JP. Morgan – Climate Change Solutions Fund

overall rating:

0.66

planets

Matthew Ball
2/15/2022
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JPMorgan Chase & Co. is an American multinational investment bank, which is based in New York City in the United States of America. They label themselves as being global leaders in financial services, offering solutions to the world’s most important corporations, governments, and institutions. 

 

Their “Climate Change Solutions Fund” looks to translate these financial ‘solutions’ in the direction of tackling the climate crisis, which is underpinned by ‘intelligence’, ‘data’ and ‘research. 

 

As will be explored, the fund itself is represented online by a clunky and over-complex webpage, which has more of a focus on flashy graphics and bold statements than anything of any substance or inherent meaning – in the wider content of climate change investment. The statistics that are thrown around the page lack all meaning, failing to be accompanied by any relation or content to the J.P. Morgan climate change solutions fund itself. Much of the data and statistics behind the fund is locked away in PDFs, which are equally confusing and again, suffer from a general lack of transparency and resultantly, any real care to advertise J.P. Morgan’s significant action towards climate change, which perhaps unsurprisingly is little to none – on a relative scale.

 

Personally, I have never felt more patronised in the reading of any financial report, with the guise of climate change’s complexity being upheld to have – again relatively meaningless – statistics and background thrown at you to cover for any hard proof of J.P Morgan’s action. The entire representation of the fund online reads more like an introductory paper to climate change than anything remotely related to a fund which manages over £70 million (GBP) in capital as of February 2022 – a statistic which itself isn’t even offered on the webpage but rather is glossed over quickly in a tacked on to a PDF. 

 

The climate change solutions fund, and JP Morgan Chase & Co. is frankly an embarrassment to everything sustainable and it is a total outrage to see such an abhorrent company – from an environmental perspective – brand anything remotely sustainable. Their solutions fund fails at the same starting point as the company, which is an overwhelming focus on profit and a lack of consideration for anything on the planet outside of this.

What it's made of:

0.75

The focus of the climate change solutions fund is to invest in companies that provide products and services that will ‘enable emission reduction across the economy’. This involves the utilisation of artificial intelligence and big datasets, alongside traditional human analysis. 

 

Already, there is an apparent lack of awareness regarding climate change’s multifaceted nature and complexity – which itself is touted so heavily on the fund's own webpage. Climate change finance can be broken down in two large categories, climate mitigation (to reduce emissions) and climate adaptation (to adapt to the growing consequences of climate change). Here, JP Morgan have entirely forgone the latter category, arguably committing sustainable suicide if you were looking for a balance approach to tackling climate change and have favoured purely climate mitigation. 

 

If not apparent already, it is an absolute disgrace that this fund is allowed to call itself ‘sustainable’ or better even preach so highly of the ‘intelligence’ that underpins its investing. For reference, the issue of climate adaptation receiving little focus in climate finance investing is so widespread and so widely understood that the UNEP have even dubbed it the ‘climate mitigation gap’ as dedicated finance flows for adaptation are already five to ten times lower than the constantly rising adaptation costs. Climate mitigation has historically been seen as the ‘sexier’ of the two financing pathways and solutions in relation to climate change and this marketing appeal is not missed by JP Morgan. After all, why invest in developing flood management plans when you can finance flashy new renewable energy projects? The why is because it’s what’s needed, yet this isn’t a concern for JP Morgan, what draws in more customers is, however.

 

To look beyond this, arguably major oversight, the fund breaks solutions down into five separate categories. These are, Renewables & electrification, Sustainable construction, Sustainable food & water, Sustainable transport and Recycling & re-use. Aside from a couple of vague examples of funded projects that fit each of these categories – e.g., ‘hydrogen as an energy source’ and ‘precision agriculture’ or perhaps my favourite, ‘efficient appliances’ – the rest is all tightly locked away from outsiders. To learn more than this, we are encouraged to ‘contact our usual J.P. Morgan Asset Management representative’ – which would be a slightly more attractive premise if they offered any more detail than simply infantile descriptions of some areas of sustainable investing.

 

As noted above, there is very limited official data on the operations of the fund, notably there isn’t any specific data of the number of projects funded but rather data that breaks down investments by region, sector and the top 10 companies funded. Immediately there are apparent geographical and sectoral trends to the investments, with 61.9% of investments going into the industrials sector, with 48.8% of investments being based in North America and 38.4 in Europe & Middle East (excluding the UK). Resultantly, we are faced with a fund which primarily funds machinery companies across the global North - while branding itself as Climate Change orientated. It is an absolute outrage to even begin to label this a ‘climate change solutions’ fund when there is a clear failure to acknowledge the global impacts of climate change alone, let alone call it remotely ‘sustainable’ when there is little to no diversity in the investment types. 

