Global financial services firm, JPMorgan Chase, has today released the comprehensive steps it is taking in its efforts to align its financing activities with the climate goals of the Paris Agreement.
As part of its Paris-aligned financing commitment announced last fall, the firm has published 2030 carbon intensity targets for the oil and gas, electric power and auto manufacturing sectors. JPMorgan Chase also released its new Carbon CompassSM methodology that describes how the firm set its targets and how it will monitor progress over time.
“There must be collective ambition and cooperation by business and government to tackle climate change,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase.
“Setting our Paris-aligned targets is an important step toward accelerating the transition to a low-carbon economy and meeting the goals of the Paris Agreement.”
“JPMorgan Chase is committed to doing its part by working with clients around the world to reduce emissions and by ensuring our own operations remain carbon neutral,” Mr Dimon said.
A commitment to Paris
JPMorgan Chase first announced its Paris-aligned financing commitment in October 2020, aiming to work with clients to drive near-term actions that help set a path for achieving net-zero emissions by 2050.
As part of this effort, JPMorgan Chase also created the Center for Carbon Transition to engage with clients on sustainability-focused financing, research and advisory solutions.
More recently, the firm’s Commercial Banking business launched a Green Economy specialised industry team to support the development and growth of companies in Renewable Energy, Efficiency Technology, Sustainable Finance, and Agriculture and Food Technology.
To help clients access capital needed for innovation, JPMorgan Chase announced in April 2021 a target to finance and facilitate more than $2.5 trillion over 10 years – including $1 trillion for green activities – to advance long-term solutions that address climate change and contribute to sustainable development.
Carbon CompassSM methodology and targets
JPMorgan Chase has built Carbon CompassSM, a methodology that guides its approach for Paris-aligned target setting, measuring clients’ carbon intensity, evaluating ongoing progress and integrating carbon performance considerations into business decision-making.
The targets are based on credible third-party energy and emissions scenarios, including the International Energy Agency’s Sustainable Development Scenario.
To challenge and enhance the firm’s efforts in creating Carbon CompassSM, JPMorgan Chase enlisted the support of ERM, a global sustainability consultancy with deep sectoral, technical and business expertise in the low-carbon economy transition.
Key aspects of JPMorgan Chase’s approach and its portfolio targets, established against a 2019 baseline, include:
2030 target: 41 per cent reduction in the carbon intensity from manufacturing of new vehicles, and tailpipe emissions from such vehicles.
This target covers global manufacturers of light-duty vehicles, such as global passenger cars and U.S. light trucks. The firm will work with clients to help accelerate the transition to electric vehicles, and over time, quantify and address emissions from the automotive supply chain.
2030 target: 69 per cent reduction in carbon intensity from electric power generation, which accounts for the vast majority of the sector’s climate impact.
This target covers companies engaged in power generation. The firm will work to accelerate the power sector’s shift to low- and zero-carbon sources, like solar and wind, to help reduce emissions from electricity grids globally.
Oil and gas:
2030 target: 35 per cent reduction in operational carbon intensity, as well as a 15 per cent reduction in end-use carbon intensity – reflecting a decrease in emissions from the combustion of oil and natural gas downstream and increase in renewable energy generation.
This target covers producers of oil and natural gas, as well as refiners and integrated companies. The firm intends to work with clients to address methane leakage and flaring activity, in addition to encouraging shifts to renewable electricity to reduce operational emissions. JPMorgan Chase will also work with clients to address end-use emissions, including by shifting to lower-carbon fuels and exploring other business diversification strategies.
Keryn James, CEO of ERM, said: “JPMorgan Chase is leading the way for the banking industry by developing and transparently sharing a practical methodology which tackles key challenges, such as the urgency of reducing methane emissions in the oil and gas sector, and the prominence of light-duty trucks in the non-commercial U.S. fleet.”
“They have embraced the enormous opportunity for the banking industry to finance the transition to a low-carbon economy and provided clarity to their corporate clients on credible decarbonisation trajectories.”
Over time, the firm intends to integrate additional sectors into its Paris-aligned financing commitment. As a next step, JPMorgan Chase is analysing target setting for the aviation and pulp and paper sectors by the end of 2022.
Ashley Bacon, Chief Risk Officer, JPMorgan Chase, added: “We have carefully chosen our targets and put the resources in place to help our clients transition to a low-carbon world.”
“Our Carbon CompassSM methodology creates incentives to deliver capital and advice to our global clients for the purpose of improving carbon efficiency, to help put us on a path to net-zero.”
Measurement and reporting
The firm’s 2020 ESG report, which was released today, provides updates on how environmental, social and governance matters are considered in the way JPMorgan Chase manages its business, as well as how the firm is putting its business to work for its stakeholders.
This includes information about the firm’s approach to managing climate-related risks and opportunities, which has been informed by the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
Addressing operational impact
JPMorgan Chase also announced today that it achieved carbon neutrality across its operations in 2020 and will maintain this commitment each year going forward. Examples of how the firm reached its goal include:
- Installed LED lighting systems at approximately 4,300 branches and 50 commercial offices, reducing lighting-related electricity consumption at each building by an estimated 50 per cent.
- Installing energy-efficient building management systems at over 3,400 branches to better control and monitor energy use at each location.
- Installing approximately 30 megawatts (MW) of solar capacity across 900 branches, which are expected to provide about 35 per cent of each location’s power needs.
- Planning to install 40 MW of solar capacity across the firm’s corporate office buildings in the U.S. and the U.K.
- Collaborated on the development of a 108 MW, 22-turbine wind farm, which will provide the equivalent of about 14 per cent of JPMorgan Chase’s energy needs globally.
To continue advancing sustainability in its own operations, JPMorgan Chase is also establishing a series of new goals:
- Reduce greenhouse gas emissions from the operation of its buildings, branches and data centres by 40 per cent by 2030, based on a 2017 baseline.
- Satisfy at least 70 per cent of its renewable energy goal with on-site renewable energy and off-site long-term renewable energy contracts by 2025.
- Transition its entire owned fleet of vehicles to electric by 2025.
- Reduce global water consumption by 20 per cent by 2030, based on a 2017 baseline.
- Reduce office paper use by 90 per cent by 2025, based on a 2017 baseline, and purchase 100 per cent of paper from certified sources by the end of 2021.
- Divert 100 per cent of e-waste from landfill through responsible third-party vendors.