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Four Powerful Climate Change Speeches to Inspire You

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Looking to be inspired to take action on climate change? Watch these four powerful climate change speeches, and get ready to change the world.

Climate change is the most pressing concern facing us and our planet. As such, we need powerful action, and fast, from both global leaders and global corporations, right down to individuals.

I’ve got over 70 climate change and sustainability quotes to motivate people and inspire climate action. But if it is more than quotes you need then watch these four impassioned climate change speeches. These speeches are particularly good if you are looking for even more inspiration to inspire others to take climate action.

The Sustainability Speeches To Motivate You

Here are the speeches to know – I’ve included a video of each speech plus a transcript to make it easy to get all the information you need. Use the quick links to jump to a specific speech or keep scrolling to see all the speeches.

Greta Thunberg’s Climate Change Speech at the 2019 UN Climate Action Summit

Leonardo dicaprio’s climate change speech at the 2014 un climate summit, yeb sano’s climate change speech at the united nations climate summit in warsaw, greta thunberg’s speech at houses of parliament.

In September 2019 climate activist Greta Thunberg addressed the U.N.’s Climate Action Summit in New York City with this inspiring climate change speech:

Here’s the full transcript of Greta Thunberg’s climate change speech. It begins with Greta’s response to a question about the message she has for world leaders.

My message is that we’ll be watching you.

This is all wrong. I shouldn’t be up here. I should be back in school on the other side of the ocean. Yet you all come to us young people for hope. How dare you!

You have stolen my dreams and my childhood with your empty words. And yet I’m one of the lucky ones. People are suffering. People are dying. Entire ecosystems are collapsing. We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you!

For more than 30 years, the science has been crystal clear. How dare you continue to look away and come here saying that you’re doing enough when the politics and solutions needed are still nowhere in sight.

You say you hear us and that you understand the urgency. But no matter how sad and angry I am, I do not want to believe that. Because if you really understood the situation and still kept on failing to act, then you would be evil. And that I refuse to believe.

The popular idea of cutting our emissions in half in 10 years only gives us a 50% chance of staying below 1.5°C, and the risk of setting off irreversible chain reactions beyond human control.

Fifty per cent may be acceptable to you. But those numbers do not include tipping points, most feedback loops, additional warming hidden by toxic air pollution or the aspects of equity and climate justice. They also rely on my generation sucking hundreds of billions of tons of your CO 2 out of the air with technologies that barely exist.

So a 50% risk is simply not acceptable to us — we who have to live with the consequences.

To have a 67% chance of staying below a 1.5°C global temperature rise – the best odds given by the Intergovernmental Panel on Climate Change – the world had 420 gigatons of CO 2 left to emit back on January 1st, 2018. Today that figure is already down to less than 350 gigatons.

How dare you pretend that this can be solved with just ‘business as usual’ and some technical solutions? With today’s emissions levels, that remaining CO 2 budget will be entirely gone within less than 8 and a half years.

There will not be any solutions or plans presented in line with these figures here today, because these numbers are too uncomfortable. And you are still not mature enough to tell it like it is.

You are failing us. But the young people are starting to understand your betrayal. The eyes of all future generations are upon you. And if you choose to fail us, I say: We will never forgive you.

We will not let you get away with this. Right here, right now is where we draw the line. The world is waking up. And change is coming, whether you like it or not.

Leonardo DiCaprio gave an impassioned climate change speech at the 2014 UN Climate Summit. Watch it now:

Here’s a transcript of Leonardo DiCaprio’s climate change speech in case you’re looking to quote any part of it.

Thank you, Mr Secretary General, your excellencies, ladies and gentleman, and distinguished guests. I’m honoured to be here today, I stand before you not as an expert but as a concerned citizen. One of the 400,000 people who marched in the streets of New York on Sunday, and the billions of others around the world who want to solve our climate crisis.

As an actor, I pretend for a living. I play fictitious characters often solving fictitious problems.

I believe humankind has looked at climate change in that same way. As if it were fiction, happening to someone else’s planet, as if pretending that climate change wasn’t real would somehow make it go away.

But I think we know better than that. Every week, we’re seeing new and undeniable climate events, evidence that accelerated climate change is here now .  We know that droughts are intensifying.  Our oceans are warming and acidifying, with methane plumes rising up from beneath the ocean floor. We are seeing extreme weather events, increased temperatures, and the West Antarctic and Greenland ice sheets melting at unprecedented rates, decades ahead of scientific projections.

None of this is rhetoric, and none of it is hysteria. It is fact. The scientific community knows it. Industry and governments know it. Even the United States military knows it. The chief of the US Navy’s Pacific Command, Admiral Samuel Locklear, recently said that climate change is our single greatest security threat.

My friends, this body – perhaps more than any other gathering in human history – now faces that difficult task. You can make history or be vilified by it.

To be clear, this is not about just telling people to change their light bulbs or to buy a hybrid car. This disaster has grown BEYOND the choices that individuals make. This is now about our industries, and governments around the world taking decisive, large-scale action.

I am not a scientist, but I don’t need to be. Because the world’s scientific community has spoken, and they have given us our prognosis. If we do not act together, we will surely perish.

Now is our moment for action.

We need to put a price tag on carbon emissions and eliminate government subsidies for coal, gas, and oil companies. We need to end the free ride that industrial polluters have been given in the name of a free-market economy. They don’t deserve our tax dollars, they deserve our scrutiny. For the economy itself will die if our ecosystems collapse.

The good news is that renewable energy is not only achievable but good economic policy. New research shows that by 2050 clean, renewable energy could supply 100% of the world’s energy needs using existing technologies, and it would create millions of jobs.

This is not a partisan debate; it is a human one. Clean air and water, and a livable climate are inalienable human rights. And solving this crisis is not a question of politics. It is our moral obligation – if, admittedly, a daunting one.

We only get one planet. Humankind must become accountable on a massive scale for the wanton destruction of our collective home. Protecting our future on this planet depends on the conscious evolution of our species.

This is the most urgent of times, and the most urgent of messages.

Honoured delegates, leaders of the world, I pretend for a living. But you do not. The people made their voices heard on Sunday around the world and the momentum will not stop. And now it’s YOUR turn, the time to answer the greatest challenge of our existence on this planet is now.

I beg you to face it with courage. And honesty. Thank you.

The Philippines’ lead negotiator  Yeb Sano  addressed the opening session of the UN climate summit in Warsaw in November 2013. In this emotional and powerful climate change speech he called for urgent action to prevent a repeat of the devastating storm that hit parts of the Philippines:

Transcript of Yeb’s Climate Change Speech

Here’s a transcript of Yeb’s climate change speech:

Mr President, I have the honour to speak on behalf of the resilient people of the Republic of the Philippines.

At the onset, allow me to fully associate my delegation with the statement made by the distinguished Ambassador of the Republic of Fiji, on behalf of G77 and China as well as the statement made by Nicaragua on behalf of the Like-Minded Developing Countries.

First and foremost, the people of the Philippines, and our delegation here for the United Nations Climate Change Convention’s 19 th  Conference of the Parties here in Warsaw, from the bottom of our hearts, thank you for your expression of sympathy to my country in the face of this national difficulty.

In the midst of this tragedy, the delegation of the Philippines is comforted by the warm hospitality of Poland, with your people offering us warm smiles everywhere we go. Hotel staff and people on the streets, volunteers and personnel within the National Stadium have warmly offered us kind words of sympathy. So, thank you Poland.

The arrangements you have made for this COP is also most excellent and we highly appreciate the tremendous effort you have put into the preparations for this important gathering.

We also thank all of you, friends and colleagues in this hall and from all corners of the world as you stand beside us in this difficult time.

I thank all countries and governments who have extended your solidarity and for offering assistance to the Philippines.

I thank the youth present here and the billions of young people around the world who stand steadfastly behind my delegation and who are watching us shape their future.

