isdelivering what was initially expected or promised.
It is the responsibility of the Investment Stewardshipteam and other relevant divisions to evaluate thecapabilities, objective and purpose of any stewardshipand research-related service provider. This may
take into account the alignment of the vendor data
and research to help drive our J.P. Morgan AssetManagement commercial sustainable investingand stewardship priorities, as well as the quality
and coverage of research to augment proprietary
fundamental research and cost competitiveness.
We also work as needed with our in-house technology
partners to consider third-party technology providers
that are stewardship related.
CTPO is responsible for defining and implementing theservice provider oversight program across the Firm.
This partnership helps to retain what we believe arecompetent, competitive and secure service providers
and helps to mitigate potential financial, operational
and performance risks.

Monitoring service providers
J.P. Morgan Asset Management uses multiple service
providers to support our stewardship efforts including
data collection and background research. They play arole in facilitating our stewardship activities and ESG
research. Also, they help support efficiencies in datacollection, reporting and operational matters.
We are also members of some industry organizations
and collaborative initiatives to promote sustainable
investing practices and increase the effectivenessof our engagements and improve the chance of
successful outcomes.

J.P. Morgan Asset Management

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Structures, processes, policies andprocedures supporting stewardship continued
Service providers supporting stewardship and ESG research
The following table shows the list of service providers from third-party research and data vendors.
Type of data vendor

Data vendor

Market data•

Bloomberg•

FactSet•MSCI ESG•

Sustainalytics•

S&P Global

•

CDP

•

Miotech•Sigwatch•

Equileap•

PATSTAT•

Revelio Lab•

Science Based Targets Initiative•

Institutional Shareholder Services (ISS)•Glass Lewis & Co

Proxy vote
execution•

Institutional Shareholder Services (ISS)

Vote execution platform and administrative
services including reporting?

ESG exclusions,minimum
safeguards•

Institutional Shareholder Services’ ESG
Platform (ISS-ESG)

Values and norms-based (United Nations
Global Compact) exclusionary screening
tools for portfolio construction in products(including EU SFDR Article 8 and 9 products)
and informs research for engagement on
norms- and/or values-based breaches.

ESG and alternative
data sets

Proxy research148

Type of service and provisionMarket data, financial information,
ownership data and corporate ESG
disclosures to inform views on companies
and augment proprietary research forengagement and voting.
Environmental, social and governanceresearch and data on companies used,amongst other use cases, as part of the
JPMAM Quantitative ESG Score to augment
proprietary research for engagement andvoting.

Proxy voting research a to implement the
J.P. Morgan Asset Management custom
voting policies in each region. Separately,
provision of voting-related services tomitigate conflicts of interest.

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Structures, processes, policies andprocedures supporting stewardship continued
Oversight supported by the Corporate
Third-Party Oversight (CTPO) Program

How we source, use and rate broker
research

The JPMorgan Chase & Co. (JPMC) Global SupplierManagement Policy sets forth the requirements forthe procurement of goods and/or services fromservice providers and establishes a risk-based
framework for oversight of service providers. Service
providers are required to adhere to a set of minimum
control requirements and are evaluated according
to predefined criteria depending on their inherent
risk classification.

Research from third-party, sell-side brokers (bothtraditional brokers and independent research
providers), sourced either through written reports or
meetings with analysts, is a component of the research
we use to understand shifts in ESG issues, market
trends and sector dynamics. We also use company
analysis especially as brokers are increasingly
incorporating ESG analysis.

JPMorgan Chase & Co.’s Corporate Third-Party
Oversight (CTPO) Program sets the framework forservice provider engagements. The Firm-wide 3-phase
CTPO lifecycle is designed to manage the selection,
onboarding, performance and risk monitoring anddisengagement of service providers.
Service providers are reviewed initially during
onboarding and periodically thereafter, commensuratewith the inherent risk of the engagement. As part of thisassessment, service providers are required to provide
evidence to show that they are prepared to deal withissues relating to business continuity, disaster recovery
and pandemics. This includes formal documented
recovery plans to identify the resources and specify
actions required to help minimise losses in the event of
a disruption to the business unit, support group unit,
application or infrastructure component. Any issues
identified during the assessment are tracked by thebusiness until remediated.

This helps shape and inform engagement andvoting on company-specific and thematically driven
engagements. We also use research from certain
technical specialist brokers for analysis relating toproxy contests or say-on-pay votes.
It is important to provide transparent feedback on thevalue specific broker’s research provides in aiding
and augmenting our stewardship activities. We have a
dedicated team that manages our broker relationships
and coordinates user assessment of brokers’ research
quality across J.P. Morgan Asset Management on abi-annual basis. For ESG research, our assessment
considers the quality and depth of issues, thematic
priorities and company-level coverage. Our feedback
will be shared with brokers, and ultimately, where
research providers have provided benefit to ourinvestors, stewardship specialists and clients, payment
allocations are made accordingly.

