Memo to JPMorgan Chase Shareholders: Stop Banking on Climate Chaos

April 13, 2023 | 10:34 am
Paul Becker/Becker 1999/Flickr
Kathy Mulvey
Accountability Campaign Director, Climate & Energy Program

Spring is a time of new beginnings, and this spring scientists are calling for financial institutions to start doing their part to limit the worst impacts of climate change and hasten a just, equitable transition to clean energy. While science shows that the world is dangerously far from the path that would limit future global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above preindustrial levels—and that projected carbon dioxide emissions from existing fossil fuel infrastructure are enough to exhaust the remaining carbon budget to reach that goal—new research shows that the world’s largest banks continue to provide hundreds of billions of dollars in financing for the fossil fuel industry to expand its production of climate-destroying products.

Fortunately, spring also provides an opportunity for scientists to demand that bank shareholders and investors take responsibility and act, since it is when private and public sector banking institutions hold their annual meetings. Read on to learn why and how more than a thousand scientists issued an open letter urging JPMorgan Chase shareholders to vote in favor of a time-bound phaseout of financing for new fossil fuel development and exploration at the bank’s annual meeting on May 16.

Banks are still fanning the flames

According to the 2023 edition of Banking on Climate Chaos, released this week, the world’s 60 largest banks spent $673 billion on fossil fuel financing in 2022 and $5.5 trillion in the seven years since the adoption of the Paris climate agreement. The report—prepared by Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, the Sierra Club and Urgewald—examines commercial and investment bank financing, combining lending with underwriting debt and equity issuances. It also assesses bank financing for the top 100 companies expanding fossil fuels as well as those active in such sectors as tar sands oil, Arctic oil and gas, Amazon oil and gas, coal mining, and coal power.

Total bank financing for fossil fuels in 2022 was lower than it was in 2016, but Banking on Climate Chaos attributes that decrease partly to record oil and gas industry profits of $4 trillion last year. Several major oil and gas companies—including ExxonMobil, Occidental Petroleum and Shell—did not borrow any money in 2022. Those three alone borrowed more than $200 billion between 2016 and 2021.

Since the adoption of the Paris agreement, JP Morgan Chase is at the top of the list of fossil fuel bankers, financing a staggering $434 billion from 2016 through 2022. In 2022, JPMorgan Chase’s biggest fossil fuel clients (in rank order) were TransCanada Pipelines, Vitol SA and Pacific Gas and Electric. From 2016 through 2022, TransCanada Pipelines, ExxonMobil and Saudi Arabian Oil (in rank order) received the most financing from the bank.

Science—and scientists—demand action

According to Intergovernmental Panel on Climate Change’s (IPCC’s) latest report, limiting the climate crisis means sharply reducing fossil fuels and stopping new fossil fuel infrastructure expansion. The IPCC report also found projected carbon dioxide emissions from existing fossil fuel infrastructure without additional abatement would be enough to blow through the remaining carbon budget for 1.5 C. This, coupled with the continued expansion of fossil fuels and rising heat-trapping emissions, is making it unlikely that the increase in global average temperature will stay below 1.5 C above preindustrial levels.

That’s why more than 1,300 scientists have joined with the Union of Concerned Scientists (UCS) in calling on JPMorgan Chase shareholders to vote “yes” on a resolution asking the financial institution to phase out its financing—including loans, bonds and underwriting—of companies expanding fossil fuel production.

The scientists’ letter is addressed to JPMorgan Chase because of its role as the largest financer of fossil fuel companies since the adoption of the Paris agreement. The resolution, which is proposal 6 on the agenda at JPMorgan Chase’s annual general meeting on May 16, is similar to proposals filed with Bank of America, Citigroup, Royal Bank of Canada and Wells Fargo.

Advocates are presenting several other climate- and human rights-related proposals to JPMorgan Chase shareholders this year, requesting reports on:

  • a transition plan describing how the company intends to align its financing activities with its 2030 sectoral global warming emissions reduction targets;
  • absolute 2030 global warming emissions reduction targets covering lending and underwriting for oil and gas and power generation;
  • how the company oversees risks related to discrimination and civil rights; and
  • congruence of the company’s political and electioneering expenditures with its stated policies and values.

UCS and the letter’s signatories also are encouraging JPMorgan Chase shareholders to support all other resolutions that would promote the rapid decarbonization of our economy, advance a just transition to clean and renewable energy, and protect Indigenous sovereignty.

