Leading global financial services firm JPMorgan Chase & Co. announced in April a plan to facilitate and invest more than $2.5 trillion over 10 years to advance climate action and sustainable development.
The company says the $2.5tn investment will begin this year through to the end of 2030.
The objective, according to the company, is to advance long-term solutions that address climate change and to contribute to sustainable development.
JPMorgan Chase says it will bring together its capital and expertise to help clients, customers and communities address these vital issues.
SUSTAINABLE FINANCING TO THE FORE
The news coincides with predictions by KPMG’s Anson Bailey during the closing keynote session of the inaugural Travel Retail Sustainability Week (viewable on Youtube by clicking here), that financial institutions are not only focusing more on sustainable investments, but even applying sustainability benchmarks as a pre-requisite to granting company loans and financing.
Anson Bailey, Head of Consumer & Retail, ASPAC Head of Technology, Media & Telecoms, Hong Kong addressed the closing keynote session during the Travel Retail Sustainability Week
JPMorgan Chase’s long-term target, it says, will help accelerate the transition to a low-carbon economy by encouraging actions that set a path for achieving net-zero emissions by 2050.
Last year, the firm established the J.P. Morgan Development Finance Institution (DFI) to grow the development finance activities undertaken by J.P. Morgan and attract additional investment to the emerging markets.
The new 10-year effort announced in April will further the DFI’s objective to promote economic and social development.
“Climate change and inequality are two of the critical issues of our time, and these new efforts will help create sustainable economic development that leads to a greener planet and critical investments in underserved communities,” said Jamie Dimon, Chairman and CEO, JPMorgan Chase.
“Business, government and policy leaders must work together to support long-term solutions that advance economic inclusion, bolster sustainable development and further the transition to a low-carbon economy. We are committed to doing our part.”
SUPPORTING CLEAN ENERGY
The new $2.5 trillion effort will be focused on the following objectives:
1. Green economy: $1tn for green initiatives that support climate action, with the goal of accelerating the deployment of solutions for cleaner sources of energy and facilitating the transition to a low-carbon economy.
Since 2016, the firm has facilitated and financed nearly $210bn towards green initiatives.
To help clients navigate the challenges and the long-term benefits of this transition, the company will continue to provide clients in the corporate & investment bank and commercial banking with centralised access to sustainability-focused financing, research and advisory solutions through its Center for Carbon Transition.
As part of its efforts, JPMorgan Chase Commercial Banking also recently launched a ‘Green Economy’ specialised industry team. The team will initially focus on four sectors: renewable energy, efficiency technology, sustainable finance, and agriculture and food technology.
2. Development Finance: The firm will finance and facilitate transactions that support socio-economic development and quality of life in developing countries. By originating and structuring transactions with anticipated development impact, the firm will mobilise capital to advance the United Nations Sustainable Development Goals (SDGs) in emerging economies.
3. Community Development: JPMorgan Chase will advance economic inclusion in developed markets. The firm will focus its efforts on small business financing, home lending and affordable housing, education and healthcare. This includes the firm’s recent $30bn commitment to advance racial equity.
Ashley Bacon, Chief Risk Officer, JPMorgan Chase said: “We believe that a contribution at this scale will have a significantly positive impact. As a company we commit to dedicating extensive time, expertise and focus to ongoing analysis and development of the role we play.
“It is necessary, but not sufficient that as financial institutions covering the whole economy, we play our part. We hope broader developments ranging from public policy to technological advancement will move us further towards a sustainable path.”
IMPACT OF ANNUAL TARGET
In 2020, JPMorgan Chase exceeded its annual sustainable development target and facilitated more than $220bn in transactions, including more than $55bn towards green initiatives. It achieved this in a number of ways:
-Raising $230 million for Bloom Energy Corporation, which develops efficient energy generators used to dramatically reduce electricity costs and greenhouse gas emissions;
-Providing financing to support the development of Allete Clean Energy’s largest wind farm, which produces enough renewable energy to power about 114,000 homes;
-Helping structure the inaugural $198m local currency tranche of the Republic of Uzbekistan’s sovereign issuance. Intended use of proceeds includes building 15 schools, constructing three health institutions, developing new transportation and utility infrastructure and funding social welfare programs to support women and children; and
-Committing $24.7m in equity to the new construction of Old Colony, a 115-unit public housing project in South Boston. All the units will serve families at or below 60% of the Area Median Income (AMI), with 12 of the units reserved for families at or below 30% of the AMI.
-The new 10-year goal leverages the firm’s global reach, capital, data and resources across lines of business. The firm will look for opportunities to refine JPMorgan Chase’s methodology, just as it has done between its 2020 achievement and this new 10-year target.
SUSTAINABILITY MEASUREMENT & REPORTING
JPMorgan Chase says it will share additional information about eligible business activity, how it measures qualified transactions and the results of its efforts. The firm’s 2020 ESG Report, which will be released in May, will include more information on the firm’s 2020 effort.
Additional detail will also be shared at that time that lays out criteria for eligible business activity that will count toward the new 10-year target, as well as the process for reviewing qualified transactions.
Going forward, the firm intends to provide updates on progress in its annual ESG Report. Examples of eligible business activities may include” financing efforts that support renewable energy, clean technology, waste management, conservation, green buildings, sustainable transportation, transactions that advance the United Nations SDGs, affordable housing and small business financing in low-to-moderate income communities.