Service providers used by the Investment Stewardshipteam are considered to carry negligible, or at most, low,financial, operational, legal and/or regulatory risk toour business activities and/or clients. J.P. Morgan AssetManagement has a long, active research heritage, andservice providers are used to supplement or inform
proprietary research, rather than being central to thecore functioning of our business and consequently are
considered to carry low risk to our business activities.

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Structures, processes, policies andprocedures supporting stewardship continued
Assessment and ongoing engagement with service providers
Beyond the in-depth due diligence and review
conducted at the time of onboarding new providers
or when renegotiating contracts on expiry, like the full
review conducted with one of our major proxy service
providers in 2022, we consider it to be important toassess and communicate on an ongoing basis with ourservice providers.
As we consider the needs of our investment teams andstewardship specialists and grow our expertise in ESG
data in our investment decision making, as well as
the requirements for data for regulatory compliance,
we actively seek to assess methodology, scope andcredibility of assumptions and forecasts of ESG data
and third-party research. One such example relates
to climate metrics. With continued interest frominvestment teams, stewardship specialists and clientsfor high-quality and granular data to assess how
companies are positioned for climate risk, and withnew offerings from existing data providers, a continued
area of focus this year has been to engage with service
providers on climate metrics. See the following casestudy on engagement with a data provider on Scope
3 emissions. Another area of engagement relates toregulatory compliance, where we may engage service
providers as the regulatory environment evolves, suchas mapping indicators for Principle Adverse Impacts(PAIs) to third- party data as part of the EU Sustainability
Finance Disclosure Regulation (EU SFDR). Where thedata obtained is financially material, we may choose toengage with companies.

For instance, with regards to proxy voting research,
we continuously evaluate accuracy of information fromservice providers for their benchmark research. This isa part of our ongoing due diligence of the standard ofresearch provided. Where we have identified material
differences in interpretation of company disclosure,
we may provide feedback to relevant proxy research
providers so that they can ensure their research reflects
accurately appropriate disclosure and practices. We
ask that research be updated in our ongoing dialogue
with our service providers. We also carefully evaluate
research, especially in Asia-based markets where webelieve that there can be differences with interpretationof company disclosure due to local languages.
Another area of focus with our proxy providers thisyear has been to improve the operational plumbingof our vote execution services. As we continue torefine voting operations across the globe, we initiateda large technology project in partnership with ouroperations, technology and stewardship teams to
reduce the operational touchpoint from four regions
to one centralized location. This will ensure a morestreamlined operational workflow and, importantly,
will further enable our consistent application of
applicable regional voting policies.

On a more regular basis, the Investment Stewardshipteam has regular relationship calls with proxy voting
service providers to consider capabilities including
data quality and methodology, client servicing, andoperational support for vote execution. Where we feelthat performance is below our expectations, or we wish
to evaluate the methodology or consider data to be outof date or inaccurate, we engage directly with service
providers to discuss specific cases.

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Structures, processes, policies andprocedures supporting stewardship continued
Case study
Understanding a company’s value chain GHG emissions
Issue

For many sectors, the most material source of company’s GHG emissions is from their value chain, also known
as Scope 3. More granular data on Scope 3 GHG emissions can allow investors to understand trends andpotential climate risks from a company’s value chain. Data availability for Scope 3 is lower than for Scopes
1 and 2. The GHG protocol breaks down Scope 3 emissions into 15 categories, which relate to upstream anddownstream sources of emissions. It can be helpful to break down Scope 3 emissions into their individual
categories to understand a company’s value chain emissions, which may allow investors to better assesstransition risks. Our primary data vendor, S&P Global has been providing company emissions data acrossScope 1, 2 and 3.

ActionWhile significant progress has been made towards emissions reporting, at the start of 2023 S&P Global
provided only an aggregate Scope 3 upstream and Scope 3 downstream metric. While the split between
upstream and downstream emissions is helpful, this level of aggregation may make it more challenging tounderstand a company’s emissions.
We discussed emissions estimation with S&P Global to better understand their methodology and highlighted
the need for Scope 3 emissions data at the category level.

Outcome and next steps
Towards the end of 2023, S&P Global started publishing Scope 3 data at the granularity that matches the GHG
Protocol for certain categories and have committed to a plan to publish the remaining categories.

Performance and compensation practices
The Firm provides market-competitive compensation
and benefits programs to our employees. The Firm’s
compensation philosophy includes guiding principles
that drive compensation-related decisions acrossall levels of the Firm. We believe our compensation
philosophy promotes an equitable and well-governed
approach to compensation, which includes pay-forperformance practices that attract and retain top talent
in a competitive market, is responsive to and alignedwith shareholders’ expectations, reinforces our cultureand Business Principles including the integration ofrisk, controls and conduct considerations. The Firm’s
commitment to diversity, equity and inclusion for all
employees includes compensation review processes
that seek to ensure that the Firm’s employees are paid
fairly and competitively for the work they do.