 

There is a sole mention in an attached PDF of the fund’s total capital management, which is over £70 million, with the fund’s overall aim to ‘return through investing at least 80% of the Fund’s assets in equity securities of companies with exposure to the theme of climate change solutions. The ‘theme’ of climate change solutions is notably left undefined in any official capacity, yet we can assume that the projects will fall into one of the five categories outlined previously. 

 

Overall, what constitutes the fund is seemingly an insultingly low level of transparency, a basic level of sustainable investing and a purposefully vague marketing strategy which prays upon people’s ignorance. It’s saddening that any climate change investment fund could be bastardised in such a manner, yet it is still largely unsurprising. The overall score for this section is 0.75 / 3. There is promise in the fund’s written focus, yet that is all – it is an absolute disgrace to even begin to consider the terms ‘intelligence’ or ‘research’ in any other context than purely for global north profit.  

How it's made:

0.75

Projects must fit into one of the five major categories outlined previously, Renewables & electrification, Sustainable construction, Sustainable food & water, Sustainable transport, and Recycling & re-use. Beyond this, we’re in the dark. There doesn’t appear to be a geographical limitation to the funds’ operations, nor does there appear to be any specific targets or limits to ensure an even or ‘fair’ share of investing is ensured either. 

 

The process of investing follows a primary usage of ‘ThemeBot’ a natural language processing tool which screens more than stocks globally and identifies those which best fit the themes proposed by the fund. This is then followed by active managers selecting the ideas which hold the most promise, which is underpinned by their own research and expertise. 

 

Again, there is a clear lack of transparency as to the findings of ‘ThemeBot’ or the specific criteria that are followed when ultimately deciding on a funding decision or not. The constant reference to ‘themes’ is vague at best and can only be assumed to be the five major categories listed above, yet there may be more specific terms than this – which wouldn’t be of surprise. 

 

Ultimately, it’s a relatively straightforward strategy for investing, yet the clear lack of targets or insurances to create a diverse portfolio is a major drawback. Notably, a failure to publish ThemeBot’s data in any form is a major failure. To rely on artificial intelligence so heavily yet to safeguard its results, is perhaps the greatest representation of what this fund prioritises. It’s understandable to withhold elements to the findings, yet to not even provide any more clarity than to say it screens 13,000 stocks globally is, frankly, an embarrassment. Therefore, this section gets a 0.75 / 3 as the initial stages of the process seems promising, yet a lack of in-built restrictions to diversity severely limit this area of the investment fund. 

Who makes it:

0.5

The portfolio management team is made up of 3 individuals. There is a 2:1 ratio of men to women and all are portfolio managers with 20+ years experience. This highlights a clear lack of diversity in relation to the background of the management team – while the team not being entirely male is appreciated – there being no specific sustainability or climate analyst within the team is a serious oversight. 

 

JP Morgan themselves have a colourful past with fossil fuel funding and an even more interesting future in relation to their sustainability pledges. The company has – even with the climate change solutions fund as an example – an extensive history of putting profit ahead of any other considerations. JP Morgan Chase & co. has invested more money into fossil fuels than any other bank, has violated indigenous rights on countless occasions and has only offered greater investment targets in climate change-based projects as a condolence – which as seen with the climate change solutions fund is devoid of all substantial meaning. 

 

Reading about the background of this company repulsed me, specifically they have invested over a quarter trillion dollars (USD) into fossil fuels between 2017-2021 alone, have funded projects that knowingly exploit the planet and expand upon indigenous land and notably made grossly misleading promises. Of specific note is when JPMorgan announced in 2020 that they would ‘combat climate change’ yet in 2021 announced that they would not pressure oil companies to lower their emissions but rather would encourage them to become more efficient. The company is a disgrace to the planet, from an environmental perspective and it’s bitterly ironic that the climate solutions fund is no better. 

 

JP Morgan’s range of employee benefits, from healthcare plans to family care and retirement savings do little to soften the blow of just how devilish the company truly is. Yet it is refreshing to see companies value their workers, irrespective of their questionable operating practices.

 

Overall, for this section, JP Morgan’s climate change solutions fund receives 0.5 / 3 – saved solely because of the employee benefits and likely unintentional gender representation.