JPMorgan Chase & Co.: Limit High Carbon Financing for Low Carbon Transition
WHEREAS: The Intergovernmental Panel’s recent report on Climate Change announced that "rapid, far-reaching” changes must be made, and net emissions of carbon dioxide must fall 45 percent by 2030, reaching "net zero" by 2050, to avoid disastrous levels of global warming.
The impacts associated with climate change present systemic portfolio risks to investors. A warming climate causes supply chain dislocations, reduced resource availability, lost production, commodity price volatility, infrastructure damage, energy disruptions, among others.
Banks’ financing choices have a major role to play in promoting carbon reduction. Bank lending and investments make up a significant source of external capital for carbon intensive industries. Every dollar banks invest in new fossil fuel infrastructure increases climate risk and slows the transition to a clean energy economy.
JPMorgan recognises climate change and has increased clean energy financing and renewable energy sourcing for its operations. JPMorgan’s Environmental and Social Policy Framework requires avoiding coal projects in developed nations (where there is limited demand for such projects). Significantly, JPMorgan’s climate change policies do not require reductions in its largest contribution to climate change: its investments and loans in carbon-intensive fossil fuel projects and companies.
To the contrary, JPMorgan continues to make investments and loans in the most extreme fossil fuel projects. Between 2015 and 2017, it poured over 26 billion dollars into financing tar sands, Arctic oil, ultra-deepwater oil, LNG and coal – the highest funding of any American bank. It also invests in companies holding licenses to drill in the Amazon rainforest, threatening climate stability and indigenous human rights.
In contrast, peer banks have adopted policies to reduce carbon in loan and investment portfolios. Five banks with a combined portfolio of 2.7 trillion dollars committed to decrease the climate impact of their loans in alignment with Paris climate goals. BNP Paribas’ policies phase out financing for companies tied to Arctic drilling, oil sands, and shale development and restrict financing for coal. Natixis committed to end financing of tar sands and Arctic drilling. The World Bank committed to end upstream oil and gas financing. Eleven banks have adopted policies to end or reduce financing for Arctic oil and/ or tar sands projects.
Banks that finance carbon intensive fossils fuel investments, projects, and companies also face reputational harm, boycotts, divestment, and litigation that adversely affects shareholder value.
BE IT RESOLVED: Shareholders request that JPMorgan Chase adopt a policy to reduce the carbon footprint of its loan and investment portfolios in alignment with the 2015 Paris goal of maintaining global warming well below 2 degrees, and issue annual reports (at reasonable cost, omitting proprietary information) describing targets, plans, and progress under this policy.
SUPPORTING STATEMENT: Shareholders recommend the report include, among other issues at board and management discretion:
The carbon reduction benefits of expeditiously reducing exposure to extreme fossil fuel projects such as such as coal, Arctic oil and gas, and tar sands.