I thank civil society, both who are working on the ground as we race against time in the hardest-hit areas, and those who are here in Warsaw prodding us to have a sense of urgency and ambition.

We are deeply moved by this manifestation of human solidarity. This outpouring of support proves to us that as a human race, we can unite; that as a species, we care.

It was barely 11 months ago in Doha when my delegation appealed to the world… to open our eyes to the stark reality that we face… as then we confronted a catastrophic storm that resulted in the costliest disaster in Philippine history.

Less than a year hence, we cannot imagine that a disaster much bigger would come. With an apparent cruel twist of fate, my country is being tested by this hellstorm called Super Typhoon Haiyan, which has been described by experts as the strongest typhoon that has ever made landfall in the course of recorded human history.

It was so strong that if there was a Category 6, it would have fallen squarely in that box. Up to this hour, we remain uncertain as to the full extent of the devastation, as information trickles in an agonisingly slow manner because electricity lines and communication lines have been cut off and may take a while before these are restored.

The initial assessment shows that Haiyan left a wake of massive devastation that is unprecedented, unthinkable, and horrific, affecting 2/3 of the Philippines, with about half a million people now rendered homeless, and with scenes reminiscent of the aftermath of a tsunami, with a vast wasteland of mud and debris and dead bodies.

According to satellite estimates, the US National Oceanic and Atmospheric Administration also estimated that Haiyan achieved a minimum pressure between around 860 mbar (hPa; 25.34 inHg) and the Joint Typhoon Warning Center estimated Haiyan to have attained one-minute sustained winds of 315 km/h (195 mph) and gusts up to 378 km/h (235 mph) making it the strongest typhoon in modern recorded history.

Despite the massive efforts that my country had exerted in preparing for the onslaught of this monster of a storm, it was just a force too powerful, and even as a nation familiar with storms, Super Typhoon Haiyan was nothing we have ever experienced before, or perhaps nothing that any country has every experienced before.

The picture in the aftermath is ever so slowly coming into clearer focus. The devastation is colossal. And as if this is not enough, another storm is brewing again in the warm waters of the western Pacific. I shudder at the thought of another typhoon hitting the same places where people have not yet even managed to begin standing up.

To anyone who continues to deny the reality that is climate change, I dare you to get off your ivory tower and away from the comfort of your armchair.

I dare you to go to the islands of the Pacific, the islands of the Caribbean and the islands of the Indian Ocean and see the impacts of rising sea levels; to the mountainous regions of the Himalayas and the Andes to see communities confronting glacial floods, to the Arctic where communities grapple with the fast dwindling polar ice caps, to the large deltas of the Mekong, the Ganges, the Amazon, and the Nile where lives and livelihoods are drowned, to the hills of Central America that confront similar monstrous hurricanes, to the vast savannahs of Africa where climate change has likewise become a matter of life and death as food and water becomes scarce.

Not to forget the massive hurricanes in the Gulf of Mexico and the eastern seaboard of North America. And if that is not enough, you may want to pay a visit to the Philippines right now.

The science has given us a picture that has become much more in focus. The IPCC report on climate change and extreme events underscored the risks associated with changes in the patterns as well as the frequency of extreme weather events.

Science tells us that simply, climate change will mean more intense tropical storms. As the Earth warms up, that would include the oceans. The energy that is stored in the waters off the Philippines will increase the intensity of typhoons and the trend we now see is that more destructive storms will be the new norm.

This will have profound implications on many of our communities, especially who struggle against the twin challenges of the development crisis and the climate change crisis. Typhoons such as Yolanda (Haiyan) and its impacts represent a sobering reminder to the international community that we cannot afford to procrastinate on climate action. Warsaw must deliver on enhancing ambition and should muster the political will to address climate change.

In Doha, we asked, “If not us then who? If not now, then when? If not here, then where?” (borrowed from Philippine student leader Ditto Sarmiento during Martial Law). It may have fell on deaf ears. But here in Warsaw, we may very well ask these same forthright questions. “If not us, then who? If not now, then when? If not here in Warsaw, where?”

What my country is going through as a result of this extreme climate event is madness. The climate crisis is madness.

We can stop this madness. Right here in Warsaw.

It is the 19 th  COP, but we might as well stop counting because my country refuses to accept that a COP30 or a COP40 will be needed to solve climate change.

And because it seems that despite the significant gains we have had since the UNFCCC was born, 20 years hence we continue to fail in fulfilling the ultimate objective of the Convention. 

Now, we find ourselves in a situation where we have to ask ourselves – can we ever attain the objective set out in Article 2 – which is to prevent dangerous anthropogenic interference with the climate system? By failing to meet the objective of the Convention, we may have ratified the doom of vulnerable countries.

And if we have failed to meet the objective of the Convention, we have to confront the issue of loss and damage.

Loss and damage from climate change is a reality today across the world. Developed country emissions reduction targets are dangerously low and must be raised immediately. But even if they were in line with the demand of reducing 40-50% below 1990 levels, we would still have locked-in climate change and would still need to address the issue of loss and damage.

We find ourselves at a critical juncture and the situation is such that even the most ambitious emissions reductions by developed countries, who should have been taking the lead in combatting climate change in the past two decades, will not be enough to avert the crisis.

It is now too late, too late to talk about the world being able to rely on Annex I countries to solve the climate crisis. We have entered a new era that demands global solidarity in order to fight climate change and ensure that the pursuit of sustainable human development remains at the fore of the global community’s efforts. This is why means of implementation for developing countries is ever more crucial.

It was the Secretary-general of the UN Conference on Environment and Development, Earth Summit, Rio de Janeiro, 1992, Maurice Strong who said that “History reminds us that what is not possible today, may be inevitable tomorrow.”

We cannot sit and stay helpless staring at this international climate stalemate. It is now time to take action. We need an emergency climate pathway.

I speak for my delegation. But more than that, I speak for the countless people who will no longer be able to speak for themselves after perishing from the storm. I also speak for those who have been orphaned by this tragedy. I also speak for the people now racing against time to save survivors and alleviate the suffering of the people affected by the disaster.

We can take drastic action now to ensure that we prevent a future where super typhoons are a way of life. Because we refuse, as a nation, to accept a future where super typhoons like Haiyan become a fact of life. We refuse to accept that running away from storms, evacuating our families, suffering the devastation and misery, having to count our dead, become a way of life. We simply refuse to.

We must stop calling events like these as natural disasters. It is not natural when people continue to struggle to eradicate poverty and pursue development and get battered by the onslaught of a monster storm now considered as the strongest storm ever to hit land. It is not natural when science already tells us that global warming will induce more intense storms. It is not natural when the human species has already profoundly changed the climate.

Disasters are never natural. They are the intersection of factors other than physical. They are the accumulation of the constant breach of economic, social, and environmental thresholds.

Most of the time disasters are a result of inequity and the poorest people of the world are at greatest risk because of their vulnerability and decades of maldevelopment, which I must assert is connected to the kind of pursuit of economic growth that dominates the world. The same kind of pursuit of so-called economic growth and unsustainable consumption that has altered the climate system.

Now, if you will allow me, to speak on a more personal note.

Super Typhoon Haiyan made landfall in my family’s hometown and the devastation is staggering. I struggle to find words even for the images that we see from the news coverage. I struggle to find words to describe how I feel about the losses and damages we have suffered from this cataclysm.

Up to this hour, I agonize while waiting for word as to the fate of my very own relatives. What gives me renewed strength and great relief was when my brother succeeded in communicating with us that he has survived the onslaught. In the last two days, he has been gathering bodies of the dead with his own two hands. He is hungry and weary as food supplies find it difficult to arrive in the hardest-hit areas.

We call on this COP to pursue work until the most meaningful outcome is in sight. Until concrete pledges have been made to ensure mobilisation of resources for the Green Climate Fund. Until the promise of the establishment of a loss and damage mechanism has been fulfilled. Until there is assurance on finance for adaptation. Until concrete pathways for reaching the committed 100 billion dollars have been made. Until we see real ambition on stabilizing greenhouse gas concentrations. We must put the money where our mouths are.

