File this one under “Yes, Virginia – business fundamentals matter.” Bloomberg reported that JPMorgan isn’t interested in pursuing transition finance:
“Linda French, JPMorgan’s global head of sustainability policy and regulation, says it’s far from clear that calling something a transition asset will unlock capital. Ultimately, she says, the approach ignores the fact that investors are less concerned with definitions and more interested in proof that capital allocations yield results.
‘To state what should be obvious, finance will only move when there’s an economically viable business case,’ French said in an interview. ‘Taxonomies and disclosure frameworks on their own do nothing to finance flows, and even risk becoming a distraction… Fundamentally, it’s a rehash of the green finance conversation: Once you’ve defined relevant economic activities, then finance will begin to flow to those activities,’ she said. As an approach, it downplays the fundamentals of financial logic, she said.”
Let’s be clear, though – JPM won’t be sitting on the sidelines while meaningful transition economy business opportunities pass them by. Instead, I take this to mean that the firm will focus on – and expect – financial returns on their funding activities, and soft dollar benefits probably won’t suffice. If you plan on pitching to JPM, make sure that old fashioned business case is front and center.
If you are looking for guidance on how to do that, PracticalESG.com members have access to several guidebooks and checklists on communicating ESG value and risks and finding real business opportunities in ESG/sustainability – and more are on the way.
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Photo credit: Dragoș Asaftei – stock.adobe.com
