Shareholder activists seek JP Morgan action on coal, fossil fuel investment
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Financing for thermal coal projects could become even tighter if a group of JP Morgan shareholders have their way at the upcoming annual general meeting for the world’s sixth largest bank.
Shareholder activist organisation As You Sow is planning to ask the banking giant to describe whether it will align its lending with the Paris Agreement’s goal of maintaining global warming well below 2 degrees Celsius and how it plans to do so.
“As the world’s largest funder of fossil fuels, JPMorgan Chase has a decision to make — either recognise growing global climate risk and dramatically reduce its fossil fuel funding or continue irresponsibly, driving global temperature rise to greater and more devastating impacts,” As You Sow president Danielle Fugere said.
JP Morgan shareholders will also vote on a resolution calling for the board to appoint an independent chair to guide its financing to align with the Paris Agreement.
While As You Sow’s moves target all fossil fuels, thermal coal has been singled out for exclusion from financing due to it being considered the most polluting fossil fuel.
This has led major banks such as London-based Hong Kong and Shanghai Banking Corporation (HSBC) to announce recently that it is closing loopholes in its previous energy policy that allowed it to fund coal projects in developing countries.
Fellow US bank Citigroup has also moved to stop providing underwriting and advisory services to the sector while cutting its credit exposure in half by 2025. It plans to eliminate its exposure entirely by 2030.
In Australia, Westpac is the latest bank to end its support for investment in thermal coal, promising to exit thermal coal by 2030, leaving ANZ as the only major local bank not to have done so.
Besides the financing pressure on the sector, the COVID-19 pandemic has also accelerated the long-term shift away from coal with several countries bringing forward power plant closures as energy demand collapsed.
In the US, the Energy Information Administration forecast that the US will produce more electricity from renewables than from coal this year.
The Guardian reported that industry analysts expect coal’s share of US electricity generation could fall to just 10 per cent in five years, down from 50 per cent a decade ago.
Meanwhile, India has prioritised solar energy over coal in response to the energy demand slump.
This news comes as a review of Australia’s $2bn Climate Solutions Fund recommended changing the investment mandate of the Clean Energy Finance Corporation and the Australian Renewable Energy Agency.
The review, led by former Origin Energy (ASX:ORG) boss Grant King, calls for the agencies to be given “an expanded, technology-neutral remit so they can support key technologies across all sectors”.
A potential winner could be carbon capture and storage (CCS) technology, which involves capturing emissions from coal or gas plants and injecting them underground.
However, critics have questioned whether CCS will ever become viable.
“Carbon capture and storage has never been viable anywhere in the world at scale and it’s a deluded fantasy to think that (Energy Minister) Angus Taylor can get it right where the rest of the world has failed,” Greenpeace said.