JPMorgan Chase & Co. has opted out of developing a transition-finance framework, distancing itself from an approach embraced by major Wall Street banks like Wells Fargo & Co. and Citigroup Inc., which are working to define assets and activities eligible for funding under the label.
Transition finance, a growing area in climate finance, focuses on funding activities that reduce carbon emissions over time. Despite being seen as a $50 trillion investment opportunity, it operates in a regulatory grey zone. JPMorgan, however, argues that such frameworks risk becoming distractions rather than solutions.
Linda French, JPMorgan’s global head of sustainability policy and regulation, said the bank prefers focusing on financial logic rather than labels. “Finance will only move when there’s an economically viable business case,” French stated, emphasising that taxonomies and disclosure frameworks alone fail to drive capital flow.
The criticism comes as other banks, including Standard Chartered Plc and Barclays Plc, push forward with their transition frameworks. These frameworks aim to address the dynamic nature of transition finance and mitigate greenwashing concerns, though banks acknowledge the lack of standardised guidelines remains a challenge.
Instead of a framework, JPMorgan has established a Centre for Carbon Transition to guide clients in navigating the complexities of decarbonisation. “This isn’t about ‘transition finance,’” French explained. “It’s about whether companies investing in transition can access the finance they need.”
The move highlights broader tensions in climate finance, with green investments facing political headwinds and market skepticism. While proponents argue that frameworks can catalyse much-needed capital, critics, like JPMorgan, suggest they may distract from the economic fundamentals required to scale decarbonisation efforts.