Words are not enough

One of the most alarming Banking on Climate Chaos findings is that ConocoPhillips received financing in 2022 for “general corporate purposes” from a syndicate that included 12 of the banks profiled in the report, among them Bank of America, Citi, JP Morgan Chase and Wells Fargo. So although 39 of the 60 banks profiled in the report had an exclusion policy applicable to projects in the Arctic, the policies did not preclude financing for ConocoPhillips’s controversial Willow project, which the Biden administration recently approved.

How could this happen?

Bank policies have major loopholes. Most fossil fuel exclusions apply only when a company seeks financing designated for a particular project, but project-specific financing accounts for only about 4% of total annual fossil fuel company finance.

Furthermore, while underwriting bonds and equities accounted for more than a third of fossil fuel financing in 2022, major bank policies omit these activities. According to the World Benchmarking Alliance, only 37% of leading financial institutions have disclosed long-term (midcentury) net-zero targets, of which only 2% have been translated into interim (2030) targets applied across the institution’s financing activities.

Banking on Climate Chaos found that most of the 60 banks studied have policies restricting fossil fuel financing and four-fifths have made net zero pledges, but only one bank had policies robust enough to help meet the goal of keeping global temperature increase to 1.5 C above preindustrial levels. The report determined that the 49 banks with net-zero commitments provided 81% of the financing to the top 100 companies expanding fossil fuels in 2022.

The new report echoes the findings and recommendations of other recent analyses, including a January 2023 report by Reclaim Finance, which concluded that the leading banks, asset owners and managers of the seven sectoral alliances that make up the Glasgow Financial Alliance for Net Zero are continuing to pour billions of dollars into expanding the coal and oil and gas industries. The report urged the alliances to update their guidelines and protocols to require members to phase out providing financial services for fossil fuel expansion.

Elizabeth Harnett and Asia Salazar at RMI (formerly Rocky Mountain Institute) recently warned that banks’ empty climate promises can backfire. “Banks using target-setting as a channel for good publicity,” they wrote, “are … walking a thin line between demonstrating their commitment and being accused (publicly and privately) of using targets as a greenwashing tool.”

Investors have power

In recent years, shareholders have issued wake-up calls to ExxonMobil and other major fossil fuel companies. In the face of mounting evidence of deception and denial, fossil fuel polluters continue to delay meaningful emissions reductions, greenwash, and backslide on their promises. To spur climate action, shareholders are now turning their attention to banks and other key fossil fuel industry business partners.

Banking on Climate Chaos presents five demands to banks, all of which their shareholders should use their proxy votes to amplify:

  1. Prohibit all finance for fossil fuel expansion immediately.
  2. Adopt absolute financed emissions reduction targets.
  3. Demand robust transition plans for all existing fossil fuel clients.
  4. Protect Indigenous Peoples’ and human rights.
  5. Scale up financing for a just and fair transition.

Like private sector finance through such banks as JPMorgan Chase, public finance also must be oriented toward the objectives of mitigating further climate change-related damage, advancing climate justice, and accelerating the clean energy transition. Yet a report released in October 2022 found that the World Bank had provided nearly $15 billion in financing directly to fossil fuel projects since the Paris agreement, and likely encouraged far greater investment indirectly.

On the eve of the World Bank Spring Meetings, the International Finance Corporation (the World Bank’s private sector lending arm) announced last week that it would no longer allow financial intermediary clients to support new coal projects. This step, while welcome, was slow and timid.

Hold big banks accountable

Last month, UCS joined Third Act and 50 other organizations for the Stop Dirty Banks National Day of Action to protest the banks that lend the most toward expanding the fossil fuel industry. More than 100 in-person demonstrations took place in more than two dozen states alongside virtual actions. (Read more here.)

On Wednesday, May 3, at 12 p.m. EDT, UCS will join with Follow This, Majority Action, Sierra Club Foundation and Stop the Money Pipeline in a virtual event titled “JPMorgan Chase & the Climate Crisis: How 2023 Shareholder Action Can Advance Corporate Accountability.” This webinar will feature shareholder advocates, community leaders and UCS experts discussing how JPMorgan Chase is enabling climate destruction and environmental injustice and what shareholders can do this annual general meeting season. (You can register here.)

New tactics focused on new targets are springing up as the climate crisis grows more urgent. Bank shareholders probably aren’t accustomed to hearing directly from scientists. Shareholders, now that we have your attention, please heed the message and start by voting in favor of JPMorgan Chase and other large banks adopting a time-bound phaseout of financing fossil fuel expansion.