C: Forestry and biodiversity policy and commitments
Forests are home to more than half of all terrestrial species and support the livelihoods of millions of people. They are sources of food, medicine, lumber, and aesthetic benefits. They sequester carbon, clean water and cycle nutrients. In spite of their critical importance, forests are under threat; half of the world's forests are gone and well over 30 million acres more are lost each year. In addition, the decline in our high ecological value forests results in the loss of critical biodiversity as natural habitats are destroyed.
To address this decline, we will apply the following policy to our Investment Bank and Commercial Bank.
Risk management policy
a. No go zones JPMorgan Chase believes that there are certain places on earth with cultural and natural values so great that we as a global citizen must take extra precautions to protect them. JPMorgan Chase prefers to only finance preservation and light, nonextractive use of forest resources for projects in forests whose high conservation values are endangered.(1) In addition, we will not finance extractive projects or commercial logging in World Heritage sites.(2)
Further, as part of our implementation of the Equator Principles:
JPMorgan Chase will not finance commercial logging operations or the purchase of logging equipment for use in primary tropical moist forests.(3)
JPMorgan Chase will finance plantations only on nonforested areas (including previously planted areas) or on heavily degraded forestland.
JPMorgan Chase will not finance projects that contravene any relevant international environmental agreement which has been enacted into the law of, or otherwise has the force of law in, the country in which the project is located.
b. Global endangered zones JPMorgan Chase will not finance any project or provide loans where the use of proceeds is designated within critical natural habitats(4), unless the sponsor or borrower, as appropriate, has demonstrated to JPMorgan Chase's satisfaction the following:
They have considered economic and technically feasible alternatives to avoid such areas and have addressed these issues in a publicly available Environmental Assessment;
The project will not significantly convert(5) or degrade(6) the critical natural habitat;
Project management has adequate capacity and willingness to ensure biodiversity protection and respect for the rights of indigenous communities whose livelihoods or cultural integrity could be adversely impacted;
Indigenous peoples and local communities(7) affected by the project, whether directly or by induced impact, have the opportunity and if needed, culturally appropriate representation, and have access to relevant information, to engage in informed participation;
The governmental authorities at the local, regional or national level have provided mechanisms for the affected communities to be represented or consulted, and international, national and local laws have been upheld;(8) and
An Environmental Assessment has been prepared that takes into account such consultations and is publicly available.
c. Sustainable forest management
JPMorgan Chase will adopt specific policies to protect the highest conservation values in forests. The process of protecting high conservation values includes scientific assessment of species, cultural assessment, and conservation plans to protect species or cultural sites that are unique, rare, threatened or endangered. The Forest Stewardship Council (FSC)(9) is one of the most robust high conservation value assessment processes. We prefer FSC certification when we finance forestry projects that impact high conservation value forests, unless a comparable assessment process underpins a conservation plan. For operations that are not already certified, we will introduce them to credible experts who can help establish a rigorous, time-bound, step-wise approach to achieve certification.
We will review and understand the merits of the different internationally accepted forestry certification standards to better understand best practices.
d. Illegal logging
We will not finance companies or projects that collude with or are knowingly engaged in illegal logging.(10) Clients that process, purchase, or trade wood products from high risk countries(11) will have certifiable systems in place to ensure that the wood they process or trade comes from legal sources. Due diligence will include company representations as to its practices, monitoring and, by 2007, chain of custody certification (e.g. FSC controlled wood standard) for illegal logging.
We will not finance companies or projects that do not have an explicit policy against the uncontrolled and/or illegal use of fire in their forestry, plantation or extractive operations.
e. Land conservation If JPMorgan Chase acquires significant amounts of environmentally sensitive land as a result of a default or debt work-out situation, we will work with conservation groups and local stakeholders to consider conservation alternatives, including donation, environmental management plans or protective easements.
1. In implementing this policy, we will take guidance from the major conservation groups, the Wye River Process and the World Bank's Critical Forest Areas. Our policy will include the following conservation values: rare, endemic, threatened and endangered species, legally protected areas and forests that house vulnerable or threatened cultural sites.
2. There are currently 788 World Heritage sites that were nominated by the member countries and selected by independent review panels for their natural and cultural values.
3. Tropical moist forest is generally defined as forest in areas that receive not less than 100 mm of rain in any month for two out of three years and have an annual mean temperature of 24 oC or higher. Also included in this category, however, are some forests (especially in Africa) where dry periods are longer but high cloud cover causes reduced evapotranspiration.
Primary forest is defined as relatively intact forest that has been essentially unmodified by human activity for the previous 60 to 80 years.
4. Critical natural habitats are: i) existing protected areas and areas officially proposed by governments as protected areas (e.g., reserves that meet the criteria of the World Conservation Union [IUCN] classifications), areas initially recognized as protected by traditional local communities (e.g., sacred groves), and sites that maintain conditions vital for the viability of these protected areas (as determined by the environmental assessment process); or ii) sites identified on supplementary lists prepared by the World Bank or an authoritative source determined by IFC's Environment Division. Such sites may include areas recognized by traditional local communities (e.g., sacred groves); areas with known high suitability for biodiversity conservation; and sites that are critical for rare, vulnerable, migratory, or endangered species. Listings are based on systematic evaluations of such factors as species richness; the degree of endemism, rarity, and vulnerability of component species; representativeness; and integrity of ecosystem processes.
5. Significant conversion is the elimination or severe diminution of the integrity of a critical or other natural habitat caused by a major, long-term change in land or water use. Significant conversion may include, for example, land clearing; replacement of natural vegetation (e.g., by crops or tree plantations); permanent flooding (e.g., by a reservoir); drainage, dredging, filling, or channelization of wetlands; or surface mining. In both terrestrial and aquatic ecosystems, conversion of natural habitats can occur as the result of severe pollution. Conversion can result directly from the action of a project or through an indirect mechanism (e.g., through induced settlement along a road).
6. Degradation is modification of a critical or other natural habitat that substantially reduces the habitat's ability to maintain viable populations of its native species.
7. Local Communities - describes the broad group of people living in or near a forest or plantation, with some significant level of dependence on it. The term includes forest dwellers, indigenous forest-adjacent populations, and recent immigrants.
8. Including those laws related to the ratification and implementation of "Convention 169 Concerning Indigenous & Tribal Peoples in Independent Countries" of the ILO.
9. The Forest Stewardship Council (FSC) is an international organization devoted to encouraging the responsible management of the world's forests. FSC sets high standards that ensure forestry is practiced in an environmentally responsible, socially beneficial, and economically viable way. According to the UK government, FSC is one most stringent forest certification programs and is widely accepted by conservation groups. Its standards protect streams, conserve endangered forests and species habitat, and require the involvement of indigenous communities. There are other credible, internationally recognized forest stewardship certification schemes that generally recognize that timber is produced legally and comes from broadly sustainable sources.
10. Illegal logging takes place where timber is harvested in violation of local and national laws intended to stop illegal logging. Illegal logging includes: a) using corrupt means to gain access to forests, b) extraction without permission or from a legally unauthorized area, c) the cutting of protected species or the extraction of timber in excess of legal limits or in violation of legally approved forest management plans. Illegal logging has not yet been written into international law although issues relating to illegal logging have been addressed in some fashion by international treaties such as the Convention on Biological Diversity.
11. The World Bank, World Wildlife Fund and others have published data on illegal logging. For JPMorgan Chase, a high risk country is one where greater than 50% of annual harvest is illegal.
