Matt Arnold is Global Head of Sustainable Finance at JPMorgan Chase & Co. His team’s remit is sustainable finance – helping firms capitalize on sustainability as a business and leadership opportunity, as well as navigate related policies and risks.
In 2017, JPMorgan Chase committed to sourcing renewable energy for 100 percent of its global power needs by 2020 – a significant goal given the firm has offices and operations in more than 60 countries across over 5,500 properties. In addition, the bank has committed $200 billion in clean financing by 2025, which will help other companies and governments accelerate their transition to a low-carbon economy.
Ahead of his speaker appearance at GLOBE Capital 2019, Matt shares his insights on the business opportunities in the clean economy.
The clean economy is good for business because it drives innovation, motivates employees, is increasingly profitable, and has the benefit of addressing climate change, one of our era’s major challenges.
The personal motivation angle is important to us at JPMorgan Chase. We are very proud of the work we do. We have three or four task forces across different business areas made up of a wide range of people who don’t normally work together, but who are highly motivated because the clean economy is our core business.
Many of our clients are pursuing renewable energy as a business opportunity. Others are exploring it from other perspectives: research, mergers and acquisitions, equity capital markets, and debt capital markets.
The early movers in solar and wind had to work hard to break down barriers, but are now seeing strong business results. I learned last week that there are 1,200 energy companies in Silicon Valley. There’s a great deal of innovation focussed on energy storage and energy transmission. You get a sense that people are working together on a huge societal problem, and it’s really motivating.
Three barriers to realizing the business opportunities in the clean economy
1. Economics
Fossil fuel prices are still very competitive, certainly for transportation fuel and particularly for aviation. I was in a meeting with a group of large integrated oil companies the other day, and some of them were investing in renewable energy but others weren’t. The discussion from those who weren’t was interesting: they said that the economics of fossil fuels are better, and that they didn’t really know enough about renewable energy to invest in it. Continuous education of the long-term economic opportunity that environmentally sustainable solutions present can therefore help boost investment in the sector.
2. Policy
We need clear policy signals in the U.S. on key issues like carbon pricing, methane emissions from energy production, renewables, and energy production tax credits. Having said that, many national and sub-national jurisdictions are making good progress. For example, Alberta has made strides towards cleaning up their oil industry, probably due to the province-wide policy framework.
3. Incumbency
A lot of new technologies haven’t been deployed at scale, and large incumbents in the power sector, including oil and gas, are not embracing these new technologies. It’s not that they’re against them, it’s that their business models don’t necessarily accommodate them.
Three ways to integrate sustainability in your organization
1. Develop a business case for sustainability
Without a firm business case, it will be difficult to overcome resistance to integrating sustainable business practices. Decision makers need to understand why it is good for business, for people, and for the bottom line.
2. Set strong environmental objectives and targets
Having a goal or a series of goals is really motivating, no matter whether it’s a revenue goal, capital goal, or installation goal. Measuring progress against your goals is also helpful. If you know you’re coming up short on your sustainability goals, you’re going to work harder.
3. Create a purposeful corporate culture
Ensure there is an employee engagement angle when embedding sustainable business practices – communicate, engage, and enlist the support of people throughout the organization. Employees often enjoy and are motivated by the notion that they are contributing to something bigger than themselves and the organization they work for.
The Capital conversation
Canada is an important market for us right now and I’m looking forward to meeting leaders from across the industry at GLOBE Capital 2019. We look forward to learning from them and sharing our own experience in advancing sustainability for our clients and in our own operations.