This process under the UNFCCC has been called many names. It has been called a farce. It has been called an annual carbon-intensive gathering of useless frequent flyers. It has been called many names. But it has also been called “The Project To Save The Planet”. It has been called “Saving Tomorrow Today”. We can fix this. We can stop this madness. Right now. Right here, in the middle of this football field.

I call on you to lead us. And let Poland be forever known as the place we truly cared to stop this madness. Can humanity rise to the occasion? I still believe we can.

Finally, in April 2019, Greta spoke at the Houses of Parliament in the UK. Here she gave this powerful climate change speech to the UK’s political leaders:

Transcript of Greta’s Climate Change Speech

Here is the full transcript of Greta’s climate change speech:

My name is Greta Thunberg. I am 16 years old. I come from Sweden. And I speak on behalf of future generations.

I know many of you don’t want to listen to us – you say we are just children. But we’re only repeating the message of the united climate science.

Many of you appear concerned that we are wasting valuable lesson time, but I assure you we will go back to school the moment you start listening to science and give us a future. Is that really too much to ask?

In the year 2030, I will be 26 years old. My little sister Beata will be 23. Just like many of your own children or grandchildren. That is a great age, we have been told. When you have all of your life ahead of you. But I am not so sure it will be that great for us.

I was fortunate to be born in a time and place where everyone told us to dream big. I could become whatever I wanted to. I could live wherever I wanted to. People like me had everything we needed and more. Things our grandparents could not even dream of. We had everything we could ever wish for and yet now we may have nothing.

Now we probably don’t even have a future anymore.

Because that future was sold so that a small number of people could make unimaginable amounts of money. It was stolen from us every time you said that the sky was the limit and that you only live once.

You lied to us. You gave us false hope. You told us that the future was something to look forward to. And the saddest thing is that most children are not even aware of the fate that awaits us. We will not understand it until it’s too late. And yet we are the lucky ones. Those who will be affected the hardest are already suffering the consequences. But their voices are not heard.

Is my microphone on? Can you hear me?

Around the year 2030, 10 years 252 days and 10 hours away from now, we will be in a position where we set off an irreversible chain reaction beyond human control, that will most likely lead to the end of our civilisation as we know it. That is unless, in that time, permanent and unprecedented changes in all aspects of society have taken place, including a reduction of CO 2 emissions by at least 50%.

And please note that these calculations are depending on inventions that have not yet been invented at scale, inventions that are supposed to clear the atmosphere of astronomical amounts of carbon dioxide.

Furthermore, these calculations do not include unforeseen tipping points and feedback loops like the extremely powerful methane gas escaping from rapidly thawing arctic permafrost.

Nor do these scientific calculations include already locked-in warming hidden by toxic air pollution. Nor the aspect of equity – or climate justice – clearly stated throughout the Paris Agreement, which is absolutely necessary to make it work on a global scale.

We must also bear in mind that these are just calculations. Estimations. That means that these “points of no return” may occur a bit sooner or later than 2030. No one can know for sure. We can, however, be certain that they will occur approximately in these timeframes because these calculations are not opinions or wild guesses.

These projections are backed up by scientific facts, concluded by all nations through the IPCC. Nearly every single major national scientific body around the world unreservedly supports the work and findings of the IPCC.

Did you hear what I just said? Is my English OK? Is the microphone on? Because I’m beginning to wonder.

During the last six months, I have travelled around Europe for hundreds of hours in trains, electric cars, and buses, repeating these life-changing words over and over again. But no one seems to be talking about it, and nothing has changed. In fact, the emissions are still rising.

When I have been travelling around to speak in different countries, I am always offered help to write about the specific climate policies in specific countries. But that is not really necessary. Because the basic problem is the same everywhere. And the basic problem is that basically nothing is being done to halt – or even slow – climate and ecological breakdown, despite all the beautiful words and promises.

The UK is, however, very special. Not only for its mind-blowing historical carbon debt but also for its current, very creative, carbon accounting.

Since 1990 the UK has achieved a 37% reduction of its territorial CO 2 emissions, according to the Global Carbon Project. And that does sound very impressive. But these numbers do not include emissions from aviation, shipping, and those associated with imports and exports. If these numbers are included the reduction is around 10% since 1990 – or an average of 0.4% a year, according to Tyndall Manchester. And the main reason for this reduction is not a consequence of climate policies, but rather a 2001 EU directive on air quality that essentially forced the UK to close down its very old and extremely dirty coal power plants and replace them with less dirty gas power stations. And switching from one disastrous energy source to a slightly less disastrous one will of course result in a lowering of emissions.

But perhaps the most dangerous misconception about the climate crisis is that we have to “lower” our emissions. Because that is far from enough.

Our emissions have to stop if we are to stay below 1.5-2 ° C of warming. The “lowering of emissions” is of course necessary but it is only the beginning of a fast process that must lead to a stop within a couple of decades or less. And by “stop” I mean net-zero – and then quickly on to negative figures. That rules out most of today’s politics.

The fact that we are speaking of “lowering” instead of “stopping” emissions is perhaps the greatest force behind the continuing business as usual. The UK’s active current support of new exploitation of fossil fuels – for example, the UK shale gas fracking industry, the expansion of its North Sea oil and gas fields, the expansion of airports as well as the planning permission for a brand new coal mine – is beyond absurd.

This ongoing irresponsible behaviour will no doubt be remembered in history as one of the greatest failures of humankind.

People always tell me and the other millions of school strikers that we should be proud of ourselves for what we have accomplished. But the only thing that we need to look at is the emission curve. And I’m sorry, but it’s still rising. That curve is the only thing we should look at.

Every time we make a decision we should ask ourselves; how will this decision affect that curve? We should no longer measure our wealth and success in the graph that shows economic growth, but in the curve that shows the emissions of greenhouse gases. We should no longer only ask: “Have we got enough money to go through with this?” but also: “Have we got enough of the carbon budget to spare to go through with this?” That should and must become the centre of our new currency.

Many people say that we don’t have any solutions to the climate crisis. And they are right. Because how could we? How do you “solve” the greatest crisis that humanity has ever faced? How do you “solve” a war? How do you “solve” going to the moon for the first time? How do you “solve” inventing new inventions?

The climate crisis is both the easiest and the hardest issue we have ever faced. The easiest because we know what we must do. We must stop the emissions of greenhouse gases. The hardest because our current economics are still totally dependent on burning fossil fuels, and thereby destroying ecosystems in order to create everlasting economic growth.

“So, exactly how do we solve that?” you ask us – the schoolchildren striking for the climate.

And we say: “No one knows for sure. But we have to stop burning fossil fuels and restore nature and many other things that we may not have quite figured out yet.”

Then you say: “That’s not an answer!”

So we say: “We have to start treating the crisis like a crisis – and act even if we don’t have all the solutions.”

“That’s still not an answer,” you say.

Then we start talking about circular economy and rewilding nature and the need for a just transition. Then you don’t understand what we are talking about.

We say that all those solutions needed are not known to anyone and therefore we must unite behind the science and find them together along the way. But you do not listen to that. Because those answers are for solving a crisis that most of you don’t even fully understand. Or don’t want to understand.

You don’t listen to the science because you are only interested in solutions that will enable you to carry on like before. Like now. And those answers don’t exist anymore. Because you did not act in time.

Avoiding climate breakdown will require cathedral thinking. We must lay the foundation while we may not know exactly how to build the ceiling.

Sometimes we just simply have to find a way. The moment we decide to fulfil something, we can do anything. And I’m sure that the moment we start behaving as if we were in an emergency, we can avoid climate and ecological catastrophe. Humans are very adaptable: we can still fix this. But the opportunity to do so will not last for long. We must start today. We have no more excuses.

We children are not sacrificing our education and our childhood for you to tell us what you consider is politically possible in the society that you have created. We have not taken to the streets for you to take selfies with us, and tell us that you really admire what we do.

