The sustainable liquidity management investment options for both institutional and retail investors continue to expand. At least ten firms, identified by Sustainable Research and Analysis LLC, now offer sustainable money market funds with a choice of investing options that include a values-based orientation, negative screening and/or ESG integration. In one case, ESG integration combines negative screening and issuer engagement, as referenced in Table 1.
Table 1: Sustainable Money Market Funds and their Sustainable Investing Strategies
|Fund Firm||Values/ Religious Based||Negative Screening (Exclusions)||ESG Integration||Engagement|
|Goldman Sachs (GS)||X1|
|State Street Global Advisors (SSgA)||X|
As reported in September of 2019, J.P. Morgan Asset Management amended the prospectuses of 12 money market funds to explicitly reflect the onboarding of environmental, social and governance factors as part of its security selection strategy, joining a limited but growing list of money market fund management firms that have adopted sustainable investing strategies (refer to notes of explanation). Last month. J.P. Morgan Chase launched a new Empower money market fund share class exclusively to support minority-owned and diverse led financial institutions. The Empower product, applicable to four of the firm’s money market funds, will be distributed exclusively by Minority Depositary Institutions (MDIs) and diverse-led Community Development Financial Institutions (CDFIs) and will feature annual donations from J.P. Morgan Chase to support community development. The Empower offering is part of the firm’s recently announced $30 billion commitment to advancing racial equity and will be making an annual donation of 12.5% of revenue received from the 18 basis point management fees on Empower share class assets to support community development. Google is anchoring the program’s launch with an intent to invest $500 million.
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Note of Explanation: While definitions continue to evolve, sustainable investing refers to a range of five overarching investing approaches or strategies that encompass: values-based investing, negative screening (exclusions), thematic investing, impact investing and ESG integration, in turn classified into ESG Integration, ESG Integration-Consideration and ESG Integration-Mixed, referring to a core strategy consisting of ESG integration, but exclusions, impact or thematic approaches may also be employed. Shareholder/bondholder engagement and proxy voting may also be employed along with one of more of these strategies that are not mutually exclusive. Prepared by: Sustainable Research and Analysis LLC