Driving Long-Term Value: Our Client-Centric Sustainability Strategy

We have long been committed to addressing critical environmental issues, beginning in 2005 with our inaugural Environmental Policy Framework where we were one of the first financial institutions to recognize the scale and urgency of the challenges posed by climate change. We have always acknowledged that navigating climate transition would be complex and that as a financial institution, our central focus should remain on how we can deliver sustainability solutions for our clients and grow commercial capabilities to support them.

The challenges facing climate transition are multifaceted: Our economy is heavily dependent upon a well-functioning energy system. Today more than 80% of our global energy needs come from fossil fuels. That coupled with the backdrop of rising energy demand and geopolitical conflicts in Ukraine and the Middle East has underscored the need for affordable and reliable energy. In addition, higher levels of inflation have been headwinds to decarbonization as input costs have increased and supply chains are more complicated to navigate. And the impact of emerging technology remains to be seen, with some sources indicating that electricity consumption from data centers, generative AI, and cryptocurrencies could double by 2026 compared with 2022 levels.

Scrutiny of sustainability commitments, divergence in client preferences, and regulatory approaches to climate change across jurisdictions have also evolved. Our clients include pension plans and retirement funds, large and small businesses, investors, and governments across various sectors and geographies and with a diversity of investment strategies and business models. Regulatory regimes are also evolving across jurisdictions with different scopes and timelines. In 2025, we will be one of the first US banks to file a global firmwide sustainability report under the European Union’s Corporate Sustainability Reporting Directive. This new requirement is expansive in scope, covering not only our financial exposure but also our environmental and social impact, and we are investing in our data management, measurement, and reporting capabilities to prepare for this shift in the regulatory landscape.

Despite all of these external forces and evolutions, central to our focus on the effects from climate change as well as decarbonization has always been our commercial capabilities and the insights that we can provide to our clients to help them invest in opportunities and manage risk. I also want to be clear about our role in supporting our clients in this area:

First, we will continue to finance and advise our clients in the energy sector, and we will also invest in innovative decarbonization technologies that can accelerate the transition. We need to do both. It’s not an or, it’s an and.

Second, we recognize that there is a gap between global climate ambition and the reality of where our energy system is today, and this gap will not be closed just by private sector voluntary commitments. Government has always and will continue to play a critical role in setting policy, providing incentives, easing implementation challenges, and balancing energy security and economic growth objectives with long-term climate ambition. There is no question that policy has a big impact on our clients’ decarbonization goals and our ability to support them.

Lastly, the most meaningful role we can play in climate transition is developing the solutions our clients need to deliver on their decarbonization goals for their businesses. Over time, we have developed independent aspirational goals and commitments to measure our progress, evolve our practices, and provide transparency to our clients and key stakeholders. This includes a long-term net zero financing commitment and three related interim goals where we see opportunities to support our clients’ decarbonization strategies in the Energy, Power, and Auto Manufacturing sectors. In addition, we set a $750 billion sustainable finance target by 2030, and we are approximately 75% of the way there after just four years. We are committed to continuing to invest in our capabilities so we can expand the range of sustainable finance solutions we can provide, and later this year, we plan to provide an update on our net zero sectoral targets.

Beyond our business, we continue to build partnerships globally to address market gaps. In 2023, we completed allocating $25 million in philanthropic capital to the Climate Innovation and Development Fund, a blended-finance facility we created with Bloomberg Philanthropies and the Asian Development Bank. Launched in 2021, the fund has catalyzed approximately $500 million in private and public capital to support seven climate solution projects in South and Southeast Asia.

In the US, our partnerships continue to promote sustainable economic growth through entrepreneurship. In 2023, we expanded our work supporting small businesses with the launch of 10,000 Small Businesses Investment in Rural Communities, our $100 million commitment to bring our flagship business education program to 20 rural states over the next five years. We also have extended our One Million Black Women: Black in Business program, an education initiative to help Black women solopreneurs grow their businesses. More than 600 Black women from 40 states have participated so far.

There’s plenty of work ahead, and we’re ready for the challenge. By supporting our clients and working with our partners, we will continue to execute our sustainability strategy and create long-term value for our shareholders.