We children are doing this to wake the adults up. We children are doing this for you to put your differences aside and start acting as you would in a crisis. We children are doing this because we want our hopes and dreams back.

I hope my microphone was on. I hope you could all hear me.

Hopefully, these climate change speeches will encourage you to take action in your local community. If you need more inspiration then head to my post on the best TED Talks on climate change , my guide to the best YouTube videos on climate change , and the sustainability poems to inspire you.

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Wendy Graham is a sustainability expert and the founder of Moral Fibres. She's dedicated to bringing you sustainability advice you can trust.

Wendy holds a BSc (Hons) in Environmental Geography and an MSc (with Distinction) in Environmental Sustainability - specialising in environmental education.

As well as this, Wendy brings 17 years of professional experience working in the sustainability sector to the blog.

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Climate Action: It’s time to make peace with nature, UN chief urges

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The UN Secretary-General, António Guterres, has described the fight against the climate crisis as the top priority for the 21st Century, in a passionate, uncompromising speech delivered on Wednesday at Columbia University in New York.

The landmark address marks the beginning of a month of UN-led climate action, which includes the release of major reports on the global climate and fossil fuel production, culminating in a climate summit on 12 December, the fifth anniversary of the 2015 Paris Climate Agreement.

Nature always strikes back

Mr. Guterres began with a litany of the many ways in which nature is reacting, with “growing force and fury”, to humanity’s mishandling of the environment, which has seen a collapse in biodiversity, spreading deserts, and oceans reaching record temperatures.

The link between COVID-19 and man-made climate change was also made plain by the UN chief, who noted that the continued encroachment of people and livestock into animal habitats, risks exposing us to more deadly diseases.

And, whilst the economic slowdown resulting from the pandemic has temporarily slowed emissions of harmful greenhouse gases, levels of carbon dioxide, nitrous oxide and methane are still rising, with the amount of CO2 in the atmosphere at a record high. Despite this worrying trend, fossil fuel production – responsible for a significant proportion of greenhouse gases – is predicted to continue on an upward path.

‘Time to flick the green switch’

The appropriate global response, said the Secretary-General, is a transformation of the world economy, flicking the “green switch” and building a sustainable system driven by renewable energy, green jobs and a resilient future.

One way to achieve this vision, is by achieving net zero emissions (read our feature story on net zero for a full explanation, and why it is so important). There are encouraging signs on this front, with several developed countries, including the UK, Japan and China, committing to the goal over the next few decades.

Mr. Guterres called on all countries, cities and businesses to target 2050 as the date by which they achieve carbon neutrality – to at least halt national increases in emissions - and for all individuals to do their part.

With the cost of renewable energy continuing to fall, this transition makes economic sense, and will lead to a net creation of 18 million jobs over the next 10 years. Nevertheless, the UN chief pointed out, the G20, the world’s largest economies, are planning to spend 50 per cent more on sectors linked to fossil fuel production and consumption, than on low-carbon energy.

Put a price on carbon

For years, many climate experts and activists have called for the cost of carbon-based pollution to be factored into the price of fossil fuels, a step that Mr. Guterres said would provide certainty and confidence for the private and financial sectors.

Companies, he declared, need to adjust their business models, ensuring that finance is directed to the green economy, and pension funds, which manage some $32 trillion in assets, need to step and invest in carbon-free portfolios.

Far more money, continued the Secretary-General, needs to be invested in adapting to the changing climate, which is hindering the UN’s work on disaster risk reduction. The international community, he said, has “both a moral imperative and a clear economic case, for supporting developing countries to adapt and build resilience to current and future climate impacts”.

Everything is interlinked

The COVID-19 pandemic put paid to many plans, including the UN’s ambitious plan to make 2020 the “super year” for buttressing the natural world. That ambition has now been shifted to 2021, and will involve a number of major climate-related international commitments.

These include the development of a plan to halt the biodiversity crisis; an Oceans Conference to protect marine environments; a global sustainable transport conference; and the first Food Systems Summit, aimed at transforming global food production and consumption.

Mr. Guterres ended his speech on a note of hope, amid the prospect of a new, more sustainable world in which mindsets are shifting, to take into account the importance of reducing each individual’s carbon footprint.

Far from looking to return to “normal”, a world of inequality, injustice and “heedless dominion over the Earth”, the next step, said the Secretary-General, should be towards a safer, more sustainable and equitable path, and for mankind to rethink our relationship with the natural world – and with each other.

You can read the full speech here .

Our planet is in a state of climate emergency.But I also see hope.There is momentum toward carbon neutrality. Many cities are becoming greener. The circular economy is reducing waste. Environmental laws have growing reach. And many people are taking #ClimateAction. pic.twitter.com/dDAHH279Er António Guterres, UN Secretary-General antonioguterres December 2, 2020

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Cop26: Biden urges action on climate change and vows US will ‘lead by example’

‘Right now, we are falling short,’ US president says, urging other world leaders to embark upon a shift to clean energy

Joe Biden has warned that the climate crisis poses “the existential threat to human existence as we know it” and urged other world leaders to embark upon a transformational shift to clean energy, as questions linger over the US president’s ability to deliver this vision at home.

Biden, addressing a sparse chamber at crucial UN climate talks that have begun in a frigid and drizzly Glasgow, said that the conference must act as a “kickoff of a decade of ambition and innovation to preserve our shared future”.

The president added: “We meet with the eyes of history upon us. Will we do what is necessary? Or will we condemn future generations to suffer?”

Biden’s administration is attempting to reassert America’s credibility at the gathering of nearly 200 countries in Scotland, known as Cop26, after Donald Trump’s decision to pull the US from the Paris climate agreement and his dismissal of climate science. Scientists have warned the world is badly off track to avoid disastrous climate change, with leaders of poorer, vulnerable countries using the talks to warn their populations face looming cataclysm.

“We will demonstrate to the world the United States is not only back at the table but hopefully leading by the power of our example,” Biden said in his speech, in a tacit acknowledgement of Trump. “I know it hasn’t been the case, which is why my administration is working overtime to show our climate commitment is action not words.”

“Right now, we are falling short, there’s no time to hang back, sit on the fence or argue amongst ourselves,” the president continued. “This is the challenge of our collective lifetimes, an existential threat to human existence as we know it and every day we delay the cost of inaction increases.”

Biden said that wealthy, major polluters such as the US have an “overwhelming responsibility” to aid smaller countries that are struggling to cope with growing floods, fires and heatwaves spurred by global heating .

Before arriving in Glasgow, Biden also took aim at some other leading emitters for not doing enough to prevent global heating surpassing 1.5C. He said these countries are “not only Russia but China (which) basically didn’t show up in terms of commitments to deal with climate change. I found it disappointing myself”.

At a side event, Biden also effectively apologized for his predecessor. “I guess I shouldn’t apologize, but I do apologize for the fact that the United States – the last administration – pulled out of the Paris accords and put us sort of behind the eight ball,” Biden said.

But climate activists, many of whom gathered outside the Glasgow venue that hosted more than 120 world leaders on Monday, argue that Biden is failing to live up to his own words. The president touted vast proposed climate legislation that would be the “most significant investment to deal with the climate crisis that any advanced nation has made, ever,” but the bill remains stalled in Congress, after being winnowed away by a senator who has extensive ties to fossil fuels .

“Biden is at Glasgow empty handed, with nothing but words on paper,” said Varshini Prakash, executive director of Sunrise Movement. “It is humiliating and fails to meet the moment that we’re in.”

Biden has also been attacked over his administration’s reluctance to drastically scale back oil and gas drilling in the US. The president’s narrative of “climate leadership” contradicts the daily suffering by communities on the frontline of gas and oil production in the US, activists say. In the first six months of the Biden administration, about 2,500 new oil and gas permits were authorized – a figure Trump’s administration took a year to reach.

