In a leaked document sent to the Guardian and obtained by Extinction Rebellion spokesperson Rupert Read, JP Morgan’s economists warns clients that the climate crisis threatens the survival of humanity. The report contradicts the bank’s own investment strategy as the world’s largest financier of fossil fuels, and acknowledges that the business-as-usual is driving the planet towards an unsustainable trajectory.
JP Morgan, the largest financier of fossil fuel projects globally, has recognised the economic risks of anthropogenic global heating and irreversible consequences of unabated climate change. Written by the bank’s economists David Mackie and Jessica Murray, the paper says that the climate crisis will affect the global economy and human health, and will set off water crises, mass migration and displacement and threaten the survival of species.
“We cannot rule out catastrophic outcomes where human life as we know it is threatened,” read the report.
JP Morgan’s economists drew on extensive scientific evidence and literature, including forecasts by the United Nations IPCC body and the International Monetary Fund (IMF). The paper states that these figures likely underestimate the actual impact of continued temperature rise, citing the massive economic and health costs to be incurred by loss of wealth, discount rate and damages from frequent climate disasters.
The leaked document is an implicit condemnation of the bank’s investment strategy, and reflects the concerns amongst major financial institutions about the reputational and economic risks with continued funding of destructive industries such as coal, oil and gas. According to the Guardian, JP Morgan has financed around US$75 billion to companies that have been aggressively pursuing fracking and oil and gas exploration since the Paris Agreement.
Alongside other major financial institutions – 33 altogether – JP Morgan contributed towards an estimated total of US$1.9 trillion to the fossil fuel sector between 2016 and 2018, as published in an analysis by global NGO Rainforest Action Network (RAN).
“Something will have to change at some point if the human race is going to survive,” the authors wrote. Without naming specific organisations, the authors added that fiscal and financial authorities must step up action.
Although a spokesperson for the bank told the BBC that the research team was “wholly independent from the company as a whole” and declined to comment any further, the leaked document signals that financial institutions are finding it tough to ignore the climate emergency any longer.
A recent analysis by audit firm and think tank Mazars and OMFIF involving institutions representing 77% of global GDP found that the majority of central banks and regulatory firms in the world are now planning to introduce radical regulatory changes due to climate change, such as environmental risk stress tests and setting sustainability criteria.
While JP Morgan has stopped short from making climate pledges, sustained pressure from youth activists and the scientific consensus has resulted in sustainability commitments from major institutions in the financial world. After greenwashing claims, the world’s biggest asset management firm Blackrock signed onto the Climate 100+ pact, which pledges to reduce the carbon emissions under its portfolio. Last December, Goldman Sachs ruled out any financing for oil drilling or exploration activities in the Arctic, citing mounting scientific evidence about the role of fossil fuels in global heating.
However, like JP Morgan, a number of financial institutions in Asia are continuing to ignore the climate emergency. A Green Queen investigation last year revealed that many of the biggest culprits funding the fossil fuel industry are located in Asia, including the Bank of China, HSBC, China Construction Bank, ICBC and the Agricultural Bank of China.
Lead image courtesy of Lucian Crusitu / Shutterstock / JP Morgan / Green Queen.