JP Morgan has announced that it will pull back from investing in coal mines and power plants, putting such transactions in the same category as those that support illegal logging or child labour.
The US-headquartered investment bank said it will cease funding new coal-fired power plants in high income OECD countries, adding that “the financial services sector has an important role to play as governments implement policies to combat climate change”.
However, JP Morgan said it would continue to provide financing to new coal plants outside of such countries that employed efficient, low-carbon “ultra-supercritical steam generation” technology.
“While we expect our business to reflect the decline of coal as an energy source over time as a result of government policies, technology choices and innovation, we recognize that conventional energy sources will continue to form an important part of the energy mix,” the bank said in an update of its environmental and social policy framework.
“We will therefore continue to provide financial support to those clients whose activities remain consistent with our own internal policies and government-led efforts to achieve an orderly transition toward less carbon-intensive economies.”
The bank also said it would:
- Reduce the proportion of coal-fired technology that are financed by the bank’s power generation portfolios
- Prohibit project financing to new greenfield coal mines
- Continue to cut its exposure to companies engaged in mountaintop coal mining
- Reduce its credit exposure to coal mining companies
- Apply enhanced due diligence to transactions that finance new coal-fired generation or coal production capacity
It added that it would also apply enhanced reviews or internal restrictions to transactions involving fracking, oil sands, large hydrodams, and the Arctic.
JP Morgan, previously one of the banking sector’s largest funders of coal projects, joins industry peers Morgan Stanley and Bank of America in scaling back investment in the area.
By Mike Szabo – firstname.lastname@example.org