J.P. Morgan Asset Management

The Compensation framework for JPMAM’s investment
professionals (generally defined as portfolio managers,
research analysts, traders and investment specialists,
with a corporate title of VP and above) participating inpublic market investing activities is based on several
factors that drive alignment with client objectives,
the primary of which is investment performance,alongside of the firm-wide performance dimensions.
The framework focuses on total compensation –base salary and variable compensation. Variable
compensation is in the form of cash incentives, and/or long-term incentives in the form of fund-tracking
incentives (referred to as the ‘Mandatory Investment
Plan’ or ‘MIP’) and/or equity-based JPMorgan Chase
Restricted Stock Units (‘RSUs’) with defined vestingschedules and corresponding terms and conditions.
Long-term incentive awards may comprize up to 60%
of overall incentive compensation, depending on an
employee’s pay level.

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Structures, processes, policies andprocedures supporting stewardship continued
The performance dimensions for investment
professionals are evaluated annually based on several
factors that drive investment outcomes and value– aligned with client objectives – including, but notlimited to:• Investment performance, generally weighted more to

the long-term, with specific consideration for portfolio
managers of investment performance relative tocompetitive indices or peers over one-, three-, fiveand ten-year periods;• The scale and complexity of their investment

responsibilities;• Individual contribution relative to the client’s risk andreturn objectives;• Business results, as informed by investment

performance; risk, controls and conduct objectives;client/customer/stakeholder objectives, teamwork
and leadership objectives; and• Adherence with the Firm’s compliance, risk, regulatory

and client fiduciary responsibilities, including, asapplicable, adherence to the JPMAM Sustainability
Risk Integration Policy, which contains relevant
financially material Environmental, Social andCorporate Governance (ESG) factors that are intended
to be assessed in investment decision-making, perinvestment objectives.
In addition to the above performance dimensions forinvestment professionals, the Firm-wide pay-for-perperformance framework is integrated into the final
assessment of incentive compensation for an individual
investment professional. Feedback from JPMorgan’s
risk and control professionals is considered inassessing performance and compensation.
Investment professionals are subject to a mandatorydeferral of long-term incentive compensation under
J.P. Morgan’s Mandatory Investor Plan (MIP). In
general, the MIP provides for a rate of return equal
to that of the particular fund(s), thereby aligning theinvestment professional’s pay with that of the client’s
experience/ return.

152

For investment professionals participating in publicmarket investing activities, 50% of their long-term
incentives are subject to a mandatory deferral in the
MIP, and the remaining 50% can be granted in the formof RSUs or additional participation in MIP at the electionof the investment professional.
For the portion of long-term incentives subject tomandatory deferral in the MIP (50%), the incentives areallocated to the fund(s) the investment professional
contributes to, as determined by the employee’s
respective manager and reviewed by AssetManagement’s senior management (e.g., in the caseof a portfolio manager, the specific fund(s) a portfolio
manager is named on).
In addition, named portfolio managers on dedicatedsustainable fund(s) are required to allocate at least 25%of their mandatory deferral in at least one dedicatedsustainable fund(s). Investment professionals,
regardless of whether they are named on and/or
contribute to a sustainable fund, also have the ability
to allocate a portion of their mandatory deferral to asustainable fund.
To hold individuals responsible for taking risks
inconsistent with the firm’s risk appetite and to
discourage future imprudent behavior, we have policies
and procedures that enable us to take prompt andproportionate actions with respect to accountable
individuals, including:• Reducing or altogether eliminating annual incentive

compensation;• Canceling unvested awards (in full or in part);• Claw back/recovery of previously paid compensation(cash and/or equity);• Demotion, negative performance rating or otherappropriate employment actions; and• Termination of employment.

The precise actions we take with respect to accountable
individuals are based on circumstances, including thenature of their involvement, the magnitude of the eventand the impact on the firm.

2023 Investment Stewardship ReportOur approach to promoting diversity, equity,and inclusion

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JPMAM believes inclusive cultures foster better outcomes – for our teams, our clients and our communities.
Working to ensure inclusivity with effective diversity, equity and inclusion (‘DEI’) programs positions us well
to appreciate and leverage diverse perspectives and to generate creative ideas and differentiated thinking.
We believe that having an inclusive workforce that is reflective of diverse background and perspectives, bestenables us to support the communities in which we operate and invest.

