JPMorgan Chase & Co. has updated its approach to financing the energy transition, in a move the biggest US bank says will help it meet a historic surge in demand while also supporting affordability and security.
The decision, under which nuclear power and grid investments are eligible to be included in its $1 trillion green finance goal, is part of a broader rethink of the bank’s $2.5 trillion sustainable development target, said Heather Zichal, who oversees JPMorgan’s center for energy and environment as well as its sustainability strategy.
“The amount of power and build-out that we’re talking about is kind of mind boggling and the world needs more energy,” she said in an interview. “We are a bank, it is our job to scale finance.”
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The bank has made clear it wants to dominate the financing opportunities around electrification, which includes becoming the go-to lender for grid projects. In his introduction to JPMorgan’s sustainability report, Chief Executive Officer Jamie Dimon describes energy infrastructure as a key plank of the bank’s $1.5 trillion Security and Resiliency Initiative, which he unveiled last year to support US national security.
“Much of what strengthens energy independence may also advance sustainability,” Dimon said in the report on Wednesday. “Efforts such as nuclear power, energy storage and grid modernization enhance resilience while helping clients decarbonize.”
Zichal, whose newly expanded role at JPMorgan is part of a recent reorganization to bring energy finance and sustainability closer together within the bank, says financing a diverse range of power sources remains a commitment.
“But at the same time, we have to meet the moment,” she said.
A war-fueled shock to the supply of oil and gas combined with insatiable demand for energy to power AI data centers means sustainable finance, like every other corner of banking, needs to adapt, Zichal said.
“The name of the game around energy is completely changed,” she said. “We’re not going to set a strategy and leave it on autopilot for five years. We wouldn’t do that across the corporate and investment bank: Why would we do that on sustainability?”
In Wednesday’s report, JPMorgan said the purpose of its updated sustainability strategy is “not to restrict our financing,” but to help clients and customers achieve their business and financial goals.
The bank says it has so far financed or facilitated $1.2 trillion of its 2030 $2.5 trillion sustainable development target. Of that, $520 billion went toward green finance projects.
JPMorgan’s expanded definition of green energy includes charging stations for electric vehicles, as well as zero- and low-carbon power generation at so-called diversified companies that also produce fossil fuels. Electricity networks and grid modernization are also included in the bank’s definition of activities eligible for green finance.
Nuclear energy is a good example of how “the definition of green has evolved over time,” said Vijnan Batchu, who runs JPMorgan’s center for carbon transition. Just five years ago, nuclear wasn’t widely considered eligible for inclusion in green portfolios, he said.
Asked about the bank’s commitment to cutting financed greenhouse-gas emissions, Zichal said the main goal is “mobilizing capital at scale,” which is “where we can make our greatest direct contribution.”
JPMorgan measures success “by how much capital we put to work for clients and for the energy solutions that the world needs,” she said.
The bank has also pushed back its targets for reducing emissions associated with lending to high-carbon clients, as decarbonization in the wider economy slows and after the International Energy Agency updated its widely followed net-zero emissions scenario. JPMorgan says it’s now aligning its approach with the IEA’s latest scenario, which “presents 2035 as the nearest interim reference year,” compared with an earlier emphasis on 2030.
There will be some overlap between JPMorgan’s green financing goals and its security and resilience initiative, according to Wednesday’s report. Certain activities that help maintain a secure and reliable energy system “may also support its decarbonization” and may therefore “be reflected in both initiatives,” it said.
“We also know that energy security, affordability, resilience and sustainability are interconnected,” Dimon said. “And advancing them together is important to a strong and competitive economy.”
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