Wednesday, July 24, 2024

Senators accuse JPMorgan’s Jamie Dimon of backtracking on climate commitments

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JPMorgan Chase, the world’s biggest investor in fossil fuels, may have misled investors and the public by backtracking on its already weak climate and environmental commitments, six US senators have warned in a letter to the CEO Jamie Dimon.

Although a climate-disrupted world demands stronger action by the financial sector to reduce emissions and protect nature, the Wall Street firm is heading in the opposite direction, say the upper chamber legislators, who include Senate banking committee member Elizabeth Warren.

They have demanded clarification about the intentions of the world’s biggest bank. Senator Warren said: “If JPMorgan Chase has misled investors and the public, both Congress and regulators have a range of tools to respond as necessary.” They have given the bank until 24 July to reply.

The letter, shared exclusively with the Guardian, reflects growing concern that JPMorgan Chase is watering down public commitments it has made over decades. Campaigners say this poses a structural risk because short-term interests are taking precedence over long-term climate – and financial – stability.

JPMorgan Chase, which has $4tn in assets, has been criticised for making profits while the world burns. The letter notes that the company has financed over $430bn in fossil fuel projects since 2016, more than any other institution on the planet.

Concerns rose earlier this year when Dimon announced a shift in policy that suggested JPMorgan Chase would dilute its environmental goals. In an 8 April letter to shareholders, he indicated the company was “going to use the word ‘commitment’ much more reservedly in the future, clearly differentiating between aspirations we are actively striving toward and binding commitments”.

The senators’ letter said the company reversed its previous promise by pulling out of the Climate Action 100+ and the Equator Principles, which serve as a common baseline for institutions to manage environmental and social risks when financing projects.

Elizabeth Warren listens during a Senate hearing in Washington DC on 18 April 2023. Photograph: Amanda Andrade-Rhoades/Reuters

Instead of being proactive about the climate threat, Dimon said JPMorgan Chase would wait for “proper government action . . . [that is] not there yet”.

The firm also swapped its clear Paris Climate Agreement goal to reduce its emissions intensity with a blurry new “Energy Mix” target that makes it impossible, the senators say, for an investor to know if JPMorgan Chase is doing anything at all to reduce its oil and gas financing because it now dumps this into a blender with clean energy.

“Your full set of comments indicated JPMorgan was completely abdicating any role in addressing climate change,” says the letter, which is also signed by Senators Sheldon Whitehouse, Peter Welch, Bernie Sanders, Ed Markey and Jeff Merkley. “This raises questions about the impact of these policy changes moving forward, and about whether you were misleading investors and the public when you made these commitments.”

Concerns are also growing that other major US banks are sliding away from their promises of climate and biodiversity action. Citi, Bank of America and Wells Fargo also quit the Equator Principles earlier this year, a move that climate groups condemned as “shocking” and “cowardly”.

At a time of record temperatures and deadly storms, this has led to a public backlash. On the streets, the climate finance movement has staged protests outside several Wall Street institutions, including Citi, Bank of America and major insurers.

Pressure also came in the annual banking on climate chaos report, produced by a coalition of environmental groups, which details the investments of JPMorgan Chase and other majors bankers in climate destabilising projects. BlackRock also limited its involvement.

Last month, the financial watchdog NGO Stand.earth highlighted JPMorgan Chase among five of the world’s biggest banks, whose environmental and social guidelines fail to cover more than 70% of the Amazon rainforest. The report found JPMorgan Chase made $2.4bn in capital available to companies that operate oil and gas projects in the Amazon and its biodiversity protections applied to only Unesco world heritage sites that cover just 2% of the region. By contrast, the study commended the British bank HSBC, which was once a major funder of destructive projects in the region but has not provided any financing since it adopted a 100% Amazon exclusion policy in December 2022.

Ernesto Archila of the Public Citizen’s Climate Program, said banks needed to be brought into line. “They made commitments when it was politically expedient and now they are walking them back. It is really important for senators to call attention to this issue,” he said. “This underlines the need for regulators to take urgent action. Banks should be compelled to take a serious look at their financed emissions, and make effective and transparent plans to address the financial risks associated with climate change. It is clear that a short-term profit motive is driving the behaviour of the banks. It is now up to regulators to step in and prevent those short-term interests from creating structural risks.”

JPMorgan Chase declined to comment on the record. A representative shared materials showing the company is a major financier of clean energy, as well as fossil fuels. On its website, the bank says it has broken down the elements in its Energy Mix Target to show oil and gas financing. A recent op-ed by a senior executive said banks have a role in supporting the energy transition with capital, but stressed that governments need to take the lead: “To transform the energy mix, boost new industrial activity, and build sustainable infrastructure at speed and scale, governments need to lead by setting necessary enabling regulatory frameworks and policy incentives to transform regional and local economies, reskill global workforces, unblock permitting to develop the backlog of necessary infrastructure, and so on.”

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