One feature of (hopefully) peak ESG was companies entering into commitments to hit targets for reducing their greenhouse gas emissions. If reducing those emissions was good for profitability and thus in accord with management’s fiduciary obligations to shareholders, they were “committing” to something that they should have been doing anyway. But if those commitments were not going to benefit the bottom line, they should not have been made, especially if they exposed the companies to some legal or regulatory liability in the event that they were not met.
So this may have been a step forward (via Trellis):
JPMorgan Chase, the largest U.S. bank, has backed away from its pledge to cut the carbon footprint of its corporate offices, bank branches and data centers 40 percent by 2030.
JPMorgan said the transition away from “time- and percent-bound targets,” disclosed Oct. 15 in its 2024 Sustainability Report, will allow it to prioritize measures to reduce, avoid or replace greenhouse gas emissions by analyzing which projects have the largest potential impact relative to cost rather than making decisions based on whether an initiative will deliver specific cuts by a short-term timeframe.
But on the other hand:
JPMorgan is holding firm on its commitment to invest $1 trillion to support renewable energy, electric vehicles, climate adaptation and other initiatives in pursuit of a clean economy transition by 2030. The bank has so far deployed $309 billion toward that goal, including $68 billion in 2024. Much of that financing came in the form of green bonds or funds deployed for renewables and low-carbon energy projects.
If those loans could not have been deployed more profitably elsewhere, and if those loans satisfied the firm’s profitability benchmarks, that is fine. If not . . .
And:
[The] bank still calculates and reports on its energy financing activities. It scrutinizes the amount of money it commits to high-carbon supply compared with its investments toward projects or technologies that support the transition to low-carbon energy. The overall ratio for 2024 was 1.13, meaning that for every $1 committed to high-carbon energy, JPMorgan put $1.13 toward low-carbon projects.
Hmmm . . .
Read the headlines and the easy conclusion is that big business has abandoned the fight against climate change. In the past two weeks BP, an oil giant, has sold its American onshore-wind business; Jaguar Land Rover, a carmaker, has reportedly delayed the launch of its new electric Range Rover; and HSBC, a bank, has left the Net-Zero Banking Alliance (nzba), a group committed to lending in a greener way. But these bits of gloomy news are only part of a sunnier outlook. Taken as a whole, companies are quietly making progress on their climate goals.
A report published in March by PWC, an auditor, found that of the 4,000-odd firms that reported climate commitments last year to the CDP, a non-profit, only 16% dialled back their goals, while 47% stood by them and 37% became more ambitious. The analysis also found that 67% of companies with targets were on track to meet them, a proportion which had inched up by three percentage points compared with 2023. Once companies were accused of “greenwashing”: making nonsense promises, and doing nothing to achieve them. Now they seem to be “greenhushing”—getting on with the job of decarbonisation without making a fuss.
But decarbonization is not their job. If companies are doing it, but not making a fuss about it, their shareholders certainly should be.