Jul 21

JPMorgan shoots for green finance stratosphere as ESG target tops peer plans

Apr 15, 2021
A sign outside JP Morgan Chase & Co. offices is seen in New York City, U.S., March 29, 2021. REUTERS/Brendan McDermid/File Photo
JPMorgan Chase & Co (JPM.N) aims to lend, invest and provide other financial services for up to $2.5 trillion of banking business to be done for companies and projects tackling climate change and social inequality over the next decade.
In a statement on Thursday, JPMorgan said green initiatives will account for $1 trillion of that total – the largest environmental, sustainable and governance (ESG) financing target announced by a U.S. bank to date.
That could mean lending or investing in companies that develop clean-energy technology for the trucking, aviation or industrial manufacturing sectors, the bank’s head of sustainability, Marisa Buchanan, told Reuters in an interview.
JPMorgan’s announcement comes amid a flurry of billion- and trillion-dollar commitments by banks toward ESG initiatives – a sign that Wall Street is betting the solutions to climate change and inequality will come from corporations.
These targets are being issued as sustainable finance investors and industry insiders mull whether regulators should make it more expensive for banks to lend to fossil fuel companies. A recent U.K. survey found widespread support for a proposal that would impose tougher rules around the amount of capital banks need to hold if they lend to companies responsible for emitting high levels of greenhouse gases.
JPMorgan is among the leading U.S. lenders to fossil fuel companies, having provided $317 billion of lending and underwriting since 2016, according to a recent study by environmental activist group Rainforest Action network.
Growing investor interest in ESG issues has pushed several global banks to set their own net-zero carbon emissions targets and to stop funding coal and Arctic drilling projects, in addition to setting targets like these.
But it can be tough to track banks’ actual progress toward the pledges: most are relatively new and lenders do not release comprehensive lists of the projects, deals or other business they perform related to the goals.
JPMorgan pledged to share more details about its ESG initiatives, including its work establishing emission targets for companies in its financing portfolio, in its next climate report, due out this spring.
Thursday’s announcement extends a similar, smaller-scale target the bank had in recent years, during which it led the $2.2 billion initial public offering of renewable energy company Shoals Technologies (SHLS.O).
In his annual shareholder letter, JPMorgan’s Chief Executive Jamie Dimon wrote that the solution to climate change “is not as simple as walking away from fossil fuels” because some sectors do not have affordable, low-carbon energy sources to replace oil and natural gas.
According to head of sustainability Buchanan, “The only way that actually can happen is if the public and private sectors come together to invest in the development of new technologies.”
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