By the numbers

26.6%

34.6%

of our fund managers
globally are womenof assets managed or
co-managed by women

J.P. Morgan Asset Management 2023

Source: J.P. Morgan Asset Management 2023

#1

100

globally ranked for longest average
female fund manager tenure

score on Human Rights Campaign’s
Corporate Equality Index

J.P. Morgan Asset Management 2021
Source: Citywire Alpha Female Report 2021

JPMorgan Chase & Co.
Source: Human Rights Campaign 2022

How does JPMAM tackle this issue?
Our areas of focus are:Accountabillity

Recruitment and retention• Executing our DEI practices requires promoting• We strive to attract and recruit the best talent for all

accountability across the Firm. We seek to holdour senior leaders accountable for building andfostering a more inclusive work environment within
their businesses and across the firm through theaccountability framework, which we have continued
to enhance since its launch in 2020. The frameworkis used to evaluate senior leaders, including
Operating Committee members, on inclusive
behaviors, practices and progress on the Firm’s
DEI priorities, and to incorporate that into year-end
performance feedback.

roles across the Firm. We recognize that top talent is
not limited to any particular group(s), so we source
broadly, to identify qualified candidates for open roles.
Our search for top talent includes, without limitation,
sourcing from historically underrepresented
communities and establishing strategic partnerships
and programs to create new pathways for candidates
with less traditional backgrounds.
• We strive to be inclusive with our candidates and casta wide net to tap into the full array of qualified talentavailable in the labor market.
• We have non-discrimination policies that apply

during the hiring process, as well as, during thecourse of employment.

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Our approach to promoting diversity, equity,and inclusion• At JPMC, we continually work to create and reinforce aculture of respect, fairness and inclusion, in which our
employees are empowered to be authentic and bring
their best, most productive selves to the workplace.
• We have robust employee support and development

programs, and promote a culture of belonging so that
all employees feel the firm is a place where they arechallenged professionally, recognized and can thrive.
• Data – We periodically review workforce metrics to

help identify areas of focus as we continue our efforts
to build a robust and inclusive work environment.
We have established forums for employee engagement,
initiatives to advance inclusion and invite diverse
perspectives, and education and training programs
designed to support a work environment in which allof our employees have an opportunity to meaningfully
contribute to the work we do and thrive.

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Our seven Centers of Excellence are:• Advancing Black Pathways (‘ABP’): Works tostrengthen the economic foundation of Black
communities. It seeks to address historical barriers
to economic growth in Black communities througheducation and information sharing, talent sourcing
and development, identifying and building leadersand leadership opportunities, supporting Blackowned businesses and improving financial health forBlack communities worldwide.
• Advancing Hispanics & Latinos (‘AHL’): Works on

promoting the growth and success of the Hispanicand Latino community across the globe both
inside and out of the firm. Its efforts are focused on
extending opportunities for students, employees,
business owners, and communities to help them build
a stronger economic foundation.
• Military & Veterans Affairs (‘MVA’): Honors those who

The Firm’s Centres of Excellence
Our Firm has established Global DEI Centres of
Excellence (‘COEs’) to take a coordinated andintersectional approach to delivering dedicatedleadership to assist in supporting the employees,
clients, customers and the communities we serve.
Our COEs play an important role in identifying andproviding equitable pathways to opportunities for
employees, customers and communities to growand thrive. These COEs assist in leading our global
strategies to advance priorities for historicallyunderserved communities.
Our COEs, in partnership with Executive Forums andBRGs, also strengthen our internal culture of inclusion
and belonging, and support manager accountability.
These COEs amplify the work of the LOBs to deliver
more inclusive products and services to clients andcustomers. They also work closely with a wide array of
local, national and global partners in the communities
we serve, leveraging the Firm’s business expertiseand philanthropic resources to help accelerate
economic empowerment.

have served and positions military members, veteransand their families for long-term personal successand financial confidence. Its efforts are focused on
attracting, retaining and developing diverse veterantalent; supporting veteran-owned businesses;
increasing the financial health of veterans and militaryfamilies; and working with leading veteran service
organizations on outreach and philanthropic efforts.
• Office of Asian & Pacific Islander Affairs (‘API’): Leads

the execution of global programs and initiatives
focused on creating a more equitable and inclusive
future for Asian and Pacific Islander employees,
customers, partners and communities aroundthe world; economic inclusion and community
development initiatives; and advocacy.
• Office of Disability Inclusion (‘ODI’): Leads strategy

and initiatives aimed at driving an inclusive workplace
while helping the Firm aspire to be a bank of choicefor people with disabilities. ODI’s other focus
areas include driving small business growth andentrepreneurship, community development, andfinancial inclusion of people with disabilities.
• Office of LGBTQ+ Affairs (‘LGBTQ+’): Focuseson advancing a culture of inclusion for LGBTQ+
employees, enabling LGBTQ+ owned businesses togrow and thrive, providing financial health awarenessand education, and driving equity and inclusion for
the LGBTQ+ community globally.

154

2023 Investment Stewardship ReportOur approach to promoting diversity, equity,and inclusion continued• Women on the Move (‘WOTM’): Seeks to help createa more equitable workforce that enables womento achieve financial well-being, grow their skills
and advance their careers. Its efforts are focusedon supporting women-run businesses, improving
women’s financial health and independence,
empowering women’s career growth, and supporting
women and girls in our communities.

