Carbon Compass®
Carbon Compass®
The evolution of
Carbon Compass®
At JPMorganChase, we recognize that transitioning to a low-carbon economy requires balancing environmental needs, social progress, technological advancement, energy affordability and security, and economic stability. We seek to meet the needs of clients looking to incorporate climate-aligned considerations and solutions into their long-term business strategies. We also aim to leverage our expertise and balance sheet to support clients in advancing their low-carbon transition goals and in developing strategies that help them remain competitive in a changing world. To this end, we have established a series of climate-related metrics and targets, which are designed to help us understand the impact of our efforts. The methodologies for these metrics and targets are collectively referred to as Carbon Compass®.
Moving forward, we intend to continue to update and evolve our methodology to reflect other changes in our approach, as necessary. We also plan to continue to make the details of our methodology public to help inform efforts across our industry and to support our clients’ decarbonization efforts. For additional information on the Firm’s approach to environmental sustainability, our progress toward our targets and how we are supporting our clients, see our most recent firmwide Sustainability Report, available in the ‘Resources, reports and disclosures’ section on our Sustainability webpage.
The evolution of
Carbon Compass®
At JPMorganChase, we recognize that transitioning to a low-carbon economy requires balancing environmental needs, social progress, technological advancement, energy affordability and security, and economic stability. We seek to meet the needs of clients looking to incorporate climate-aligned considerations and solutions into their long-term business strategies. We also aim to leverage our expertise and balance sheet to support clients in advancing their low-carbon transition goals and in developing strategies that help them remain competitive in a changing world. To this end, we have established a series of climate-related metrics and targets, which are designed to help us understand the impact of our efforts. The methodologies for these metrics and targets are collectively referred to as Carbon Compass®.
Moving forward, we intend to continue to update and evolve our methodology to reflect other changes in our approach, as necessary. We also plan to continue to make the details of our methodology public to help inform efforts across our industry and to support our clients’ decarbonization efforts. For additional information on the Firm’s approach to environmental sustainability, our progress toward our targets and how we are supporting our clients, see our most recent firmwide Sustainability Report, available in the ‘Resources, reports and disclosures’ section on our Sustainability webpage.
Our current portfolio-level
carbon
intensity targets
Key aspects of our methodology for each of the included sectors, our portfolio-weighted baselines and our current 2030 targets:
Energy Mix
We focus on the decarbonization of energy supply – specifically, the transition from fossil fuels to low- or zero-carbon alternatives. This metric combines Oil & Gas End Use (Scope 3) emissions with zero-carbon power generation activity from our Electric Power portfolio to better capture how our financing is helping to facilitate a transition. Key to this approach is the understanding that energy remains vital to the functioning of society and the economy, and that most of the energy currently supplied by fossil fuels must eventually be abated or replaced by energy from low- or zero-carbon alternatives.
Oil & Gas Operational
We focus on the operational emissions from production and refining activities (Scopes 1 & 2), which includes emissions from fugitive and vented methane emissions, including the release of unburnt natural gas from flare stacks, and CO2 emissions from flaring and any on-site use of fossil fuels. This approach acknowledges that addressing methane emissions is one of the most important levers that contributes to the overall reduction in emissions from the sector’s operations, followed by eliminating routine flaring and increased electrification.
Electric Power
We focus on direct CO2 emissions from power generation (Scope 1), which account for the vast majority of the sector’s climate impact. The methodology is designed to track the fuel mix of power generation activities as it shifts from being predominantly fossil-based to more reliant on renewables, in a bid to rapidly decarbonize electricity grids globally. Due to the integrated nature of our Energy Mix target, and its partial overlap with our existing Electric Power target, we will include our financing of zero-carbon power generation activities in both targets’ calculations. We have calibrated our target to take into account the split of clients in our portfolio between OECD and non-OECD member countries to reflect the difference in rate of decarbonization of each region.
Auto Manufacturing
We include direct emissions from auto manufacturing (Scopes 1 and 2) as well as “tank-to-wheel” emissions aligned to the Worldwide Harmonized Light Vehicle Test Procedure (WLTP) from vehicle end use (Scope 3). In addition to global passenger car sales, our methodology also includes U.S. sales of light trucks (SUVs, vans and pickups), as these are primarily sold as passenger vehicles and can account for as much as 30% of global sales for some portfolio companies.