Speakers outside Cop26 on Monday – only 23 civil society observers were allowed in to hear the leaders’ speeches – included Black and Indigenous leaders whose communities are on the frontline of fossil fuel extraction impacts, including air pollution and contaminated drinking water and land across the US.

Tom Goldtooth, Native American leader from the Indigenous Environmental Network, said: “We’re here as the original people of the US to denounce the polluters conference – it’s not a climate conference – it’s been taken over by corporate interests. If we Indigenous people don’t come we’ll be on the menu. We’re here to defend our people, we want to live.”

Biden’s speech came shortly after an official opening of Cop26 that acknowledged the growing anguish over the escalating, and largely unchecked, climate crisis. Boris Johnson, the British prime minister, said “the people who will judge us are children not yet born”, adding “if we fail they will not forgive us”. Antonio Guterres, the secretary general of the UN, warned that “we are digging our own graves” due to the failure to dramatically cut planet-heating emissions.

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The Role of Individual Responsibility in the Transition to Environmental Sustainability

Steve Cohen

We New Yorkers live in a city that is on a gradual transition toward environmental sustainability, but we are a long way from the place we need to end up. A circular economy where there is no waste and where all material outputs become inputs is well beyond our technological and organizational capacity today. But that does not mean we shouldn’t think about how to get from here to there. Much of the work in building environmental sustainability requires the development of systems that enable us to live our lives as we wish while damaging the planet as little as possible. Large-scale institutions are needed to manage sewage treatment and drinking water, to develop renewable energy and build a modern energy grid. Government policy is needed to ensure the conservation of forests, oceans, and biodiversity. Pandemic avoidance requires global, national and local systems of public health. Climate change mitigation and adaptation also require collective action. What then can individuals do?

As individuals, we make choices about our own activities and inevitably, they involve choices about resource consumption. I see little value in criticizing people who fly on airplanes to travel to global climate conferences. (I assume you do remember airplanes and conferences, don’t you?) But I see great value in considering the importance of your attendance at the conference and asking if the trip is an indulgence or if you will have an important opportunity to learn and teach. This year has taught us how to attend events virtually. There is little question that live presence at an event enables a type of communication that can’t be achieved virtually. Many times, you will judge that the financial and environmental cost of the trip is far outweighed by the benefits. Those are the times you should travel. My argument here is that it is the thought process, the analysis of environmental costs and benefits, that is at the heart of an individual’s responsibility for environmental sustainability. Individuals are responsible for thinking about their impact on the environment and, when possible, minimize the damage they do to the planet.

Everyone needs to turn on the lights at night, start the shower in the morning, turn on the air conditioning and possibly drive somewhere on Mother’s Day. I would never argue that you should give up these forms of consumption. Instead, I believe we should all pay attention to the resources we use and the impact it has. We are responsible for that thought process and the related analysis of how we, as individuals, might accomplish the same ends with less environmentally damaging means.

Some say that the fixation on individual responsibility is a distraction from the more important task of compelling government and major institutions to implement systemic change. This perspective was forcefully argued in 2019 in The Guardian by Professor Anders Levermann of the Potsdam Institute for Climate Impact Research. According to Professor Levermann:

“Personal sacrifice alone cannot be the solution to tackling the climate crisis. There’s no other area in which the individual is held so responsible for what’s going wrong. And it’s true: people drive too much, eat too much meat, and fly too often. But reaching zero emissions requires very fundamental changes. Individual sacrifice alone will not bring us to zero. It can be achieved only by real structural change; by a new industrial revolution.   Looking for solutions to the climate crisis in individual responsibilities and actions risks obstructing this. It suggests that all we have to do is pull ourselves together over the next 30 years and save energy, walk, skip holidays abroad, and simply ‘do without.’ But these demands for individual action paralyse people, thereby preventing the large-scale change we so urgently need.”

Perhaps, but I do not see it that way. I consider individual responsibility and the thought process and value shift that stimulates individual action as the foundation of the social learning process required for effective collective action. In other words, individual change and collective system-level change are interconnected. The fact is that on a planet of nearly 8 billion people, it is too late for many of us to get back to the land and live as one with nature. There’s too many of us and not enough nature. There is an absolute limit to our ability as individuals to reduce our impact on the planet. Therefore, system-level change is absolutely needed. But system change requires individuals to understand the need for change along with a well-understood definition of the problem. The cognitive dissonance of identifying a problem but never acting on it is difficult to live with. If you see a poor child on the street begging for food, you can provide that child with food and money while continuing to support public policy that addresses the child poverty issue at the systems level. In fact, the emotional impact of that child’s face may well provide the drive that leads you to fight harder for the policy that would prevent that child from needing to beg. We learn by example, and vivid experiences and cases can lead to transformative systemic change.

While I consider individual and collective responsibility connected, without collective systems and infrastructure supporting environmental sustainability, there are distinct limits to what individual action can achieve. That is why I see no value in shaming individuals for consuming fossil fuels, eating meat, or buying a child a Mylar birthday balloon. I believe an attitude of moral superiority is particularly destructive in any effort to build the political support needed for systemic change.

As my mentor, the late Professor Lester Milbrath, often argued, the only way to save the planet is through social learning that would enable us to “learn our way to a sustainable society.” He made this argument in his pathbreaking work: Envisioning a Sustainable Society: Learning Our Way Out . In Milbrath’s view, the key was to understand environmental perceptions and values and to build on those values and perceptions to change both individual behavior and the institutions their politics generated. To Milbrath, the human effort to dominate nature had worked too well, and a new approach was needed. As he observed in Envisioning a Sustainable Society :

“Learning how to reason together about values is crucial to saving our species. As a society we have to learn better how to learn, I call it social learning; it is the dynamic for change that could lead us to a new kind of society that will not destroy itself from its own excess.”

My view is that one method to pursue social learning is learning by doing — in other words by encouraging the individual behaviors we might each take to reduce our environmental impact. Those behaviors remind us to think about the planet’s wellbeing along with our own. They reinforce and remind us and as they become habit, they impact our values and our shared understanding of how the world works.

There is, therefore, no tradeoff between individual and collective responsibility for protecting the environment unless we insist on creating one. Additionally, in a world of extreme levels of income inequality, wealthy people who have given up eating meat have the resources to consume alternative sources of nourishment. They do not occupy the moral high ground criticizing an impoverished parent proudly serving meat to their hungry child. In our complex world, we should mistrust simple answers and instead work hard to understand the varied cultures, values and perceptions that can contribute to the transition to an environmentally sustainable global economy. The path to environmental sustainability is long and winding and will require decades of listening and learning from each other.

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Steve, I appreciate your perspective on individual responsibility. I am developing a similar position and submitted an “OpEd” piece to Times about a month ago but alas it didn’t get published. I would like to share and develop the conversation with you so please reach out.

What are the responsibilities of individuals, governments and the international community in helping people have access to water?

While this highly educated society continues the GDP rat race and decimating all other patterns that create balance in the world we live in, here’s a little story of obvious stupidity for fun and profit. In 1975 my wife and I after several years of college chose to listen to scientists’ warnings about continued expansionism economically. We simplified our lives and did without things like electricity, fancy new vehicles and useless bling. We did without as a plausible direction for a template of living lightly and securing a viable future for more than just humans. We endured countless slurs ( tree huggers, eco-terrorists, hippies,) and were subjected to verbal and realistic abuse . Now at 72 and 68 we are wondering where the hell were the rest of you? Read the book “Small is Beautiful ” to see the wrongheaded direction your politicians and some clergy and certainly all greedy vulture capitalist have led the general public. I have no patience for obvious stupidity .Yeah, we were WOKE long before most people and feel no compulsion to be apologetic as all of you are to blame if you help continue the narrative of GDP unlimited growth and the population explosion. nats remark

“perhaps, but i do not see it that way” sorry but that kinda just means your guile is weak and you’re extremely credulous and succeptable to propeganda, dunno what to tell ya bud but this perspective is a total nothingburger. Of Course we must needs rely on some great measure of personal choice here, but if my choices are: Waste, Waste, Out of my Budget well i dont REALLY have a choice then Do I? which means that for the majority of americans there is no ethical choice list they can follow to fix the problem, only by compelling legislation can those choices be made available to them.

