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JPMorgan Chase ups commitment to net-zero carbon future

11 November 2020 Kevin Adler

JPMorgan Chase, the US's largest bank and one of the largest fossil-fuel investors in the world, announced on 6 October 2020 that it is enacting corporate policies to support the goals of the Paris Climate Treaty.

The bank had announced in March 2020 that it was joining other major US banks in halting future investments in oil and gas drilling in the Arctic. In the last year, Morgan Stanley, Goldman Sachs, Wells Fargo and Citigroup have made similar pledges. Canada's largest bank, RBC, also made a no-Arctic oil and gas pledge in October 2020.

In the new announcement, JPMorgan Chase said it will set emissions targets for its investment clients for 2030 on a sector-by-sector basis, starting next year with oil and gas, power generation and auto manufacturing. Its goal is shifting all of its investments by 2050 to companies that have achieved or pledged to be net zero. JPMorgan said its lending to fossil fuel companies from 2016 through 2019 was $268 billion.

The company itself will be operating on a net-zero emissions basis by the end of 2020, including the purchase of emissions credits to offset travel and building heating, cooling and power.

"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."

To complement its investment actions, JPMorgan will open by the end of 2020 the Center for Carbon Transition "to provide clients in the Corporate & Investment Bank and Commercial Banking with centralized access to sustainability-focused financing, research and advisory solutions," the bank said. The Center will share information on emerging technologies, promote a carbon tax and develop carbon disclosure standards.

HSBC, the largest bank in Europe and sixth-largest in the world, made a similar statement in October, saying that it will direct $1 trillion of lending towards reducing carbon emissions to reach the Paris Treaty target. The largest share of HSBC's lending is in Asia, where faster-growing economies are expected to increase energy demand at rates well above the US and Europe.

Banks' announcements about their climate commitments continue to receive guarded support from conservation groups. For example, the Sierra Club on 6 October expressed concern about JPMorgan Chase's past activities and ongoing fossil fuel investments, such as buying a share of Permian shale producer Sable Energy this fall. "The fact that the world's biggest funder of fossil fuels feels compelled to make a pledge like this is a testament to the power of the movement pushing financial institutions to clean up their act on climate," said Sierra Club Senior Campaign Representative Ben Cushing. "Chase's climate pledge is an important step forward, but it's severely insufficient to meet the scale of the climate crisis and Chase's outsized role in driving the destruction that's already underway."

Posted 11 November 2020 by Kevin Adler, Editor, Climate & Sustainability Group, IHS Markit

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