Dedicated DEI Team
Chief Executive Officer and Chair Jamie Dimon and
Global Head of Diversity, Equity and Inclusion and Vice
Chair, Commercial Banking, Thelma Ferguson, set DEI
objectives for business heads of each JPMorgan
Chase line of business (‘LOB’), and the objectives are
discussed as part of their regular business reviews.
In addition, a variety of diversity councils that are active
globally provide support, leadership and focus ondiversity and inclusion initiatives and programming.
Our Firmwide Diversity Advisory Council meets monthly
and includes regional and LOB DEI Leads, tasked
with assessing and discussing progress on specificdiversity initiatives.
Thelma Ferguson, managing director, is the Global
Head of DEI and vice chair, Commercial Banking at
JPMorgan Chase, with responsibility for the Firm’s
DEI strategy. She joined the Firm more than 25 years
ago in and reports to the firm’s President and Chief
Operating Officer with dual accountability to the headsof Corporate Banking (CB) and Human Resources —and serves as an Operating Committee member for
Consumer & Community Banking, the Commercial &Investment Bank (CIB) and Human Resources. With aninclusive and intersectional approach, she is leading
the global DEI organization to embed sustainablestrategies and management accountability into theframework of how we do business – helping employees
thrive, serving clients and customers, and uplifting
external communities.
Ken Gladney, executive director, is the Global Headof Diversity for JPMorgan Chase’s Asset & WealthManagement (‘AWM’) line of business. In this role, heis responsible for helping to advance the global DEI
strategy for AWM, working closely with Thelma andsenior leaders to drive accountability and engagement
relating to attracting, retaining and promoting a diverse
and inclusive workplace.

J.P. Morgan Asset Management

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Advisory Council
JPMAM’s commitment to DEI is further embedded
into the organization through paths such as the AssetManagement (‘AM’) Advisory Council. Formed in 2012,
the council provides a platform to discuss global
strategic and business issues, share best practices
and identify any specific areas of interest or concern for
the AM Operating Council (‘AMOC’).
The members are a group of high-achieving executive
directors and managing directors from all regions,
AM businesses and job functions who are leadersin their respective areas. Members are nominatedby AMOC and are rotated over a two-year period
to help ensure we continue to get diverse andfresh perspectives.
AM Advisory Council members participate in two
AMOC meetings a year and work between meetings
on specific AMOC-assigned projects. Past projects
include DEI, bureaucracy busting, and effective
communication.

Company policy
Our Equal Opportunity, Anti-Discrimination and AntiHarassment Policy and the Code of Conduct set
forth expectations for our employees. All employees(including both full-time and part-time employees)
are required to complete anti-harassment awarenesstraining annually. In 2023, new employees wererequired to complete Firmwide DEI training programs,
including You Belong Here and Culture & Conduct.
In addition, all employees were provided with accessto supplemental DEI training that covers various topics
of interest.
Across the Firm, we continually work to create andreinforce a culture of respect, equity and inclusion,in which our employees are empowered to bring
their best, most productive selves to the workplace,leveraging their unique perspectives and experiences
to deliver against firm objectives. We do so by creating
forums for employee engagement, initiatives toadvance inclusion and share diverse views, andeducation and training programs designed to identify
ways that all of our employees can contribute to a
dynamic and inclusive culture.

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Our approach to promoting diversity, equity,and inclusion continued

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Firm Employee Driven Business Resource Groups (BRG’s)
Our Business Resource Groups (‘BRGs’) serve as networks for employees to connect with colleagues and growprofessionally, while advancing the Firm’s DEI strategies. Recognizing the intersectionality of the different groups
represented by our BRGs, we are taking steps to promote and facilitate cross-BRG collaboration. Our BRGs are:1562023 Investment Stewardship Report

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Appendix 1: Industry Groups
Appendix 1 – J.P. Morgan Asset Management industry group memberships related
to stewardshipAs a global asset manager, JPMAM participates in a number of organizations, including certain regionalorganizations, that focus on ESG issues that JPMAM believes are financially material to our client accounts andcertain organizations that provide research that we may find useful for clients who choose strategies that have
objectives beyond financial outcomes. Please see below for a list of the associations and initiatives to which we area signatory at the time of publication. Our participation in these organizations comes with the understanding that
we may not always align with all of their positions or those of their other members. The extent of our involvement inan organization may be limited. In addition, new memberships may be added to this list and existing memberships
may be deleted from this list at any time without notice.
Signatory/Membership
AI Asia Pacific InstituteAsia Investor Group on Climate Change (AIGCC)
Asia Securities Industry & Financial Markets Association (ASIFMA)
Asian Corporate Governance Association (ACGA)
Australian Sustainable Finance Institute (ASFI)European Fund and Asset Management Association (EFAMA)
Farm Animal Investment Risk & Return (FAIRR)
Focusing Capital on the Long Term (FCLT)​
Global Institutional Governance Network (GIGN)Harvard Program
Hong Kong Investment Funds Association (HKIFA)ICMA Green and Social Bond Principles
Institutional Investors Group on Climate Change (IIGCC)
International Corporate Governance Network (ICGN)
Investment Company Institute (ICI)
Investor Stewardship Group (ISG)
Japan Stewardship Initiative (JSI)Net Zero Asset Manager’s Initiative (NZAMI)
Pensions for Purpose
Prince of Wales Sustainable Markets Initiative (SMI)
Principles for Responsible Investment ( PRI)
Sustainability Accounting Standards Board (SASB)
Task Force on Climate-Related Financial Disclosures (TCFD)

