The worst banker of climate change: JPMorgan?

Climate change worst bankergeralt / Pixabay

The world’s worst banker of climate change, JPMorgan Chase (NYSE:JPM), aims to silence shareholders seeking reporting on fossil fuel financing

Public commitments to address climate change ring hollow as report names JPMorgan “the world’s worst banker of climate change”.

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WEDNESDAY, FEBRUARY 12TH, 2020– Investors in JPMorgan ($JPM) who filed three separate resolutions related to the company’s ongoing support for the fossil fuel industry announced that they have all received notification from the company that it will seek to omit their proposals from its 2020 proxy.

As the climate crisis escalates, JPMorgan shareholders have become increasingly concerned by the bank’s ongoing and outsized financial commitment to fossil fuels, particularly as it contradicts company and CEO Jamie Dimon’s statements in support of the Paris Accord and the need for urgent climate action.

The three resolutions the company is seeking to block all highlight JPMorgan’s exposure to climate risk through a variety of requests:

JPMorgan Chase Highlighted As The World's Worst Banker Of Climate Change

JPM has been highlighted as the largest financier of the fossil fuel industry for several years running in a report developed by the Rainforest Action Network, BankTrack, Sierra Club and other environmental groups ranking the top 33 global banks in terms of their climate lending. According to the 2019 Banking on Climate Change report:

“One inescapable finding of this report is that JPMorgan Chase is very clearly the world’s worst banker of climate change. The race was not even close: the $196 billion the bank poured into fossil funds between 2016 and 2018 is nearly a third higher than the second-worst bank, Wells Fargo.”

The report found that 33 global banks have provided the fossil fuel industry with $1.9 trillion in financing since the Paris Agreement was signed, and JPMorgan leads the pack by a wide margin. In fact, of the top 12 banks investing in expanding fossil fuel operations including new drilling sites, JPMorgan exceeds its peers by a staggering 68%.  The RAN report cites JPMorgan as the #1 banker of tar sands oil, Arctic and ultra-deep-water oil and gas exploration, liquefied natural gas and, disturbingly, as the #1 banker of coal mining, the dirtiest of fuels.

“JPMorgan’s policies on financing of oil and gas operations in the Arctic and Canadian tar sands companies has made it the target of significant protests and public condemnation, including by indigenous groups,” said Jonas D. Kron of Trillium Asset Management.  “As the climate crisis intensifies, these reputational risks will increasingly become important for investors.”

JPMorgan's Continued Investments In Fossil Fuels

Shareholders are concerned about JPMorgan’s apparent deafness to their concerns, as evidenced by its attempt to remove all climate-related shareholder proposals from its proxy.  “JPMorgan’s failure to respond to the existential nature of the climate crisis, and its own role in financing it, is causing shareholders growing concern, said Danielle Fugere, President of As You Sow, “The bank’s unrelenting investment in fossil fuels is locking in emissions for decades to come, ensuring great suffering to people and planet, and creating harm across every segment of the economy, including shareholder portfolios.”

Investor concerns are exacerbated by the fact that Lee Raymond, JPMorgan's Lead Independent Director, was the Chair/CEO of ExxonMobil from 1993 through 2005 when the company was actively denying the connection between the burning of fossil fuels and global warming, despite research corroborating this connection from its own scientists. ICCR member Majority Action filed an exempt solicitation advocating that shareholders vote against the re-election of Raymond, should he be re-nominated to the JPM board for a 34th year.

“Responsibility for overseeing JPMorgan’s risks and responsibilities with respect to the climate crisis lies with its board of directors,” said Eli Kasargod-Staub of Majority Action. “However, JPMorgan’s board structure and leadership lacks the independence needed to comprehensively address these issues.”

Further, as an investment manager, JPM is responsible for voting the proxies of its many clients, yet its 2019 proxy voting record reveals votes against virtually all climate-related resolutions (voting in favor of only 2 of 52 such resolutions), including requests for enhanced disclosure or adoption of greenhouse gas reduction goals, even when independent experts advance a strong business and economic case for support. JPMorgan voted against all three of the U.S. resolutions backed by the $41 trillion Climate Action 100+ coalition in 2019.

Taken together, these actions contrast starkly with CEO Dimon’s statement from JPMorgan’s 2019 climate risk report, the first such report produced by the bank: “Research shows that climate impacts are occurring much sooner than anticipated and with increasing frequency…The scale of the challenge is such that companies across all industries will need to participate in finding climate solutions.”

Resolution proponents say they are appealing JPMorgan’s challenges at the SEC and will seek strong shareholder support for their proposals at the company’s annual meeting on May 20th.

 



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver