From Promise to Action on Net Zero is a series of research publications, interviews, and events exploring how companies are translating net zero emissions goals into practice. This interview presents one of our discussions with senior executives responsible for delivering their companies’ climate ambitions.
Matt Haddon, one of ERM’s global leads on the Low Carbon Economy Transition, spoke with Rama Variankaval, Global Head of Center for Carbon Transition for JPMorgan Chase (JPMC) about their recent commitment to the United Nations’ Net Zero Banking Alliance (a global coalition of banks working to align their lending and investments with net zero emissions by 2050) and what net zero means for the finance sector. ERM recently helped JPMC to develop its Carbon CompassSM methodology to shape and drive the bank’s strategy to align its portfolio with the goals of the Paris Agreement.
Matt Haddon: You recently joined the United Nations’ Net-Zero Banking Alliance (NZBA). Why?
Rama Variankaval: We still need thoughtful policy, technology, and behavioral advancements to realize our common goals around net zero emissions by 2050. We joined the Net Zero Banking Alliance because we support the ambition for greater climate action, the sharing of best practices and a collaborative approach between the public and private sectors to reach this goal. It enables us to work toward a consistent voice from banking for our clients who are navigating the transition to a low-carbon world.
MH: What do you expect to achieve by joining the NZBA?
RV: We believe that we have knowledge to contribute to the NZBA as we have spent a lot of time going deep on net zero, especially with the development of our Carbon CompassSM methodology and the launch of the Center for Carbon Transition. We believe there are many learnings we can take from our experiences that will be mutually beneficial for the banks involved in the NZBA. I am also hopeful that we will learn from the collective knowledge of the NZBA’s signatories.
MH: We are seeing finance sector clients really start to pursue commercial benefit through Paris-alignment, and I am wondering how JPMC is using it to grow its business?
RV: I see it as being able to go to clients and share with them where we think the world is going in terms of climate. We need to paint a credible picture around this and explain what actions the client should take.
There is incredible opportunity in terms of both supporting our clients’ transition to a low-carbon economy and in terms of supporting the development and scaling of innovative green technologies that are needed to meet the world’s energy needs.
MH: So the motivations for you are about how can you help a client improve their own actions?
RV: That is right. That is what our business is based around. The way our clients run their business matters to the bank’s success. We think we can add value by helping our clients find the right strategies for them. Do you start buying or selling certain assets? Do you finance your business in a different way? Joining NZBA gives us another input to support our client dialogues around climate strategy.
MH: It seems that we are moving toward a consistent point of view on climate from the banking sector. How does JPMC differentiate itself from other banks when there is this convergence?
RV: As a company, we are going really deep on the technicalities of every sector we work with. This technical knowledge is where we differentiate ourselves with deep knowledge of the issues that matter to different sectors and catering solutions to them.
MH: How are you upskilling your people to understand your client’s businesses and provide climate solutions?
RV: Like most banks we already have sector experts. It is incumbent on them to understand the climate-related issues most important to their sectors.
In the energy space this is already happening because the low carbon transition has been an important business driver for a few years now. So sector by sector our bankers are updating their skills for climate.
MH: Thinking back to the emergence of the technology sector in the past 10 or 15 years, presumably bankers did not say I know exactly what the internet means and where it was going. Did you have to go through the same process that we did with technology for climate?
RV: I would make one distinction from the emergence of technology. Back then, everyone started in the same place as no one had experts who knew the internet and at first it became a new industry vertical – before everybody realized that digital really applies economy-wide. What is different for climate is that we will bypass any idea of a new vertical group focused solely on ‘climate’. Food & agriculture bankers need to understand climate. Energy bankers need to understand climate. We are embedding the expertise horizontally across our existing organization.