JPMorgan Chase, the largest lender in the United States, provided $1.29 in financing for green energy for every dollar directed to high-carbon energy in 2023, marking the first time the bank has disclosed this ratio according to the company executives. This decision to release an Energy Supply Financing Ratio follows discussions with New York City Comptroller Brad Lander, who oversees public pension funds and advocates for transparency in banks’ role in the clean energy transition.
Pressure on banks from investors to show support for clients transitioning to clean energy is mounting, and JPMorgan’s announcement aligns with a United Nations conference in Baku, where leaders are discussing global shifts away from fossil fuels. The new measure aims to reflect a company’s energy mix in its capital investments rather than its existing asset base.
JPMorgan’s ratio takes into account financing activities, such as loans, debt underwriting, tax-oriented investments, and green bonds, classifying these as either high- or low-carbon energy. For companies engaged in both areas, such as utilities with natural gas and renewable assets, the bank used forward-looking data on clients’ capital expenditures to categorize the financing, explained Rama Variankaval, JPMorgan’s Global Head of Corporate Advisory.
The bank previously committed to a goal of financing $2.5 trillion in sustainable development by 2030, with $1 trillion focused specifically on climate solutions. JPMorgan’s lending to green energy has risen in recent years, aided by a decrease in demand for external financing from cash-rich oil companies. Variankaval noted that the ratio reflects JPMorgan’s strategy to increase low-carbon financing, and the reduced presence of oil and gas in capital markets also played a role.
While it remains uncertain whether US companies will be required to disclose climate-related financial information under President-elect Donald Trump’s climate-skeptic administration, more banks are expected to adopt similar ratios in the future.
Though JPMorgan has not set a target for this ratio, Heather Zichal, Global Head of Sustainability, expressed optimism about the long-term outlook for low-carbon energy in the US and globally. “Our focus has been, and will continue to be, on scaling the technologies that the world needs and supporting our clients across sectors as they adapt to a rapidly changing economy,” she stated.