Dimon issued the warning after Rep. Rashida Tlaib (D-MI) reminded him during a Congressional hearing that his company, along with six of the largest U.S. banks, have committed to wind down their emissions from “lending and investment activities” to align with the net-zero goal by 2050. To achieve this goal, Tlaib reiterated that JPMorgan ought to veto all oil and gas projects moving forward.
But Dimon begged to differ in his response to the congresswoman’s question whether or not the bank has any policies against funding new oil and gas developments. “Absolutely not, and that would be the road to hell for America,” he answered.
“We aren’t getting this one right. The world needs 100 million barrels effectively of oil and gas every day, and we need it for 10 years. To do that, we need proper investing in the oil and gas complex.”
“Investing in the oil and gas complex is good for reducing CO2,” explained Dimon. “We’ve all seen, because of the high price of oil and gas — particularly for the rest of the world — you’ve seen everyone going back to coal.”
The JPMorgan executive earlier rebuked environmentalists pushing to curb the production of gas and oil, arguing that such a move could lead to increased coal use in developing countries.
Tlaib then turned to other banking executives to ask their positions on fossil fuels. Three other CEOs present concurred with Dimon, but they told the Michigan representative that they have also invested in renewable energy projects. Citigroup and Bank of America executives also testified that they are collaborating with their clients to help reduce carbon dioxide emissions.
This failed to mollify Tlaib, however. “We are living through a climate crisis today and a commitment to net zero requires a commitment to ending fossil fuel financing. In the end, we’re going to pay the cost of the public health impact.”
Banks oppose stringent decarbonization rules
Dimon’s statements against rejecting future fossil fuel energy projects followed rising opposition to increasingly stringent decarbonization rules among banks. Some institutions, including JPMorgan, are now mulling an exit from the Glasgow Financial Alliance for Net Zero (GFANZ).
This reconsideration came as a result of their growing fears of litigation opportunities, which are rife in the new climate-related requirements for the businesses they fund.
Some of the most significant members of the Glasgow alliance said they feel blindsided by tougher United Nations climate criteria and are worried about the legal risks of participation.
A senior executive from a U.S. bank said: “I am close to taking us out of these global green commitments – I’m not going to allow third parties to create legal liabilities for us and our shareholders. It is immoral and irresponsible. What if we get it wrong, make a mistake or someone lies? Then the bank can be sued, that is an unacceptable risk.”
European banks such as Santander also expressed their misgivings, and the potential loss of some of the world’s biggest and most influential banks could be a serious blow for the GFANZ group, which was formed last year and took center stage at the COP26 climate talks in Glasgow.
Legal departments at banks are especially anxious about tougher U.S. Securities and Exchange Commission (SEC) rules around climate-risk disclosures and commitments proposed by SEC Chairman Gary Gensler in February, which will require them to formal disclosures in annual reports about governance, risk management and strategies with respect to climate change.
Moreover, companies will also have to disclose and be held accountable for any targets or commitments made and are expected to come up with detailed plans on how these will be achieved. (Related: Report: Electric vehicle sales to increase sharply by 2040, but that’s not all good for the environment.)
Bankers also complained that the demands placed on them were not supported by equally robust government action on climate change, nor do they have the technology that can hit some of the net zero targets they rely on.
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