JP Morgan Chase pledges $2.5trn to climate and sustainability this decade

Earlier this year

The commitment, believed to be the largest of its kind from a US bank, will see $1trn from the business’s own activities earmarked for what it calls “green initiatives”. Sectors falling into this definition include renewable energy generation and distribution, energy efficiency technologies and low-carbon transport – with a particular focus on trucking and aviation.

The remaining $1.5trn will be covered by “facilitating” activities with third parties, and by the financing of initiatives that support the wider sustainable development agenda. JP Morgan Chase is expected to disclose which kinds of projects will be eligible through its annual ESG report next month, which will also detail how it plans to meet its 2050 target of net-zero financed emissions.

This target was set earlier this year, following similar announcements from a string of other US finance giants such as Citi and Goldman Sachs.  

On sustainable development and ESG, JP Morgan Chase has already established a Development Finance Initiative, specifically tasked with supporting the growth of industries with net-positive environmental and social benefits, with a focus on developing nations and community projects in developed nations. Responsibility for meeting the new $2.5trn target will sit partly with this Initiative.

For context, JP Morgan Chase has facilitated and financed $210bn “green initiatives” since 2016. $55bn of this financing fell within 2020. The new target, therefore, clearly marks an acceleration.

“We believe that a contribution at this scale will have a significantly positive impact,” JP Morgan Chase’s chief risk officer Ashley Bacon said.

“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.”

The name’s Bond. Sustainable Bond.

In related news, Nordic bank SEB has released its predictions for the global sustainable bond market this week.

Following the issuance of $378bn of bonds branded as “green” or “sustainable” in the first quarter of 2021, SEB believes that issuance is likely to exceed $1trn by the end of the year. $378bn is equivalent to around half of all issuances made between January and March.

In late 2020, SEB’s predictions for issuance in 2021 stood at $750bn.

SEB said in a statement that the low-carbon transition is “gaining pace faster than anyone had anticipated”. While policy, science and public opinion had been changing pre-pandemic, the events of 2020 affected supply and demand in the fossil fuel production and transport sectors. At the same time, the pandemic resulted in a stronger investor and corporate focus on social issues like public health.

Sarah George