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• Climate Change Speech/Global Warming Speech

Download Long and Short Climate Change Speech Essay in English Free PDF from Vedantu

Earth is the only planet which has variety in weather and climate crucial for survival.  But we humans are killing nature to fulfil our need and greed that causes global warming, eventually leading to climate change. Here, we have provided both long and short Climate Change speech or Global Warming speech along with 10 lines for a brief speech on Global Warming. Students can refer to this article whenever they are supposed to write a speech on Global Warming. 

Long Global Warming Speech

Global Warming refers to the Earth's warming, i.e. rise in the Earth's surface temperature. A variety of human activities, such as industrial pollution and the burning of fossil fuels, are responsible for this temperature rise. These operations emit gases that cause the greenhouse effect and, subsequently, global warming. Climate change, starvation, droughts, depletion of biodiversity, etc. are some of the most important consequences of global warming.

The average surface temperature of the planet has risen by around 0.8 ° Celsius since 1880. The rate of warming per decade has been around 0.15 °-0.2 ° Celsius. This is a worldwide shift in the temperature of the planet and should not be confused with the local changes we witness every day, day and night, summer and winter, etc.

There can be several causes for Global Warming, the GreenHouse Effect is believed to be the primary and major cause. This impact is caused primarily by gases such as carbon dioxide, methane, chlorofluorocarbon, nitrous oxides, etc. In the atmosphere around the Earth, these gases form a cover from which the Sun's hot rays can penetrate the Earth but can not leave. So, in the lower circle of the Earth, the heat of the Sun persists, allowing the temperature to increase.

This is not something new, it is not something we weren’t aware of before. Since childhood, each one of us present here has been made to write a speech on Global Warming in their school/college, at least once. We have been made aware of the disastrous effects through movies, articles, competitions, posters, etc. But what have we done? Recently, the Greta Thunberg's Climate Change speech was making headlines. Greta Thunberg is a 16-year-old teenager who got the chance to speak at the United Nations Climate Action Summit. Although, most of us were quick to term Greta Thunberg Climate Change speech as ‘Scathing’ but very few could point out the need for such a brutal reminder. Remember? “We have been made to write a speech on Global Warming since our school days and nothing changed”. Maybe a searing reminder would bring a change and yes, it sure did.

Now, we have the titanic fame, Leonardo DiCaprio, speaking up about climate change in his Oscar speech as well as at the UN. However, Leonardo Dicaprio's Climate Change speech makes us aware of the fact that this has grown beyond individual choices. If we have to fight climate change, industries and corporations have to take decisive large-scale action.

I would like to end my speech by saying that only spreading awareness isn't the answer. It's time to act, as actions yield results.

Short Speech on Global Warming

Today, I am here to deliver a short speech on Global Warming. We all are well aware of Global Warming and how it results in Climate Change. Owing to global warming, there have been cases of severe drought. Regions, where there used to be a lot of rainfall, are seeing less rainfall. The monsoon trend has shifted around the globe. Global warming also causes ice to melt and the level of the ocean to rise, resulting in floods.

Various species are also widely impacted by global warming. Some land organisms are very vulnerable to changes in temperature and environment and can not tolerate extreme conditions. Koalas, for example, are at risk of famine because of climate change. Several fish and tortoise species are susceptible to changes in ocean temperatures and die.

One of the biggest threats to global security is climate change. Climate change knows no borders and poses us all with an existential threat. A significant security consequence of climate change is a rise in the frequency of severe weather events, especially floods and storms. This has an effect on city and town facilities, access to drinking water, and other services to sustain everyday life. It also displaces the population and since 2008, disasters caused by natural hazards have displaced an average of 26.4 million people annually from their homes. 85% of these are weather-related. This is equal to every second of approximately one person displaced.

It is important that we finally stop debating about it. Schools need to stop making students write a speech on Global Warming or Climate Change and focus on making them capable of living a sustainable life. Face it with courage and honesty. 

10 Lines for Brief Speech on Global Warming

Here, we have provided 10 key pointers for Climate Change Speech for Students.

Global warming refers to the above-average temperature increase on Earth.

The primary cause of global warming is the Greenhouse effect.

Climate change is blamed for global warming, as it badly affects the environment.

The most critical and very important issue that no one can overlook is climate change; it is also spreading its leg in India.

India's average temperature has risen to 1.1 degrees Celsius in recent years.

Living creatures come out of their natural environment due to global warming, and eventually become extinct.

Climate change has contributed to weather pattern disruptions across the globe and has led to unusual shifts in the monsoon.

Human actions, apart from natural forces, have also led to this transition. Global warming leads to drastic climate change, leading to flooding, droughts and other climate catastrophes.

The pattern of monsoon winds is influenced by changes in global temperature and alters the time and intensity of rain. Unpredictable climate change impacts the nation's farming and production.

Planting more trees can be a positive step in eliminating the global warming problem.

What is Climate Change?

Climate change refers to alterations in Earth's climate, it has been happening since the planet was formed. The Climate is always changing. There are different factors that could contribute to Climate Change, including natural events and human activities.

Factors that cause Climate Change

The sun’s energy output

Volcanic eruptions

Earth’s orbit around the sun

Ocean currents

Land-use changes

Greenhouse gasses emissions from human activity

The most significant factor that contributes to Climate Change is greenhouse gasses emissions from human activity. These gasses form a “blanket” around Earth that traps energy from the sun. This trapped energy makes Earth warm and disturbs the Earth’s climate.

The Impact of Climate Change

Climate change is already happening. It is causing more extreme weather conditions, such as floods and droughts.

Climate change could lead to a loss of biodiversity, as plants and animals are unable to adapt to the changing climate.

Climate change could also cause humanitarian crises, as people are forced to migrate because of extreme weather conditions.

Climate change could damage economies, as businesses and industries have to cope with increased energy costs and disrupted supply chains.

Here are some Tips on How to write a Speech on Climate Change:

Start by doing your research. Climate change is a complex topic, and there's a lot of information out there on it. Make sure you understand the basics of climate change before you start writing your speech.

Write down what you want to say. It can be helpful to draft an outline of your speech before you start writing it in full. This will help ensure that your points are clear and organized.

Be passionate about the topic. Climate change is a serious issue, but that doesn't mean you can't talk about it with passion and enthusiasm. Let your audience know how important you think this issue is.

Make it personal. Climate change isn't just a political or scientific issue - it's something that affects each and every one of us. Talk about how climate change has affected you or your loved ones, and let your audience know why this issue matters to you.

Use visuals to help explain your points. A good speech on climate change can be filled with charts, graphs, and statistics. But don't forget to also use powerful images and stories to help illustrate your points.

Stay positive. Climate change can be a depressing topic, but try not to end your speech on a negative note. Instead, talk about the steps we can take to address climate change and the positive outcomes that could come from it.

Start by defining what climate change is. Climate change is a problem that refers to a broad array of environmental degradation caused by human activities, including the emission of greenhouse gasses.

Talk about the effects of climate change. Climate change has been linked to increased wildfires, more extreme weather events, coastal flooding, and reduced crop yields, among other things.

Offer solutions to climate change. Some solutions include reducing our reliance on fossil fuels, investing in renewable energy sources, and planting trees to help absorb carbon dioxide.

Appeal to your audience’s emotions. Climate change is a problem that affects everyone, and it’s important to get people emotionally invested in the issue.

Make sure your speech is well-organized and easy to follow. Climate change can be a complex topic, so make sure your speech is clear and concise.