Iron & Steel
We focus on GHG emissions associated with crude steel production (Scopes 1 and 2). This captures emissions and activity from primary and secondary steelmaking processes, and accounts for approximately 97% of total value chain emissions for the sector. This enables us to account for variations in the emissions profiles of different steelmaking processes, while also concentrating on the full range of decarbonization strategies for the sector, which include electrification, increasing scrap recycling, using lower-carbon energy inputs such as biomass or hydrogen, and deploying carbon capture, use and storage technologies.
Cement
We evaluate GHG emissions (Scopes 1 and 2) from cement manufacturing. This includes both energy-related and process emissions, and accounts for approximately 90% of total lifecycle emissions for the industry. By using cementitious product, we are able to capture both the primary driver of sector emissions (i.e., clinker production) and potential levers for reducing them, including the use of cement and clinker substitutes.
Aviation
Our target focuses on direct (Scope 1) CO2 emissions for revenue-generating passenger service and belly freight operations of airline companies, specifically from combustion of fuels during flight. This allows us to focus on companies’ relative progress in reducing, and ultimately replacing, the use of fossil-based jet fuel — the primary driver of the sector’s climate impact.
Shipping
We focus on the intensity of Scope 1 tank-to-wake (TTW) CO2 emissions from the combustion of fuels by international maritime freight transportation vessels. We calculate intensity using the Energy Efficiency Operating Indicator (EEOI) developed by the International Maritime Organization (IMO), which captures both vessel design and operational levers for reducing emissions in the sector.
Aluminium
Our target focuses on the intensity of Scope 1 and 2 GHG emissions from key emissions-intensive activities associated with aluminum production. The target covers both primary production from refining and smelting processes and secondary production from recycled input. The benchmark emissions trajectory for the sector is supplied by the International Aluminum Institute 1.5 Degrees Scenario (IAI 1.5DS), which is in turn based upon IEA NZE.
Center for Carbon Transition
This center of excellence that provides clients the data and expertise needed to navigate the challenges of transitioning to a low-carbon future.
Sustainability at J.P. Morgan
Working to promote energy security and a low-carbon future is good for business, clients and communities. Learn more about our multi-disciplinary, strategic approach and access the latest research and insights, including how we’re helping our clients to achieve their objectives.
Sustainability
Creating solutions that protect the environment and grow the economy.
Related insights
Center for Carbon Transition
This center of excellence that provides clients the data and expertise needed to navigate the challenges of transitioning to a low-carbon future.
Sustainability at J.P. Morgan
Working to promote energy security and a low-carbon future is good for business, clients and communities. Learn more about our multi-disciplinary, strategic approach and access the latest research and insights, including how we’re helping our clients to achieve their objectives.
Sustainability
Creating solutions that protect the environment and grow the economy.
The information provided in this webpage reflects JPMorgan Chase’s approach to financed emissions and emission intensity targets as at the date of this document and is subject to change without notice. We do not undertake to update any of such information in this webpage. This material contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, our goals, targets, aspirations and objectives, and are based on the current beliefs and expectations of management of JPMorgan Chase & Co. and its affiliates and subsidiaries worldwide (collectively, “JPMorgan Chase”, “The firm” “We”, “Our” or “Us”, as the context may require) and are subject to significant risks and uncertainties, many of which are beyond JPMorgan Chase’s control. Expected results or actions may differ from the anticipated goals and targets set forth in the forward-looking statements. Factors that could cause JPMorgan Chase’s actual results to differ materially from those described in the forward-looking statements include the necessity of technological advancements, the evolution of consumer behavior, the need for thoughtful climate polices, the potential impact of legal and regulatory obligations, and the challenge of balancing our short-term targets with the need to facilitate an orderly transition and energy security. Additional factors can be found in JPMorgan Chase’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission. Those reports are available on JPMorgan Chase’s website (https://jpmorganchaseco.gcs-web.com/financial-information/sec-filings) and on the Securities and Exchange Commission’s website (www.sec.gov). JPMorgan Chase does not undertake to update any forward-looking statements.
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