Construction machinery and equipment giant Caterpillar recently hosted the first major national summit on infrastructure restoration, with the clarion call that investing in nature is smart business. In the room was Matt Arnold, Global Head of Social and Sustainable Finance at JPMorgan Chase. Arnold said he was looking for deals and that “smart failure is okay.”
Arnold is not your usual banker. Prior to Joining JPMorgan Chase he was Principal and lead of Sustainable Business Solutions at PwC and co-founder of Sustainable Finance Ltd., helping companies develop sustainability strategy, manage environmental and social risk and identify environmentally sound investment opportunities. Sustainable Finance was acquired by PwC in December 2008. From 1996-2002, Arnold was COO at World Resources Institute.
When JPMorgan Chase, the U.S.’ largest bank and the world's sixth-largest (with total assets of $2.6 trillion) invites partnership in a room full of environmental sensibilities, an echo of hope reverberates. Sustainable Brands asked Arnold what drew the environmentalist in him to Wall Street.
“I’m interested in practical answers to environmental challenges, so the bigger and more mainstream the platform, the more potential for creating an impact that lasts,” Arnold said. “Because of its scale, relationships and expertise, JPMorgan Chase is at the center of capital allocation and there is a lot of opportunity for impact.
“Innovation requires a willingness to test and learn, and we intend to take educated risks based on good data and analysis,” he added. “We intend to try new things — new deal structures, new partnerships. We know not all will succeed. But avoiding any possibility of failure has never been the way to make change and find real growth and success.”
Aside from financial deals, are firms such as JPMorgan playing more of an advisory role with companies who want to move the needle on sustainability?
“Absolutely,” he said. “In fact, we are focused on exactly that role. We partner to help our clients achieve their sustainability goals. We have a variety of experiences we can share including expertise in assessing and managing risks, managing constructive dialogue with sustainability-oriented investors and advocates, structuring impact funds, programs and research, and understanding the view of sustainability issues from the perspective of a global financial firm.
“All of these perspectives have potential value to our clients and we are being more intentional about introducing them in our client interaction,” Arnold continued. “During the course of transactional discussions, we do have opportunities to work with clients to make changes to the way they address sustainability in their core business operations as well. This aspect of our work is a core part of our own risk management process.”
As for examples of successful sustainability projects JPMorgan Chase has funded to date, Arnold told us, “We are the founding sponsor of a collaboration with The Nature Conservancy (TNC) to grow the conservation finance marketplace. This work, called NatureVest, is only a few years old and has ambitions to channel billions of private capital to support nature; and it’s already produced industry-leading research, raised private capital for innovative transactions that have conserved critical ecosystems around the globe. The funding and our collaboration have helped TNC change the way it thinks about achieving its mission and the tools it can use.
“We are also a leading underwriter of Green Bonds and have helped a number of private and public clients raise capital for dedicated portfolios of projects with environmental benefits such as drinking water protection and renewable energy development.
“JPMorgan Chase’s Social Finance unit (our impact investing unit) has committed $60 million to a number of leading social impact funds that are helping to improve the lives of low-income and underserved communities around the world. This includes Leapfrog, which invests in companies that distribute microinsurance and related products to low-income and excluded people in Africa and Asia. With our support, they helped hundreds of thousands of African people gain access to insurance.”
Arnold said the biggest barrier to entry in business embracing environmentalism on a large scale is “proper incentives for more businesses to focus on sustainability as a priority. For example, business will be able to do more to address climate change when governments create policy that spurs innovation and financing for greater sustainability.”
JPMorgan Chase is looking to invest billions in conservation but successful initiatives must be inclusive, ambitious and replace existing assumptions with new models. It’s a win-win for business, brands and the environment.