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JPMorgan Chase to Stop Financing Arctic Oil and Gas

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By The Maritime Executive 02-25-2020 05:41:20

U.S. investment banking company JPMorgan Chase has announced it is expanding restrictions on financing for coal mining and coal-fired power and prohibiting project financing for new oil and gas development in the Arctic.

In 2017, JPMorgan Chase made two sustainability commitments: facilitate $200 billion in clean financing by 2025 and source renewable energy for 100 percent of its global power needs by 2020. Both of these goals are expected to be reached by the end of 2020. 

As a result, JPMorgan Chase is now taking additional steps to address climate change and further promote sustainable development by committing to facilitate $200 billion to advance the objectives of the United Nations Sustainable Development Goals (SDGs). The new commitment is intended to address a broader set of challenges in the developing world and developed countries where social and economic development gaps persist. These efforts will be focused on supporting climate action, clean water and waste management, increasing access to housing, education and healthcare and advancing infrastructure, innovation and growth.

To support the market demand for and transition to cleaner sources of energy, the firm is expanding financing restrictions on certain activities to include:

• Not providing lending, capital markets or advisory services to companies deriving the majority of their revenues from the extraction of coal, and by 2024, phasing out remaining credit exposure to such companies;
• Not providing project financing or other forms of asset-specific financing where the proceeds will be used to develop a new, or refinance an existing, coal-fired power plant, unless it is utilizing carbon capture and sequestration technology; and
• Not providing project financing or other forms of asset-specific financing where the proceeds will be used for new oil and gas development in the Arctic.

The announcement follows similar commitments made by a number of European banks and by Goldman Sachs, the first U.S. bank to announce such limits on fossil fuel funding.

JPMorgan Chase has been under fire from a range of groups including Rainforest Action Network, Sierra Club and World Resources Institute. This year, JPMorgan is facing climate-related shareholder proposals, including a resolution from As You Sow requesting that the company measure and reduce its carbon-intensive lending in line with the Paris 1.5 degree goal, as well as a campaign to remove a climate-skeptic from the company’s board. 

Danielle Fugere, President of As You Sow, said: “This announcement is a long awaited signal that JPMorgan Chase may be ending its outsized level of fossil fuel financing in the face of growing climate concern. This first step is significant. Funding of new coal, including coal-fired power plants, is incompatible with the goal of maintaining global temperature rises at 1.5 degrees Celsius. Yet, JPMorgan has not agreed to bring its full carbon footprint into alignment with the Paris goal. Until it agrees to do so, it’s fossil fuel funding remains a clear threat to the global goal of avoiding catastrophic warming. 

“We appreciate JPMorgan’s announcement of no new project financing in the Arctic. This recognizes the fragility of the Arctic ecosystem, and the importance — to the Gwich’in people, the region’s wildlife, and citizens across the globe — of this unique environment remaining free of oil and gas development.

“Overall, investors applaud JPMorgan’s announcements. As climate change increasingly impacts the economy, investors  are asking their companies to take greater responsibility for transitioning their businesses to thrive in a low-carbon economy. JPMorgan Chase is a lynchpin in that transition.”