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Appendix 1: Industry Groups continued
Signatory/Membership
The Investment Association
The Investor Forum
Transition Pathway Initiative (TPI)UK Corporate Governance Forum
UK Financial Reporting Council - UK Stewardship Code (signatories of the updated 2020 UK Stewardship Code)
30% Club Hong Kong Investor Group
30% Club Japan Investor Group
30% Investor Group

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Appendix 2: Biographies
Global Stewardship Team Biographies
Yo Takatsuki
Global Head of Investment Stewardship
Executive Director, London
Experience (industry/at J.P.Morgan AM): 12/3
Yo leads our global Investment Stewardship team. He has been a stewardship practitioner
for more than a decade and has led collaborative industry initiatives such as on Net Zero
Stewardship, Climate Transition Finance and Access to Medicine Index. Prior to J.P. Morgan
Asset Management, he led engagement at two other asset managers.
Lara Jackson
Investment Stewardship Specialist
Vice President, London
Experience: 10/3
Lara is a climate change specialist, joining J.P. Morgan Asset Management after four years
as a sustainability and climate change consultant advising corporates. She also has priorexperience in the not-for-profit sector supporting companies on agricultural commodity
production in South East Asia.
Irfan Patel
Investment Stewardship Specialist
Vice President, London
Experience: 10/3
Irfan specializes in corporate governance and voting activities. He previously worked asa corporate governance analyst at another investment manager and as proxy researchanalyst at Institutional Shareholder Services (ISS).
Jemma Ockwell
Investment Stewardship Specialist
Vice President, London
Experience: 9/9
Jemma is a specialist in engaging on natural capital. She has been in the Sustainable
Investing team for four years initially as a business manager before joining the Investment
Stewardship team. Prior experience at J.P. Morgan Asset Management includes internal
strategy, regulatory issues and controls. Jemma is a CFA charterholder.
Lisa Kladitis
Investment Stewardship Specialist
Associate, London
Experience: 4/1
Lisa is a specialist engaging on climate change and sustainable outcomes. She has priorexperience as an Impact Investment Analyst at another investment manager, where she
focused on research and engagement for listed equity impact strategies.

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Appendix 2: Biographies continued
Nishesh Kumar
North America Head of Investment StewardshipManaging Director, New York
Experience: 26/24
Nishesh leads our Investment Stewardship team in North America. His experience
includes focus on governance and climate topics. He also spent two decades as an equity
research analyst covering the energy sector in addition to transportation and consumer
discretionary sectors.
Jonathan Steinmetz
Investment Stewardship Specialist
Executive Director, New York
Experience: 27/3
Jonathan focuses on executive pay. He has more than 20 years of experience including as
an equity research analyst covering the North America automotive industry.
Aidine Rivera
Investment Stewardship Specialist
Executive Director, New York
Experience: 17/13
Aidine specializes in social issues including human capital management, diversity andhuman rights and labor rights. Prior to joining the Investment Stewardship team, she worked
at J.P. Morgan Asset Management for more than a decade covering business management,
regulatory issues, internal controls and audit exam management. Aidine also holds acertification in Sustainable Finance and Investment from the Yale School of Management
Executive Education.
Bennett Rosenbach
Investment Stewardship Specialist
Vice President, New York
Experience: 9/9
Bennett is a governance and voting specialist. He has experience as an equity researchanalyst covering the energy industry.
Felix Lam
Asia ex-Japan Head of Investment Stewardship
Executive Director, Hong Kong
Experience: 19/3
Felix leads our Investment Stewardship team in the Asia ex-Japan region. His experience
includes climate and governance topics. He worked as an equity research analyst for over
16 years with a primary focus on energy and material industries including renewable energy,
oil and gas, metals and mining and construction materials.

