The scientific evidence provided by the Intergovernmental Panel on Climate Change (IPCC), a body created by the United Nations and the World Meteorological Organization, concludes that climate change is linked largely to the emissions of greenhouse gases caused by human activity, from the burning of fossil fuels, and deforestation. While there remains uncertainty regarding the severity of impacts, we believe that it is appropriate to adopt a precautionary approach to climate protection by working to reduce greenhouse gas emissions today.
JPMorgan Chase will assume a leadership role in the financial services industry by helping to reduce greenhouse gas emissions in our value chain and internally, as described in Section E. We believe we cannot accomplish significant reductions alone; we need the support of our clients, as well as public policy that establishes certainty for investors and allows significant investments in greenhouse gas mitigation. We will therefore work with our industry, clients and policy makers to establish a policy framework for direct and indirect greenhouse gas emissions reductions.
The following policy is applicable to our Investment Bank and Commercial Bank.
I. Risk management policy
Carbon mitigation JPMorgan Chase will encourage clients that are large greenhouse gas emitters to develop carbon mitigation plans. The plans will include measurement and disclosure of greenhouse gas emissions and descriptions of plans to reduce or offset emissions. We will add carbon disclosure and mitigation to our client review process.
In project transactions in the power sector, we will quantify the financial cost of greenhouse gas emissions and integrate them into financial analysis of the transaction. Internalizing the cost of carbon in this way may alter investment choices, and we will encourage clients to evaluate alternative energy technologies.
II. Supporting commitments
a. Advancing the public discourse JPMorgan Chase will arrange meetings with other financial institutions to advocate for reductions of greenhouse gas emissions. We will work with these peers, the electric utility industry, climate policy experts in NGOs and academia, states, and the US government. This dialogue will focus on specific projects to alter the emission trajectory of the US economy. The projects will include:
A policy dialogue to advocate that the US government adopt a market-based national policy on greenhouse gas emissions, which includes all sources of emissions and is fair. Options include either a cap-and-trade or tax policy to reduce greenhouse gas emissions at the lowest possible cost.
Seek to form a coalition to explore financing the greenhouse gas mitigation of coal-fired generating capacity.
b. Products and research to address climate change
Carbon reduction We will work with clients to develop favorable financing solutions to fund development of relatively lower carbon emitting technology solutions and investments in greenhouse gas reduction.
Research JPMorgan Chase will use its leadership position in corporate research to explore the business risks associated with climate change and opportunities for greenhouse gas reductions. Our corporate research will explore the potential financial liabilities of carbon emissions to large direct emitters. We will re-examine valuations in the oil, gas, power and transport sectors in light of the operating constraints posed by limits on carbon emissions, and the emergence of alternative clean technology. Conclusions of our research should encourage disclosure, mitigation and new business development of affected companies. In specific sectors, we will also explore the possibility of having our JPM analysts incorporate climate risk into their regular research.
We will research the financial implications of higher costs of carbon emissions to the electric power industry. Particularly for coal-fired electricity generation, investment choices could be materially influenced by carbon-constrained future scenarios.
Carbon reporting JPMorgan Chase will annually report the aggregate greenhouse gas emissions from our power sector projects.
Renewable energy investment As part of its energy practice, our private equity group has invested in renewable energy generation projects and will continue to consider other investments in profitable renewable energy generation and technology.
Energy efficient mortgage In our mortgage loans products, we will accommodate higher debt to income ratios for homes that are considered energy efficient.
"Green" housing We will continue to seek investments in low-income "green" housing that conserves energy and natural resources, promotes health, and provides easy access to jobs, schools, and services.
