Jennifer Wu

The global head of sustainable investing at JP Morgan Asset Management has praised ASIC’s crackdown on greenwashing, but said the regulator should go further, with a clearer product labelling system.

On the sidelines of the asset manager’s international media summit in London last week, Jennifer Wu told Professional Planner that moves by ASIC are in-line with what is happening globally.

ASIC has taken action against Vanguard – over fossil fuels and tobacco – with other high profile actions coming against Morningstar, Mercer and Active Super.

“This is actually what the market needs,” Wu said.

“There are probably three areas globally that regulators are focusing on. We’ve got to a stage with sustainable investing such that clarity is needed, whereas at the very beginning of ESG, a lot of people thought ESG is no different from ethical investing or SRI [socially responsible investing].”

However, Wu noted there are so many “shades of sustainable investing” which could include the classic exclusions-based SRI investing; ESG integration, which is used to maximise risk adjusted returns; or impact investing, which involves companies seeking to have a tangible positive influence under ESG metrics.

“It’s not by way of mandatory exclusions or anything like that, but if I uncover a company’s practice as it relates to ‘G’ or treating employees poorly, I may decide to divest or engage with the company and promote them to change so I can create alpha for myself,” she said, explaining the value of ESG integration.

“The objective is I want to maximise returns.”

But what is missing, Wu said, is regulators stepping in to help classify different types of products to help retail investors understand what they are buying.

“Unlike with institutional investors, they have the teams and expertise to really scrutinize what is it that I need and if that matches what is being offered,” Wu said.