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Appendix 2: Biographies continued
Janet Wong
Investment Stewardship Specialist
Vice President, Hong Kong
Experience: 9/3
Janet leads social issues including supply chain and human rights. Prior to J.P. Morgan
Asset Management, she worked in London at another asset manager focusing on
engagement, proxy voting and public policy advocacy and subsequently returned to Hong
Kong to lead the Asia Pacific ESG, M&A and corporate governance advisory team at aconsulting company. She is a CFA charterholder.
Su Sang Yoon
Investment Stewardship Specialist
Associate, Hong Kong
Experience: 7/3
Su Sang is a governance specialist. He has experience providing advice to Asian andAustralian corporations on governance, shareholder engagement and ESG matters. He also
served as a governance research analyst at ISS with a focus on Korean company meetings.
Shizuko Ohmi
Japan Head of Investment Stewardship
Executive Director, Tokyo
Experience: 32/3
Shizuko leads our Investment Stewardship team in Japan. She specializes in climate andgovernance. Shizuko joined J.P. Morgan Asset Management from another asset manager,
where she served nearly two decades as an equity research analyst, covering Japaneseindustrials and then as Head of ESG in Japan.
Konomi Fujimori
Investment Stewardship Specialist
Vice President, Tokyo
Experience: 17/2
Konomi is a specialist on social issues. She has more than 10 years of experience as aninvestor relations manager at numerous Japanese companies including in the retail,healthcare, factory automation and broadcasting sectors. In those roles, she worked on
corporate governance and sustainability-focused reporting.

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Appendix 3: Thought leadership publications 2023
Please find below a list of ESG related research publications in 2023. These can be found on our website here.

January

AugustAdapting to a warmer planet: Why climate change isn’t
just about decarbonisation

Sustainability and portfolio returns

February
Sustainable investing outlook: Five reasons why
sustainability matters even more in 2023

September
Sustainable investing outlook: Themes set to shape thesecond half of 2023
The role of hydrogen in the energy transition:
A complementary option, not a silver bullet

MarchIntegrating biodiversity into investment decisions

OctoberMay

Managing investment portfolios for the carbon
transition: How investors can perform decarbonisation
analysis

Climate adaptation: How private investors canparticipate in evolving investment opportunities ascities adapt to climate risks

July
Understanding carbon exposure metrics
Mining and the energy transition
Climate adaptation: How private investors can support
adaptation in nature and ecosystems

162

December
Climate scenarios: What they are, why they areimportant, and how they are applied to investment
portfolios
Climate adaptation: How investors can support
adaptation in health and healthcare

2023 Investment Stewardship Report

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Appendix 4 – Stewardship code mappings
This report has been reviewed and approved for publication, by J.P. Morgan Asset Management’s Sustainable
Investment Oversight Committee. It was also approved by the J.P. Morgan Asset Management International Limited
Board, which we considered to be the most appropriate oversight body and has external non-executive directors as
members, for submission to the Financial Reporting Council for adherence to the UK Stewardship Code. Please findthe mapping of this report’s content to the 2020 UK Stewardship Code’s Principles in the table below.

The UK Stewardship CodePrinciple

Signatory actions

Pages

Principle 1

Signatories’ purpose, investment beliefs, strategy and culture enablestewardship that creates long-term value for clients and beneficiaries
leading to sustainable benefits for the economy, the environment andsociety.

p.100-105, p.133-138

Principle 2

Signatories’ governance, resources and incentives support
stewardship.

p.106-116, p.117-132,
p.151-156, Appendix 2

Principle 3

Signatories manage conflicts of interest to put the best interests ofclients and beneficiaries first.

p.139-141

Principle 4

Signatories identify and respond to market-wide and systemic risks topromote a well-functioning financial system.

p.143-147

Principle 5Signatories review their policies, assure their processes and assess theeffectiveness of their activities.

p.139, p.141-143

Principle 6

Signatories take account of client and beneficiary needs andcommunicate the activities and outcomes of their stewardship andinvestment to them.

p.133-138

Principle 7

Signatories systematically integrate stewardship and investment,
including material environmental, social and governance issues, andclimate change, to fulfill their responsibilities.

p.11-24, p.117-132

Principle 8

Signatories monitor and hold to account managers and/or service
providers.

p.147-151

Principle 9Signatories engage with issuers to maintain or enhance the value of
assets.

p.6-24, p.26-89

Principle 10

Signatories, where necessary, participate in collaborative engagement
to influence issuers.

p.16-19

Principle 11

Signatories, where necessary, escalate stewardship activities toinfluence issuers.

p.15-16

Principle 12

Signatories actively exercise their rights and responsibilities.

p.90-98

Source: https://media.frc.org.uk/documents/The_UK_Stewardship_Code_2020.pdf

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Appendix 4 – Stewardship code mappings continued
Taiwan Stewardship Principles for Institutional Investors
Principle

