As the world’s largest financial institutions jockey for leadership positions in financing the transition to a clean economy, JPMorgan Chase is creating a team dedicated to building deeper relationships with companies that sell “environmentally-friendly” products and services or that focus on environmental conservation.
The new Green Economy team is explicitly tasked with providing services for companies — notably private entities in need of capital — that are poised to benefit from the transition. Part of the commercial banking division, the group will include dedicated bankers led by Brian Lehman, who most recently led the JPMorgan Chase diversified financials team.
Their mission is to work with JPMorgan Chase’s existing commercial relationship specialists to accelerate the flow of capital available to organizations that can play a role in decarbonizing other companies and industries. That includes both existing clients, as well as new ones that could benefit from focused new financial innovations.
“We have the ability to support businesses at virtually every phase of their life cycle — from raising capital in a Series A all the way to crossing the chasm [to become publicly traded] … There are so many companies that are in need of that value proposition,” Lehman said.
The group initially will be focused on four sectors:
- Renewable energy, ranging from equipment providers, including microgrid technology specialists, to production and distribution organizations
- Efficiency solutions, including manufacturing hardware and software related to the distribution of power and natural resources
- Agriculture and food technology, such as systems for increasing farm productivity
- Sustainable finance firms that can themselves provide capital or project finance
The latter area might include, for example, carbon credit exchanges and marketplaces.
Lehman said these sectors were picked because of their outsized potential to decrease the carbon footprint of the global economy, pointing to estimated emissions reductions related to transitioning to clean energy and to industrial production. “The entire system needs to change, and dramatically, in order for us to achieve carbon neutrality by 2050,” he said.
The creation of the Green Economy team came one day after the publication of JPMorgan Chase’s annual letter to shareholders, penned by the company’s chairman and CEO, Jamie Dimon.
In his comments, Dimon notes:
There’s huge opportunity in sustainable and low-carbon technologies and businesses. While many of these technologies and companies are mature, many more are just getting started and more will need to be created in the coming decades. In addition, all companies will need capital and advice to help them innovate, evolve and become more efficient while staying competitive in a changing world.
Of course, JPMorgan Chase isn’t the only big U.S. bank reorganizing its commercial client resources around the opportunity in sustainable finance and the transition to a low-carbon economy.
According to several recent news reports, Citigroup is realigning its investment banking resources to help corporate customers — particularly those in chemicals and energy — navigate the transition. It created a sustainability and corporate transitions group a year ago at the onset of the COVID-19 pandemic.
The largest U.S. investment banks — Bank of America, Citibank, Goldman Sachs, JPMorgan Chase and Wells Fargo — have adopted net-zero financing pledges, both for their own operations and their investment portfolios.
While those commitments are a great first step, the reaction among environmental and some investor activist groups has been mixed, with some critics pointing to the lack of specifics surrounding those declarations as well as the ongoing role that these financial institutions play in financing projects linked to the degradation of natural resources or deforestation.