Inside the Push to Reimagine Banking’s Climate Strategy

In the early days of the COVID-19 pandemic, activist pressures seemed to align with profit motives. Coupled with low interest rates, investor concerns, and policy discussions, corporations and financial firms set ambitious climate goals. Now, those commitments feel like a distant memory: many financial organizations vowed not only to decrease their own emissions but also to cut emissions resulting from financing their consumers. Leaders in the financial industry, such as Larry Fink of BlackRock and Bank of America’s Brian Moynihan, showed up at the U.N. climate conference in Glasgow in November 2021, enthusiastically pledging their dedication to global net-zero ambitions.

Though absent from Glasgow, Dimon represented the bank through significant commitments. Among them was a promise to align JPMorgan’s funding activities with a pathway to achieving net-zero-carbon-emissions and a goal of financing $1 trillion in green projects by 2030. The bank joined its most significant counterparts in coalitions such as the Net Zero Banking Alliance (NZBA) and Climate Action 100+ at that time.

Yet, to the dismay of many activists, JPMorgan never stated it would cease financing fossil fuels. In his 2020 letter to shareholders, Dimon articulated that the bank would continue collaborating with oil and gas companies, asserting that “abandoning organizations that deal in these fuels will not offer a solution.” Dimon’s intuition proved astute when, in 2022, Russia invaded Ukraine, causing energy prices to skyrocket. The Biden Administration transitioned from advocating reduced oil and gas dependency to demanding increased production from energy firms. Simultaneously, political pushback against the E.U.’s Green Deal led to policy softening. Supply-chain disruptions hindered critical technological advancements, and Trump reasserted his influence on U.S. politics.

JPMorgan strives to maintain a tone of neutrality and nonpartisanship, while simultaneously navigating a treacherous landscape where public and private climate policies have become contentious topics. Upon discussing the passage of Trump’s One Big Beautiful Bill Act—which rescinded many Biden-era clean-energy initiatives—Dimon chose neither to endorse nor criticize the bill, mentioning its mixed merits. However, analyses consistently illustrate that U.S. emissions will surpass previous projections due to this legislation.

Many perceive the private sector, encompassing banks and significant corporations alike, to have retreated. Yet is this a fair assessment? What remains clear is that JPMorgan and the financial sector overall have fallen short of their climate targets. Since their 2021 commitment, the firm has financed $240 billion in climate-related projects—significant, but still insufficient for achieving the $1 trillion mark that looms just five years ahead. Petno has acknowledged the firm may not reach its goal, stating, “The willingness of capital markets will play a significant role.”

Read more: The Rise of Green Wall Street

This sentiment is echoed across the financial sector, where many major banks have shifted away from strict emissions pledges toward flexible guidelines and case-by-case evaluations. Wells Fargo has eliminated both its 2050 financed-emissions targets and its 2030 sector-specific objectives. Morgan Stanley has reframed its 2030 goals as adaptable ranges. Bank of America cancelled absolute bans on Arctic oil and new coal projects, opting for “enhanced due diligence” instead. The disbanding of industry coalitions like the NZBA has also garnered notable scrutiny, with JPMorgan recently announcing a pause in its participation.

To characterize this development as a lack of interest or commitment from the sector would overlook critical ongoing progress. The issuance of debt supporting sustainable projects is relentlessly rising. Transition finance—focusing on funding emission reductions among polluting companies—has emerged as a priority area. Crucially, clients continue to seek information and insight around climate strategies.

Dimon posits that what appears as a withdrawal is more accurately a strategic reorientation. “What some are letting go of,” he states, “are initiatives that were ineffective and merely performative.” To reaffirm their commitment, the bank appointed Sarah Kapnick, a past chief scientist at the U.S. National Oceanic and Atmospheric Administration, as its global head of climate advisory. She succinctly explained, “My position wouldn’t exist. None of these efforts would be underway if there were no client demand.”

As the discussions in Scottsdale progressed, participants exchanged ideas on diverse topics, encompassing electrification, policy, and trade environments. They engaged in dialogue during a candlelit dinner, reflecting on global politics. The goal, Petno indicates, is “to create a crucible for productive ideas to ignite.”

Given that this was a gathering orchestrated by the world’s largest bank, one could expect discussions to predominantly focus on mobilizing capital, and there was indeed considerable dialogue surrounding that. Engaging with venture capital firms to craft substantial investments in capital-intensive climate technologies was a focal point. Though such strategies introduce an element of risk, they could ensure companies obtain the requisite funding to comprehensively develop low-carbon innovations. Participants also examined novel strategies to intertwine philanthropic funding with profit-driven investments, intending to unlock opportunities previously deemed unviable.

Nevertheless, many of the outcomes from these dialogues seemed only loosely connected to financing. Sturdy policies, sustainable business frameworks, and synergistic public-private partnerships are just as vital as novel funding mechanisms. “Investors, business stakeholders, developers, and banks require stable guidelines,” Petno advised. “When legislative rules fluctuate each election or investor trends change whimsically, finding solid ground becomes increasingly challenging.”

This is emblematic of JPMorgan’s experience with climate—and finance’s broader narrative as well. The planet is in dire need of innovative financial solutions to combat climate change, but the financial sector operates within a broader societal context; it struggles to serve as a reliable ally when policies and markets are persistently shifting.

This reality can be difficult to accept—particularly for those who held significant faith in the Wall Street fix as a potential remedy for growing emissions. The urgency of climate crises has intensified. Solutions will not originate solely from finance. Nonetheless, fresh conversations about how to engage the industry persist. A recent report from the environmental non-profit RMI dubbed this juncture an “inflection point” for the perception of banks within climate discussions, advocating for a “right-sizing” of their role. This recalibration emphasizes the need to leverage banks’ core competencies in structuring deals and advising clients.

The report reminded me of a dialogue with JPMorgan’s Rama Variankaval, the overseer of the Center for Carbon Transition and the firm’s global head of corporate advisory. “When it comes down to it, you’re dealing with an individual CEO who has the power to make decisions. You can’t merely instruct them, ‘Invest more in climate,’” he shared. “They’ll walk away. Instead, you must advocate for how these decisions influence their financial stability, creditworthiness, or shareholder relations. By portraying a thorough picture, demonstrating the cascading effects of these choices, then it becomes valuable.”

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