JPMorgan Chase Launches Major Environmental Policy

JPMorgan Chase Launches Major Environmental Policy

JPMorgan Chase has adopted a comprehensive policy that applies high environmental standards to the firm's global business activities. Developed in cooperation with groups including Rainforest Action Network, the new policy marks another environmental milestone in the private financial sector and follows the adoption of similar policies by Citigroup and Bank of America last year.

As part of JPMorgan Chase's broad commitment, the firm has adopted the Equator Principles, guidelines that promote environmental and social responsibility in project financing. In addition, the firm will apply the Principles to projects that are $10 million or above in environmentally sensitive industries, exceeding the threshold of $50 million set by the Equator Principles. In addition to the Equator Principles, the company's new policy also addresses issues including climate change, sustainable forestry, the protection of critical natural habitats, illegal logging, and the needs and concerns of indigenous peoples. Highlights include:
  • Global Warming: JPMorgan Chase will encourage clients to develop carbon mitigation plans that include measurement and disclosure of greenhouse gas emissions as well as plans to reduce or offset them. In a financial industry first, the bank will internalize carbon pollution for power sector projects by integrating the financial cost of greenhouse gas emissions into its analysis.

  • Sustainable Forestry Certification: The policy makes JPMorgan Chase the first private bank to state a preference for Forest Stewardship Council (FSC) certification.

  • Illegal Logging: The policy will require JPMorgan Chase clients that "process, purchase or trade" forest products from high-risk countries to have certifiable chain of custody systems in place to ensure that the wood comes from legal sources.

  • Human Rights: The bank recognizes the right of indigenous individuals and communities to "self determination over issues affecting their lands and territories, traditionally owned or otherwise occupied and used."

  • Project Finance: JPMorgan Chase joins the Equator Principles, lowers the application threshold to $10 million, and broadens the scope to include "all loans, debt and equity underwriting, financial advisories and project-linked derivative transactions," specifically naming the mining, forestry, and oil and gas industries.

  • Private Equity Risk Management: The policy marks the first time that any financial institution has integrated environmental risk management into the due diligence process for its private equity divisions.

  • Leadership on Public Policy: In another industry first, JPMorgan Chase has agreed to arrange cooperative meetings with other financial institutions to advocate for reductions of greenhouse gas emissions and "focus on specific projects to alter the emissions trajectory of the US economy."
The policy is the first of any financial institution to incorporate environmental risk management into the due diligence process of its private equity divisions. "A policy of this magnitude illustrates our commitment to preserve and protect the world around us," said Amy Davidsen, director of environmental affairs. "We recognize that the policies and practices we adopt today will shape not only our lives, but also those of future generations."

JPMorgan Chase set up its Office of Environmental Affairs in April 2004 in order to evaluate the firm's own use of resources and to integrate environmental and social awareness into its risk management process. The office carefully considered the viewpoints of various constituents before developing the policy, including customers, business and community leaders, environmental groups such as Rainforest Action Network, and a shareholders group, which includes Christian Brothers Investment Services, Domini Social Investments, F&C Asset Management, Friends of the Earth, and Trillium Asset Management.

JPMorgan Chase's policy can be viewed in full online.
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