Signatory actions

Pages

Principle 1

Establish and disclose stewardship policies

p.11-24

Principle 2

Establish and disclose policies on managing conflicts of interest

p.139-142

Principle 3

Regularly monitor investee companies

p.26-89

Principle 4

Maintain an appropriate dialogue and interaction with investee companies

p.26-89

Principle 5

Establish and disclose clear voting policies and voting results

p.90-98

Principle 6

Periodically disclose the status of fulfilment of stewardship responsibilities

p.133-138

Principle 7

Service providers should provide services for institutional investors to fulfill
their stewardship responsibilities

p.147-151

Source: Taiwan Stock Exchange(https://cgc.twse.com.tw/docs/Stewardship%20Principles%20for%20Institutional%20Investors%20202307.pdf)

Hong Kong Principles of Responsible Ownership
Principle

Signatory actions

Pages

Principle 1lnvestors should establish and report to their stakeholders their policies fordischarging their ownership responsibilities

p.11-24

Principle 2lnvestors should monitor and engage with their investee companies

p.26-89

Principle 3lnvestors should consider and establish clear policies on when they will
escalate their engagement activities

p.100-132

Principle 4lnvestors should have clear policies on voting guidance

p.90-98

Principle 5lnvestors should be willing to act collectively with other investors whereappropriate

p.16-19

Principle 6lnvestors should report to their stakeholders on how they have discharged
their ownership responsibilities

p.133-138

Principle 7

When investing on behalf of clients, investors should have policies on
managing conflicts of interests

p.139-142

Source: https://www.sfc.hk/-/media/EN/files/ER/PDF/Principles-of-Responsible-Ownership_Eng.pdf

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Appendix 4 – Stewardship code mappings continued
Australia Principles of Internal Governance and Asset Stewardship
Principle

Signatory actions

Pages

Principle 1

Monitoring of company performance on financial and non-financial matters;

p.26-89

Principle 2

Engagement with company management and the board (as appropriate) andescalation of issues in instances where initial engagements have not beenadequately responded to;

p.15-16

Principle 3

Approach to considering Environmental, Social and Governance factors(risks and opportunities) and whether these considerations influence
investment decision-making and company engagement;

p.11-24, p.117-132

Principle 4

Proxy voting

p.90-98

Principle 5

Collaborative engagement with other investors including involvement withindustry groups and associations;p.16-19

Principle 6

Principles used for policy advocacy including participation with industry
groups and associations; andp.16-19, p. 157-158

Principle 7

The approach to client engagement, education and communication
regarding asset stewardship.

p.133-138

Source: FSC Australia (https://www.fsc.org.au/web-page-resources/fsc-standards/1522-23s-internal-governance-and-asset-stewardship)

Singapore Stewardship Principles For Responsible Investors 2.0
Principle

Signatory actions

Pages

Principle 1

Develop and articulate stewardship responsibilities and governancestructures.

p.11-24, p.100-132

Principle 2

Monitor investments regularly.

p.26-89

Principle 3

Stay active through constructive and purposeful engagement.

p.26-89

Principle 4

Uphold transparency in managing conflicts of interest.

p.139-142

Principle 5

Exercise rights and responsibilities on an informed basis.

p.90-98

Principle 6

Report stewardship activities periodically.

p.133-138

Principle 7

Take a collaborative approach in exercising stewardship responsibilities
where appropriate.

p.16-19

Source: https://www.stewardshipasia.com.sg/docs/saclibraries/default-document-library/ssp_for-20responsible-20investor-202-0-1-.
pdf?sfvrsn=82133969_3

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Appendix 4 – Stewardship code mappings continued
Japan Principles for Responsible Institutional Investors
Principle

Signatory actions

Pages

Principle 1

Institutional investors should have a clear policy on how they fulfill theirstewardship responsibilities, and publicly disclose it.

p.11-24, p.100-132

Principle 2

Institutional investors should have a clear policy on how they manage
conflicts of interest in fulfilling their stewardship responsibilities and publicly
disclose it.

p.139-142

Principle 3

Institutional investors should monitor investee companies so that they canappropriately fulfill their stewardship responsibilities with an orientation
towards the sustainable growth of the companies.

p.26-89

Principle 4

Institutional investors should seek to arrive at an understanding in common
with investee companies and work to solve problems through constructive
engagement with investee companies.

p.26-89

Principle 5

Institutional investors should have a clear policy on voting and disclosureof voting activity. The policy on voting should not be comprized only of amechanical checklist; it should be designed to contribute to the sustainablegrowth of investee companies.

p.90-98, p.147-148

Principle 6

Institutional investors in principle should report periodically on how they fulfill
their stewardship responsibilities, including their voting responsibilities, totheir clients and beneficiaries.

p.133-138

Principle 7

To contribute positively to the sustainable growth of investee companies,
institutional investors should develop skills and resources needed toappropriately engage with the companies and to make proper judgments
in fulfilling their stewardship activities based on in-depth knowledge of theinvestee companies and their business environment and consideration ofsustainability consistent with their investment management strategies.

p.16-18, p.100-116,
p.157-158

Source: https://www.fsa.go.jp/en/refer/councils/stewardship/20200324/01.pdf

166

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