JPMORGAN CHASE & CO. | Adopt policy financing no new fossil fuels at JP Morgan

AGM date
Previous AGM date
Proposal number
4
Resolution details
Company ticker
JPM
Resolution ask
Adopt or amend a policy
ESG theme
  • Environment
ESG sub-theme
  • Climate Change
Company sector
Financials
Company HQ country
United States
Whereas clause
Shareholders request that JPMorgan Chase (JPMC) adopt a policy by the end of 2022 in alignment with the IEA’s 1.5°C climate change scenario, by ensuring that its financing does not contribute to new fossil fuel supply — defined as exploration for and/or development of oil, gas, and coal resources or reserves beyond those already in production or approved by a final investment decision.
Supporting statement
While JPMC has asserted that it is taking “comprehensive steps”1 to align with the climate goals of the Paris Agreement”, the company’s position as a leading financier of fossil fuels conflicts with a scenario in which global warming does not exceed 1.5° C.

For instance, in May 2021, the International Energy Agency (IEA) found that for the world to limit warming to 1.5 degrees Celsius by 2050, effective immediately “there is no need for investment in new fossil fuel supply.”2 The IEA’s 1.5 degree scenario does not contemplate new fossil fuel development, but the Company continues to finance it.

Exceeding a 1.5° scenario jeopardizes the global economy. Under current emission trajectories, 10% of total global economic value has been estimated to be lost by 2050.3 Limiting warming to 1.5 versus 2 degrees could save $20 trillion globally by 2100; exceeding 2 degrees could lead to climate damages in the hundreds of trillions.

To diversified investors, continued support for fossil fuel development threatens long- term portfolio value; for banks, it means increased credit, market, and operational risks.4 Even short-term fossil fuel financing contributes to long-term risk: the IPCC’s 2021 report confirmed that historic and current emissions have locked in warming for the next two decades.5

In May 2021, JPMC released 2030 targets for oil and gas, electric power and autos as part of its “Paris-aligned financing commitment”. The bank’s 2030 targets specify reductions in carbon intensity — that is, greenhouse gas emissions per unit of output.

These targets are compatible with expansion of fossil fuels. The intensity targets do not meet the identified need, over the next decade, to cut global absolute emissions by 45%. JPMC has been identified as the largest funder of companies expanding oil and gas production.6 Some of these oil and gas companies have set intensity reduction targets meeting or exceeding what JPMC is calling for, even as they plan continued oil and gas expansion.

Public calls for an end to fossil fuel finance have grown and threaten JPMC’s reputation. For example, in September 2021, JPMC and other large banks were named in an op-ed by youth climate activists calling on the banks to stop financing expansion of fossil fuels.7

We urge shareholders to vote in favor of this proposal, to encourage JPMorgan Chase align with global efforts to contain climate change.



1 https://www.businesswire.com/news/home/20210513005492/en/JPMorgan-Chase-Releases-Carbon- Reduction-Targets-for-Paris-Aligned-Financing-Commitment

2 https://www.iea.org/reports/net-zero-by-2050 p 21

3 https://www.swissre.com/institute/research/topics-and-risk-dialogues/climate-and-natural-catastrophe- risk/expertise-publication-economics-of-climate-change.html

4 https://www.accenture.com/us-en/insights/banking/climate-change-risk-banks

5 https://www.nytimes.com/2021/08/09/climate/climate-change-report-ipcc-un.html

6 https://www.bankingonclimatechaos.org/

7 https://www.teenvogue.com/story/banks-fund-fossil-fuels

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
Kutxabank Gestion SGIIC SAU. For
EFG Asset Management For The company has committed to the Paris Agreement, has achieved carbon-neutrality, set emissions reductions goals for some industries in its portfolio and is financing $1 trillion by 2030 to accelerate the transition to a low-carbon, sustainable economy. By joining the Net-Zero Banking Alliance, it is committing to set a 2050 target. The company has banned project financing of new coal mines and plants and prohibits financing gas development in the Arctic.

In the summer of 2021, the Intergovernmental Panel on Climate Change (IPCC) issued an updated report on the status of the climate emergency. This report, combined with mounting evidence from other sources, stressed that swift and decisive action must be taken in order to limit global warming to 1.5 C. The IPCC and U.N. Secretary General have continually emphasized that GHG-intensive activities must be reduced to near-zero in all climate scenarios consistent with a 1.5 C pathway.

While the company has taken some steps to move towards a low-carbon economy and has an environmental and social risk framework and mechanisms for managing environmental, social, and financial risks, adoption of the resolution would not only serve to enhance and complement the company's current commitments to net zero activities, but also help ensure stronger alignment between the company's net zero goals and its policies and actions. In addition, it would also provide shareholders with a better understanding of the company's management and oversight of related risks. Accordingly, support for this proposal is considered warranted.
Legal & General Investment Management (Holdings) For We have carefully considered the proposal against our own expectations of the sector, as well as the bank’s current practices, commitments and disclosures. While we recognise JPMorgan’s recent commitments and improved disclosures, reiterated in its 2021 ESG report, we note that these currently only include interim targets for emissions intensity covering a small number of sectors. We are yet to see the Company’s Scope 3-financed emissions disclosure to determine the strength of its targets and the trajectory of emissions reductions, to enable us to ensure these targets can indeed achieve 1.5C alignment.
Notwithstanding these commitments and disclosures, we consider that the call for the Board to set a policy to ensure its fossil-fuel financing is aligned with the IEA NZ2050 scenario is desirable and in line with our expectations, while leaving the Board room to determine its own path to 1.5C alignment.