JPMorgan Chase & Co. is halfway to its goal of providing $200 billion in clean financing between 2016 and 2025, the bank announced in a climate report released May 24.
Among other things, the bank has underwritten $10.6 billion in green bonds and sustainable use-of-proceeds bonds, the report said.
The climate report largely focused on ways the company already oversees and tackles climate risks, such as the potential for extreme weather to disrupt business operations at any of its more than 5,500 properties in more than 60 countries. The bank also said it analyzes the transition plans of companies in high-risk sectors.
In addition, JPMorgan considers climate risks when investing in infrastructure companies and in picking data center locations. And by the end of 2018, the bank was sourcing renewable energy for 22% of its global power usage.
But while the bank said the climate report was "informed" by the recommendations of the Task Force on Climate-Related Financial Disclosures, or TCFD, JPMorgan stopped short of providing a scenario analysis of the credit risks it may face across all of its lines of business, which is one of the key suggestions TCFD made for the banking sector.
"We are in the early stages of this journey, and we will continuously seek to understand trends, hear new and different perspectives, and adapt our approach over time," the report said. JPMorgan said its consumer and community banking and commercial banking business segments are beginning to model the impacts of natural disasters on real estate portfolios, with an initial focus on specific regional impacts. And JPMorgan continues to monitor and evaluate other potential hazards, including the increased frequency and magnitude of wildfires in the western U.S.
Like many companies that have started implementing the TCFD recommendations, JPMorgan said it is working on identifying and obtaining the data it needs to analyze material climate-related risks.
"While climate change presents material risk to the environment, and will almost certainly present material risks to the global economy, it is more challenging to estimate whether and how climate change could impact any one individual company at a given point in time," the report said.
"Even within the same industry, companies may have different carbon footprints and face varying policy and market constraints and pressures," the bank explained. "We anticipate that our future disclosure of climate-related financial metrics will leverage credit exposure as a proxy for climate-related financial risk, fine-tuned to reveal transition and physical impacts over time."
As a global financial institution, JPMorgan said it provides risk management solutions and raises capital for a range of companies across a diverse set of industries, including fossil fuel producers and consumers. The bank said it anticipates that fossil fuels will be needed for the foreseeable future, "which underscores the need to produce and use such fuels in an environmentally sensitive and efficient manner." And in recent years, JPMorgan has taken steps to restrict financing for coal mining and mountaintop mining, the report said.
"Our objective is to support companies that are thinking strategically about this transition and that are positioning themselves to adapt to sustainably focused trends over time," JPMorgan said. "We also aim to expand our financing for those companies focused on renewables and other low-carbon technologies and solutions."