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ESG investing, climate change, stocks: JPMorgan on environmental ETF

Environmentally conscious investments have gained ground in the last few years, as the focus on climate change becomes more urgent and the companies directly involved in combating them become more well-known.

But ordinary investments like alternative energy and solar energy stocks are not the only way for investors to gain exposure to the growing trend. Take the JPMorgan Climate Change Solutions ETF (TEMP) – it has been active since mid-December and has several stocks that are not typically associated with climate change, such as Microsoft, Apple, McDonald’s, Deere and Eaton.

Bryon Lake, head of America’s ETF distribution at JPMorgan Asset Management, teamed up with CNBC’s “ETF Edge” to explain the strategy behind it.

“One of the things we’ve observed is that climate change is affecting all different industries,” Lake said Wednesday. “It’s not only we have to move from natural resources to solar or renewable energy or something like that. It certainly plays a big role. But it’s also in construction. It’s also in agriculture. It’s also in health care.”

Technology giant Microsoft, for example, has promised that it will be carbon negative by 2030 and that by 2050 it will have removed the carbon from the environment it has emitted since it was founded nearly 50 years ago.

“That’s why we think it’s such a nuanced conversation, and that one can not just set up a simple rule that screens for some buzzwords that help a stock get into an index,” he said. By “making sure they deserve a place in that portfolio and that they can make a difference there, this is where we think active management really comes into play.”

However, it’s not just a feel-good investment – the potential for space growth is huge, according to Lake.

“We estimate that $ 140 trillion will need to be invested in energy and global infrastructure to achieve some of the net-zero targets that many of the countries and regions are talking about by 2050,” he said. “These companies are the companies that are working on those solutions right now.”

Weakness in the broader market, especially high-growth stocks, has put pressure on this new ETF since its inception. The TEMP ETF has fallen 13% in the past month, almost double the losses of the S&P 500.

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