FAQs on Climate Change Speech/Global Warming Speech

1. What should be the main focus of my speech? Can I use statistics in my speech?

The main focus of your speech should be on the effects of climate change and the solutions we can enact to address it. However, you can also talk about your personal connection to the issue or how climate change has affected your community. Yes, you can use statistics to support your points, but don’t forget to also use images and stories to help illustrate your points.

2. How much should I talk about the potential solutions to climate change?

You should spend roughly equal time discussing both the effects of climate change and potential solutions. Climate change is a complex issue, and it’s important to provide your audience with both the facts and potential solutions.

3. Can I talk about how climate change has personally affected me in my speech?

Yes, you can talk about how climate change has personally affected you or your loved ones. Climate change is a serious issue that affects everyone, so it’s important to get people emotionally invested in the issue.

4. Are there any other things I should keep in mind while preparing my speech?

Yes, make sure your speech is well-organized and easy to follow. Climate change can be a complex topic, so make sure your speech is clear and concise. Also, remember to appeal to your audience’s emotions and stay positive. Climate change can be a depressing topic, but try not to end your speech on a negative note. Instead, talk about the steps we can take to address climate change and the positive outcomes that could come from it.

5. Where can I find more information about preparing a speech on climate change?

The best place to start is by reading some of the reports from the Intergovernmental Panel on Climate Change (IPCC). You can also find helpful resources on the websites of Climate Reality Project or Greenpeace.

6. How long should my speech be?

Your speech should be between 5 and 7 minutes in length. Any longer than that, and your audience will start to lose interest. Climate change can be a complex issue, so it’s important to keep your points brief and concise. If you need help organizing your speech, consider using the following outline:

Define what climate change is;

Talk about the effects of climate change;

Offer solutions to climate change;

Appeal to your audience’s emotions.

7. How can I download reading material from Vedantu?

Accessing material from Vedantu is extremely easy and student-friendly. Students have to simply visit the website of  Vedantu and create an account. Once you have created the account you can simply explore the subjects and chapters that you are looking for. Click on the download button available on the website on Vedantu to download the reading material in PDF format. You can also access all the resources by downloading the Vedantu app from the play store.

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An Elevator Speech on the Need to Protect the Planet

Scripps climate researcher gets a word in with pope francis after convening historic joint workshop of two vatican science academies.

Image courtesy of the Pontifical Academy of Sciences

A historic gathering of scientists, economists and philosophers who advise the Vatican produced a declaration last week that sustainable development is essential to stop continued degradation of the planet and the rise of economic inequality. But it was the condensed version of that message that Veerabhadran Ramanathan will remember delivering. With only a few hours notice, the climate and atmospheric scientist at UC San Diego’s Scripps Institution of Oceanography found out that he would be meeting Pope Francis and would have only one minute to speak to him as the workshop concluded on May 6.

The message he delivered was that climate change has become a serious issue and the 3 billion poor people in the world who bear only a small responsibility for warming the planet, having never had access to the fossil fuels used by the more affluent, will bear the brunt of the worst effects of climate change.

Ramanathan said that he practiced saying that message in Spanish after hearing the Pope would better be able to communicate a response directly, but when the moment came, the rehearsed words vanished from his mind and he fell back on English.

“Pope Francis listened patiently with his characteristic disarming smile,” Ramanathan said. “I am very hopeful the declaration we produced will have an impact on his pronouncements.”

Ramanathan was appointed to the Pontifical Academy of Sciences in 2004 by Pope John Paul II. The workshop was the first he had organized under Pope Francis since the former Cardinal Jorge Mario Bergoglio assumed the papacy in March 2013. The meeting, “Sustainable Humanity, Sustainable Nature, Our Responsibility” was a joint workshop of the Pontifical Academy of Sciences and the Pontifical Academy of Social Sciences held May 2 to 6. Joining him in presiding over the summit were Chancellor of the Pontifical Academy of Sciences Marcelo Sánchez Sorondo, British economist Partha S. Dasgupta of Cambridge University, and His Excellency Archbishop Roland Minnerath, Archbishop of Dijon, France.

Pope Francis with members of the Pontifical Academy of Sciences and of the Pontifical Academy of Social Sciences. Image courtesy of the Pontifical Academy of Sciences

The joint statement of the two academies calls for the pursuit of social equality by a more equitable provision of greater access to energy resources among other prescriptives. However, statement authors also pointed out that the use of natural resources by relatively affluent societies is not sustainable, requiring a rethinking of resource use at all economic levels.

Renowned Columbia University economist Jeffrey Sachs joined Ramanathan, Dasgupta and Sorondo in drafting the statement. Among the signatories were six Nobel laureates and some of the world’s leading thinkers on sustainable development, climate change and economic justice. UC San Diego geophysicist Walter Munk, emeritus climate researcher Paul Crutzen, and former Scripps Director Charles Kennel also signed.

Kennel described the workshop as intense work, with one session lasting 12 hours straight. What set it apart from similar declarations from panels of scientists or social scientists was the breadth of its scope, he said. The workshop statement points out the commonality of the disregard that leads to societal problems as seemingly different as environmental destruction and human trafficking. The moral authority of the Catholic Church and other religious institutions to effect justice is essential, the authors said.

The statement asserts that “at the end of the day, unless human beings treat human beings well, they wouldn’t treat nature well and if they didn’t treat nature well, we wouldn’t survive as a civilization,” said Kennel.

Munk said it is his impression that existing civilization is technically competent to switch from fossil fuel to clean energy in couple of generations provided that clean nuclear energy is included.

“But whether it has the social and ethical standards for a truly international collaboration is the real challenge. The conference was an important step in that direction,” he said.

The workshop and the meeting with Pope Francis are part of what Ramanathan says is his campaign to prevail upon religious leaders to use their moral authority to promote better stewardship of planet Earth among their followers. In 2012, Ramanathan had a similar encounter with the Dalai Lama, who ended a brief one-on-one encounter with Ramanathan by pledging to work on the issue for the rest of his life.

The Scripps researcher said it is his hope that a message on the need for climate change mitigation will be woven by Pope Francis into a future encyclical, a letter issued by popes to Catholic bishops containing directives on religious matters.

Two Scripps graduate students, Matt Siegfried and Emily Kelly, were invited as observers to the workshop. Kelly described it as an incredible experience learning from an illustrious group of people on topics of sustainability, climate change, and human dignity.

“It has been a very exciting experience here and really building so much on my Center for Marine Biodiversity and Conservation education through discussions with ethicists, anthropologists, glaciologists, sociologists, economists, politicians, biologists, religious leaders, atmospheric chemists, labor organizers, and people of so many more disciplines,” said Kelly, a fifth-year student in the lab of Scripps marine biologist Jennifer Smith.

Ramanathan has met with John Paul II and his successor Pope Benedict XVI, who appointed him to the council of the academy in 2013.

In 2010, Ramanathan founded Project Surya (“sun” in Sanskrit), a Third World-based charitable effort to mitigate the emission of black carbon and other toxins from solid biomass cooking methods endemic to his native India, Southwest Asia, and vast expanses of Africa.

Project Surya provides solid-fuel, bio-gas, and solar stoves and lamps that greatly reduce smoke indoors and outdoors — and thus reduce the ill effects of pollution — for nearly 4 million poor people in developing countries. They pay a heavy price. About 3.2 million people die every year inhaling the toxic smoke, which is a major contributor to climate change.

According to the Pontifical Academy of Sciences, the panel has its roots in the Academy of the Lynxes (Accademia dei Lincei), which was founded in Rome in 1603 as the first exclusively scientific academy in the world. The Accademia dei Lincei achieved international recognition, and appointed Galileo Galilei as a member on 25 August 1610, but did not survive the death of its founder, Federico Cesi. In 1847, Pope Pius IX reestablished the Academy as the Pontifical Academy of the New Lynxes. Pope Pius XI renewed and reconstituted the Academy in 1936, and gave it its present name.

