JPMorgan acquires ESG investment firm OpenInvest

J.P. Morgan has entered into an agreement to acquire OpenInvest a fintech that helps financial professionals develop environmental, social and governance (ESG) investment management products and impact reporting services.

FACTS

• Backed by capital from Andreessen Horowitz, Y Combinator, QED and others, OpenInvest was founded in 2015.

• The company will retain its own brand and be integrated with J.P. Morgan's private banking and wealth management client offerings.

• Open Invest's technology extracts data from more than 35 sources to power the decision engines built into its tools.

CHALLENGES

• Meeting a growing need: J.P. Morgan is focusing on ESG due to rapid industry growth and client expectations in the wake of Covid 19. They are trying to finance and facilitate more than $2.5 trillion over 10 years to advance climate action and sustainable development. They are aligning key financing portfolios with the goals of the Paris Agreement.

• Staying competitive in a changing world: It is estimated that up to $150 trillion will be needed globally over the next 30 years to meet the goals of the Paris Agreement.15 This means that for businesses to succeed through the energy transition , i.e., to become more efficient, innovate, scale, and stay competitive in a changing world, they will need significant capital and strategic support.

MARKET PERSPECTIVE

• The acquisition of OpenInvest is J.P. Morgan's third acquisition of a fintech startup in six months: The bank acquired 55ip, a company that automates the construction of tax-advantaged portfolios, in December 2020 and followed that with the acquisition of U.K.-based robo-advisor Nutmeg earlier this month.