While value investing is not often seen as a natural fit for environmental, social and governance (ESG) investing, value strategies can provide fertile ground for investors to build portfolios that promote ESG factors, among other factors, without the need for blanket exclusions.

J.P. Morgan Asset Management believe the key for value investors is to employ an active ownership model, which can help highlight those value stocks that are working to mitigate financially material ESG risks (such as the transition to net zero), improve sustainability, and create long-term value for shareholders.

Substantial global ESG research resources and stewardship expertise is needed to be able to engage fully with companies on ESG issues. However, active engagement, backed by thorough research, allows investors to understand how companies are managing the ESG risks that they face, and also generates the forward-looking insights needed to identify stocks that can deliver sustainable long-term returns.

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