JPMorgan Chase becomes the second major US bank to drop Arctic oil financing

The move drew sharp criticism and threats of divestment from Alaska's Republican governor, but praise from local environmentalists and some Native groups.

By Yereth Rosen February 26, 2020
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A man walks into the JP Morgan at Canary Wharf in London May 11, 2012. (Dylan Martinez / Reuters File Photo)

One of the largest U.S. financial institutions on Tuesday announced a sustainability policy that precludes any backing for new Arctic oil development.

The new policy announced by JPMorgan Chase won cheers from Alaska environmentalists and some Alaska Native groups but was criticized by the state’s Republican governor, Mike Dunleavy.

The governor took to Twitter to blast JPMorgan Chase, which is the biggest U.S. bank in asset rankings.

“Nobody does resource development and extraction better than Alaskans – we live in an age where a future based on resource development and protecting the environment are not mutually exclusive,” he added.

Dunleavy’s spokesman did not provide further comment.

Jason Brune, the Dunleavy administration’s commissioner of environmental conservation, used Twitter to suggest that the Alaska Permanent Fund, the state’s oil-wealth savings account, divest its shares of JPMorgan Chase.

A coalition of Alaska environmental and Alaska Native groups, however, praised the bank’s new policy, citing the Arctic National Wildlife Refuge in particular.

“Contrary to what Gov. Dunleavy and Alaska’s congressional delegation would like the nation to believe, Alaskans who are already living with the effects of climate change and industrialization are strongly opposed to oil drilling that would imperil the Gwich’in and Inupiat peoples, and the lands, waters, and wildlife on which they depend,” said the statement. “Alaska and the rest of the nation should celebrate this announcement as another sign that the financial industry recognizes that we must confront the crisis of climate change harming Alaskans, and that special places—especially those sacred to Indigenous communities—should be protected from fossil-fuel development.”

The statement was from nine organizations: the Gwich’in Steering Committee, the Northern Alaska Environmental Center, Audubon Alaska, Trustees for Alaska, the Fairbanks Climate Action Committee, the Native Movement, the Alaska Center, the Eyak Preservation Council and the Alaska Climate Action Network.

[Citing climate change, Goldman Sachs rules out new Arctic oil financing]

JPMorgan Chase is now the second major U.S. bank to take a position against financing Arctic oil development. In December, Goldman Sachs announced a similar policy.

Dunleavy, in response to that new policy, ordered the state to end its business relationships with Goldman Sachs wherever possible.

He ordered the company ejected from its position as an underwriter of bonds the state plans to issue to pay off tax credits owed to oil producers, according to a letter sent to Goldman by then-Acting Revenue Commissioner Mike Barnhill.

Goldman Sachs’ new policy is “in direct conflict with the goals of the State of Alaska and threatens Alaska’s oil and gas industry, one of the state’s primary revenue sources and economic drivers,” Barnhill said in the letter

JPMorgan Chase was also on the list of investment companies the state has lined up to finance bonds to repay outstanding oil tax credits.

Also taking a similar position against financing Arctic oil development are several European banks, including British-based Barclays Plc.

Opponents of expanded Arctic oil drilling are hoping more banks and investment companies will join the movement. In January, 15 Democratic U.S. senators sent a letter to 11 companies, including JPMorgan Chase, asking them to refrain from financing any new Arctic oil development. In response, Alaska’s all-Republican Congressional delegation wrote to the companies to urge them to continue financing Arctic oil projects.

JPMorgan Chase’s prohibition on financing new Arctic oil development was just part of its new policy. The policy also prohibits the financing of any companies that derive a majority of revenues from coal extraction and financing of any coal-fired power plant “unless it is utilizing carbon capture and sequestration technology.”

The new policy promotes what the company called “market-based policy solutions to address climate change, drive clean energy innovation and protect underserved communities.” The company said it has joined the Climate Leadership Council, a bipartisan group seeking to achieve a carbon tax-and-dividend program for the nation.