EDITOR NOTE: JPMorgan is committed to supporting the Paris Agreement. Fine. We all desire a healthier planet. But the Paris Agreement, as a “system”, is known to be highly flawed. Not only are developed countries taking on the bulk of the effort, most of the developing nations (just a few years ago led by China of all countries) blocked a critical requirement to use common format and metrics. If everyone’s measure is different, then how can you possibly coordinate the entire system? Common sense thinking here. The goal is important, the Agreement, flawed beyond practical functionality. Is this truly in JPM’s interests, or is it another exercise in virtue signalling (like many of the countries involved in this “fake” effort)?
JPMorgan Chase & Co. (NYSE: JPM) (“JPMorgan Chase” or the “Firm”) said today that it is adopting a financing commitment that is aligned to the goals of the Paris Agreement (“Paris”). As part of its strategy, the Firm intends to help clients navigate the challenges and capitalize on the long-term economic and environmental benefits of transitioning to a low-carbon world.
“Climate change is a critical issue of our time. The goals set in the Paris Agreement are commendable and ambitious, but the world is not on track to meet them,” said Daniel Pinto, co-President of JPMorgan Chase and CEO of its Corporate & Investment Bank . “While the world has a long way to go, we at JPMorgan Chase want to do more. That means working with clients, policymakers and advocates to transition our economy and turn the goals of Paris into a reality.”
The Climate Challenge
While a growing number of companies have been working to align their business strategies to the goals of the Paris Agreement, significant challenges exist. This includes a lack of comprehensive and high-quality greenhouse gas (“GHG”) emissions data, as well as the need for robust policy solutions and new technologies.
The International Energy Agency has noted that one-third of the emission reductions needed in its Paris-aligned Sustainable Development Scenario will have to come from technologies that are not yet commercially available. While the use of lower-carbon technology is growing within the electric power and automotive sectors, currently there are not adequate commercially available solutions to replace oil and natural gas in critical applications such as long-distance transportation and heavy industry. As a result, these resources will continue to play a significant role as sources of energy.
JPMorgan Chase plans to help tackle these challenges by working with clients in key sectors to align its financing activities with the goals of Paris.
A Commitment to Paris
The Paris Agreement aims to hold the increase in global average temperature to well below 2 degrees Celsius above pre-industrial levels, and ideally, to 1.5 degrees Celsius – which would require the world to achieve net-zero emissions by 2050.
As part of its commitment, JPMorgan Chase will establish intermediate emission targets for 2030 for its financing portfolio and begin communicating about its efforts in 2021. The Firm will focus on the oil and gas, electric power and automotive manufacturing sectors and set targets on a sector-by-sector basis.
Over time, JPMorgan Chase will aim to support companies to advance the goals of Paris, including reducing GHG emissions and expanding investment in low- and zero-carbon energy sources and technologies. The Firm recognizes that significant changes in policy and the creation of new technologies will ultimately be required to reach net-zero emissions by 2050, particularly in those industrialized sectors that today lack alternatives. To that end, JPMorgan Chase will continue to advocate for market-based policy solutions, including a price on carbon, and the commercialization of new technologies that can help advance deep decarbonization.
JPMorgan Chase plans to share more details in its next climate report, which will be informed by the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) and will be published in spring 2021. The Firm will also provide ongoing updates on its progress over time.
“With its ambitious new climate commitment, JPMorgan Chase & Co is positioning itself as a critical player in driving clean energy technology development and deployment. By aligning its financing with the Paris climate goals, the bank is sending a powerful signal that will help steer utilities, automakers, and oil and gas companies further along the path to decarbonization,” said Bob Perciasepe, President of the Center for Climate and Energy Solutions (C2ES) . “Executing this new strategy will be no easy task. But as more and more companies step up to the challenge, it’s now up to our political leaders to enact the policies needed to get the job done.”
Center for Carbon Transition
The Firm is launching the Center for Carbon Transition (“CCT”) to provide clients in the Corporate & Investment Bank and Commercial Banking with centralized access to sustainability-focused financing, research and advisory solutions. The CCT will also engage clients on their long-term business strategies and related carbon disclosures. The group will be led by Rama Variankaval, a Managing Director and 18-year veteran of the Firm who also continues to lead J.P. Morgan’s Corporate Finance Advisory team.
“The transition to Paris-alignment will require big ideas, technology innovation and financing,” said Rama Variankaval, Head of the Center for Carbon Transition, JPMorgan Chase . “This group will enable us to leverage the best of our expertise and resources across the Firm to help all our clients thrive in a low-carbon future.”
Measurement and Industry Engagement
To help advance the transition to a low-carbon economy and track progress towards Paris, the Firm will aim to evaluate its clients’ carbon intensity, which tracks emissions relative to unit of output. When measured over time, carbon intensity provides insight into changes in efficiency and performance. The Firm is also exploring ways to most effectively address all emissions, including Scope 3 emissions, which are relevant for sectors where the majority of GHGs are generated at other points in the supply chain.
Additionally, the Firm will continue to engage with other stakeholders and clients on how to strengthen the comprehensiveness and quality of data reported, which remains a challenge, as well as advance policy solutions. As company disclosures improve, JPMorgan Chase remains committed to incorporating the best available information into decision making about its financing activities.
For example, earlier this year, the Firm became a Founding Partner of Rocky Mountain Institute’s Center for Climate-Aligned Finance, which is developing practical solutions for financial institutions seeking to pursue the goals of the Paris Agreement in relation to relevant business activities. In addition, JPMorgan Chase is a member of the Climate Leadership Council and Business Roundtable, the latter of which recently published a new set of principles to guide the development of effective climate policy.
Operational Carbon Neutrality
The Firm is also expanding upon its 100 percent renewable energy target by committing to become carbon neutral in its operations beginning in 2020. This commitment will cover all of JPMorgan Chase’s direct carbon emissions from its corporate buildings and branches, indirect emissions from the generation of purchased electricity, and emissions from employee travel.
History of Sustainability
JPMorgan Chase’s announcement builds upon its efforts to advance sustainable solutions for its clients and within its operations, including its commitment to facilitate $200 billion in financing in 2020 for companies and projects that support green, social and economic development objectives of the United Nations Sustainable Development Goals. This year, the Firm also announced a $1 billion inaugural green bond issuance to fund eligible green projects, which may include the financing or refinancing of projects related to green buildings and renewable energy projects as well as lending to clients for eligible green projects. Additionally, JPMorgan Chase committed to source renewable energy for 100 percent of the Firm’s power needs starting in 2020, through efforts such as installing on-site solar systems at its retail branches and commercial offices. The Firm has also called for market-based carbon policy solutions, including a price on carbon, both through its memberships in the Climate Leadership Council and Business Roundtable. More information on JPMorgan Chase’s sustainability efforts is available on the Firm’s sustainability webpage .
About JPMorgan Chase & Co.
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services Firm with assets of $3.2 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of customers in the United States and many of the world’s most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands.
Originally posted on Oil & Gas