At JPMorgan Chase, we believe that climate change is a critical issue of our time and have long supported the goals of the Paris Agreement. However, the world is not currently on track to meet these goals, and we recognize we do not have time to lose when it comes to climate action.
Our commitment to Paris alignment is an important step toward accelerating the low-carbon energy transition and encouraging near-term actions that will set a path for achieving net-zero emissions by 2050. Our goal is to help our clients navigate the challenges and capitalize on the long-term economic and environmental benefits of transitioning to a low-carbon world.
Our business strives to do its part in collaboration with our clients, as well as policymakers, who have a critical role to play in creating the frameworks needed to advance significant reductions in greenhouse gas (GHG) emissions globally. We recognize that significant changes in policy and the creation of new technologies will ultimately be required to reach net-zero emissions. Learn more about our work engaging with stakeholders on climate matters and our $2.5 trillion sustainable development target here.
JPMorgan Chase has developed Carbon Compass – our methodology to align our financing with the goals of the Paris Agreement. To start, we have established intermediate emission targets for 2030 for our Oil & Gas, Electric Power and Auto Manufacturing portfolio.
To help advance the transition to a low-carbon economy and track progress towards Paris, the firm has chosen to evaluate its portfolios using carbon intensity metrics, which track emissions relative to units of output. When measured over time, carbon intensity provides insight into changes in efficiency, performance and business strategy.
Many groups have developed frameworks to help financial institutions align their financing with the Paris Agreement. Our methodology was developed by learning from and building on these existing approaches, and we are committed to continuously evolving our approach. In establishing our own methodology, we enlisted the support of ERM, a global pure-play sustainability consultancy with deep sectoral, technical and business expertise in the low-carbon and energy transition, to challenge and enhance our efforts. We believe the approach we have co-developed is practical and future ready, and reflects leading thinking on Paris alignment. We are making the details of our methodology public to help advance efforts across our industry and to bring our clients along on our journey to help meet the goals of the Paris Agreement.
We are starting with these three sectors because they are responsible for a significant share of GHG emissions from the global energy value chain. JPMorgan Chase aims to work with clients in these sectors to advance the goals of Paris, including by reducing GHG emissions and expanding investment in low- and zero-carbon energy sources.
Oil & Gas – We cover Operational emissions from production and refining (Scopes 1 and 2) and End Use emissions from the combustion of oil and natural gas (Scope 3)
Electric Power – We include direct CO2 emissions from power generation (Scope 1), which account for the vast majority of the sector’s climate impact
Auto Manufacturing – We measure direct emissions from auto manufacturing (Scopes 1 and 2) as well as “tank-to-wheel” emissions from vehicle end use (Scope 3)
Oil & Gas – We have chosen to use two separate carbon intensity values to assess the Paris alignment of our Oil & Gas portfolio and provide a clear line of sight to the climate-related priorities of our clients:
- Operational carbon intensity – expressed as grams CO2e per megajoule (g CO2e/MJ) of embedded energy – to track reduction in methane and CO2 emissions from operations
- End Use carbon intensity – expressed as grams CO2 per megajoule (g CO2/MJ) of embedded energy – to track the transition to low- and zero-carbon energy, such as bioenergy and renewables
Electric Power – We use the carbon intensity-based metric of kilograms (kg) CO2 per megawatt-hour (MWh) of electricity generated to evaluate the Paris alignment of our Electric Power portfolio
Auto Manufacturing – We use the carbon intensity-based metric of sales-weighted average grams of carbon dioxide equivalent (CO2e) emissions per kilometer for new cars sold, or g CO2e/km
The table shown above summarizes the current portfolio-weighted average carbon intensity of JPMorgan Chase’s in-scope clients and the interim targets we have defined for 2030 for each sector, which are aligned to the goals of the Paris Agreement. For more information on each sector’s target, portfolio baseline, the scenario and methods used, the emissions included and other details, see our Carbon CompassSM methodology.
We have seen a steady increase in the number of companies who have expressed support for achieving net zero emissions by 2050 and announcing goals to align their GHG emissions trajectories with the Paris Agreement.
While we anticipate seeing more such commitments from companies over time, transition pathways will be industry-specific, and strategies for individual companies will likely look different. We recognize that, for most companies, there will be opportunities to reduce GHG emissions and improve efficiency, yet it may not be feasible for every company to significantly transition their business models or strategies.
To support Corporate & Investment Bank (CIB) and Commercial Banking (CB) clients with their sustainability and energy-transition goals, we have launched the Center for Carbon Transition (CCT). The CCT is tasked with delivering on JPMorgan Chase’s commitment to align its financing with the goals of the Paris Agreement. Additionally, CCT provides clients with centralized access to sustainability-focused financing, information and advisory solutions. CCT also assists clients on their long-term business strategies and related carbon disclosures.
Today, there remains a significant gap between the path the world is on today and the changes to our global energy system that will be needed to successfully reach the goals of the Paris Agreement. To close the gap, significant investment and policy solutions will be needed to expand deployment of existing low- and zero-carbon technologies, and support the commercialization of new technologies that can advance decarbonization.
To advance long-term solutions that address climate change and contribute to sustainable development, JPMorgan Chase aims to finance and facilitate more than $2.5 trillion over 10 years, including $1 trillion for green initiatives.
Depending on the sector, progress towards 2030 Emissions Intensity targets in the coming decade may depart from a linear pathway. Progress in some sectors will likely be front-end loaded, and progress in other sectors will likely be more back-end oriented. For example, we would expect progress toward our Operational carbon intensity target for Oil & Gas companies to advance more quickly in the early years of the decade, as companies take aggressive steps to reduce methane emissions and flaring. Progress toward our End Use carbon intensity target, on the other hand, will likely be more concentrated in the latter years of the measurement period, given the more time-consuming measures necessary to reduce these emissions.
In addition, progress towards our carbon intensity targets will be somewhat tied to progress that society makes in reducing overall demand. If societal demand for carbon-intensive products declines at a pace equal to or greater than the pathway envisioned by the IEA Sustainable Development Scenario, our ability to meet or even exceed our 2030 targets will be greatly enhanced. If societal demand for carbon-intensive products does not decline as envisioned by the IEA SDS, some of our targets may prove more difficult to attain.
