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JPMorgan to Include Low-Carbon Power Generation in Climate Risk Calculations



The bank said it would reduce financing in the oil and gas sector and increase financing for zero- and low-carbon power generation as part of its new “Energy Mix” policy.

Dive Brief:

  • JPMorgan Chase said it was updating its climate strategy to prioritize decarbonization in its oil and gas portfolios and include zero and low-carbon power generation when calculating clients’ environmental impact, according to the bank’s climate report published last week.
  • The bank said it had increased its alignment with the International Energy Agency’s Net Zero Emissions by 2050 Scenario and was expanding the factors it considers when calculating its progress toward scope 3 net-zero emissions.
  • The financial institution’s new policy on emissions, which it calls “Energy Mix,” will consider zero carbon power generation in its oil and gas and electric power portfolios to better capture how its financing the substitution of fossil fuels.

Dive Insight:

JPMorgan, the nation’s largest bank by assets, said it aims for its climate strategy to be “science-based, reliant on data-driven insights, and designed to adapt as data quality and availability progress.”

The bank’s Energy Mix policy, in particular, will be used to measure collective progress in reducing financing in the oil and gas sector and increasing investments in zero- and low-carbon power generation. Both actions are geared toward reducing scope 3 emissions, which are emissions in a business’ supply chain from assets it doesn’t own or operate. 

JPMorgan said it seeks to reduce scope 3 emissions produced by its portfolio companies by 36% by 2030, compared to a 2019 baseline, by employing this framework. Initially, the bank had aimed for a 15% reduction by 2030, compared to its 2019 baseline.

According to the report, this updated target “better captures the shift in fuel mix of the global energy complex,” and “balances the trade-offs between fossil-fuel based and zero- or low-carbon energy sources to achieve net zero emissions by 2050.” 

Separate from its scope 3 reduction targets, the bank said it would continue to focus on scope 1 and 2 net-zero aligned goals and continue operational decarbonization efforts, such as mitigating methane emissions and minimizing flaring within its oil and gas portfolio. Similarly, it will also focus on the decarbonization of electric grids within its electric power portfolio.

The bank said due to the “integrated nature” of its Energy Mix target, it will include investments in zero-carbon power generation in both sectors’ target calculations, consistent with the IEA Net Zero Emissions framework’s treatment of global power generation.

JPMorgan’s CEO Jamie Dimon said the Energy Mix target shows how the bank’s financing correlates with the emissions performance of the energy supply sector.

“We expect this updated target will not only reflect market actions that are needed to support the transition from fossil fuels to low- or zero-carbon alternatives but will also provide a more holistic representation of decarbonization efforts,” Dimon said in the report.

JPMorgan previously committed to the Paris agreement in 2020 and is aiming for net-zero carbon emissions by 2050.