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Kate Abnett covers EU climate and energy policy in Brussels, reporting on Europe’s green transition and how climate change is affecting people and ecosystems across the EU. Other areas of coverage include international climate diplomacy. Before joining Reuters, Kate covered emissions and energy markets for Argus Media in London. She is part of the teams whose reporting on Europe’s energy crisis won two Reuters journalist of the year awards in 2022.

Simon leads a team tracking how the financial system and companies more broadly are responding to the challenges posed by climate change, nature loss and other environmental, social and governance (ESG) issues including diversity and inclusion.

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Haiti's government on Tuesday published a decree naming the members of a transitional council set to take power, inching toward stability after Prime Minister Ariel Henry left a political void when he announced his resignation last month.

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Un headquarters, 10 september 2018, remarks on climate change, antónio guterres.

Dear friends of planet Earth,

Thank you for coming to the UN Headquarters today.

I have asked you here to sound the alarm.

Climate change is the defining issue of our time – and we are at a defining moment.

We face a direct existential threat.

Climate change is moving faster than we are – and its speed has provoked a sonic boom SOS across our world.

If we do not change course by 2020, we risk missing the point where we can avoid runaway climate change, with disastrous consequences for people and all the natural systems that sustain us.

That is why, today, I am appealing for leadership – from politicians, from business and scientists, and from the public everywhere.

We have the tools to make our actions effective.

What we still lack – even after the Paris Agreement – is the leadership and the ambition to do what is needed.

Dear friends,

Let there be no doubt about the urgency of the crisis.

We are experiencing record-breaking temperatures around the world.

According to the World Meteorological Organization, the past two decades included 18 of the warmest years since 1850, when records began.

This year is shaping up to be the fourth hottest. 

Extreme heatwaves, wildfires, storms and floods are leaving a trail of death and devastation. 

Last month the state of Kerala in India suffered its worst monsoon flooding in recent history, killing 400 people and driving 1 million more from their homes. 

We know that Hurricane Maria killed almost 3,000 people in Puerto Rico last year, making it one of the deadliest extreme weather disasters in U.S. history. 

Many of those people died in the months after the storm because they lacked access to electricity, clean water and proper healthcare due to the hurricane. 

What makes all of this even more disturbing is that we were warned. 

Scientists have been telling us for decades. Over and over again.

Far too many leaders have refused to listen.

Far too few have acted with the vision the science demands.

We see the results.    In some situations, they are approaching scientists’ worst-case scenarios. 

Arctic sea ice is disappearing faster than we imagined possible. 

This year, for the first time, thick permanent sea ice north of Greenland began to break up.

This dramatic warming in the Arctic is affecting weather patterns across the northern hemisphere.

Wildfires are lasting longer and spreading further. 

Some of these blazes are so big that they send soot and ash around the world, blackening glaciers and ice caps and making them melt even faster.

Oceans are becoming more acidic, threatening the foundation of the food chains that sustain life.

Corals are dying in vast amounts, further depleting vital fisheries.

And, on land, the high level of carbon dioxide in the atmosphere is making rice crops less nutritious, threatening well-being and food security for billions of people.    As climate change intensifies, we will find it harder to feed ourselves. 

Extinction rates will spike as vital habitats decline. 

More and more people will be forced to migrate from their homes as the land they depend on becomes less able to support them. 

This is already leading to many local conflicts over dwindling resources. 

This past May, the World Meteorological Organization reported that the planet marked another grim milestone: the highest monthly average for carbon dioxide levels ever recorded.

Four hundred parts per million has long been seen as a critical threshold.

But we have now surpassed 411 parts per millions and the concentrations continue to rise.

This is the highest concentration in 3 million years.  

We know what is happening to our planet.

We know what we need to do.

And we even know how to do it.

But sadly, the ambition of our action is nowhere near where it needs to be. 

When world leaders signed the Paris Agreement on climate change three years ago, they pledged to stop temperatures rising by less than 2 degrees Celsius above pre-industrial levels and to work to keep the increase as close as possible to 1.5 degrees.

These targets were really the bare minimum to avoid the worst impacts of climate change. 

But scientists tell us that we are far off track.

According to a UN study, the commitments made so far by Parties to the Paris Agreement represent just one-third of what is needed.

The mountain in front of us is very high. 

But it is not insurmountable.

We know how to scale it.

Put simply, we need to put the brake on deadly greenhouse gas emissions and drive climate action.

We need to rapidly shift away from our dependence on fossil fuels. 

We need to replace them with clean energy from water, wind and sun. 

We must halt deforestation, restore degraded forests and change the way we farm. 

We need to embrace the circular economy and resource efficiency.

Our cities and transport sectors will need to be overhauled. 

How we heat, cool and light our buildings will need to be rethought so we waste less energy.

And this is exactly where this conversation can become exciting.

Because, so much of the conversation on climate change focuses on the doom and gloom. 

Of course, warnings are necessary. But fear will not get the job done. 

No, what captures my imagination is the vast opportunity afforded by climate action.

Enormous benefits await humankind if we can rise to the climate challenge.

A great many of these benefits are economic. 

I have heard the argument – usually from vested interests -- that tackling climate change is expensive and could harm economic growth. 

This is hogwash.

In fact, the opposite is true. 

We are experiencing huge economic losses due to climate change.

Over the past decade, extreme weather and the health impact of burning fossil fuels have cost the American economy at least 240 billion dollars a year. 

This cost will explode by 50 per cent in the coming decade alone.

By 2030, the loss of productivity caused by a hotter world could cost the global economy 2 trillion dollars. 

More and more studies also show the enormous benefits of climate action. 

Last week I was at the launch of the New [Climate] Economy report from the Global Commission on the Economy and Climate Change.

It shows that that climate action and socio-economic progress are mutually supportive, with gains of 26 trillion dollars predicted by 2030 compared with business as usual. If we pursue the right path.

For example, for every dollar spent restoring degraded forests, as much as $30 dollars can be recouped in economic benefits and poverty reduction. 

Restoring degraded lands means better lives and income for farmers and pastoralists and less pressure to migrate to cities.

Climate-resilient water supply and sanitation could save the lives of more than 360,000 infants every year.

And clean air has vast benefits for public health.

The International Labour Organization reports that common sense green economy policies could create 24 million new jobs globally by 2030.

In China and the United States, new renewable energy jobs now outstrip those created in the oil and gas industries.

And, in Bangladesh the installation of more than four million solar home systems has created more than 115,000 jobs and saved rural households over 400 million dollars in polluting fuels.

So, not only would a shift to renewable energy save money, it would also create new jobs, waste less water, boost food production and clean the polluted air that is killing us.

There is nothing to lose from acting; there is everything to gain.

Now, there are still many who think that the challenge is too great. 

But I deeply disagree.

Humankind has confronted and overcome immense challenges before; challenges that have required us to work together and to put aside division and difference to fight a common threat.   That is how the United Nations came into action.

It is how we have to helped to end wars, to stop diseases, to reduce global poverty and to heal the ozone hole.

Now we stand at an existential crossroad. 

If we are to take the right path – the only sensible path -- we will have to muster the full force of human ingenuity.

But that ingenuity exists and is already providing solutions.

And so dear friends,

Another central message - technology is on our side in the battle to address climate change.

The rise of renewable energy has been tremendous. 

Today, it is competitive [with] – or even cheaper – than coal and oil, especially if one factors in the cost of pollution.

Last year, China invested 126 billion dollars in renewable energy, an increase of 30 per cent on the previous year. 

Sweden is set to hit its 2030 target for renewable energy this year – 12 years early. 

By 2030, wind and solar energy could power more than a third of Europe. 

Morocco is building a solar farm the size of Paris that will power more than one million homes by 2020 with clean, affordable energy. 

Scotland has opened the world’s first floating wind farm.

There are many other signs of hope. 

Countries rich in fossil fuels, like the Gulf States and Norway, are exploring ways to diversify their economies. 

Saudi Arabia is investing heavily in renewables to move from an oil economy to an energy economy.

Norway’s 1 trillion-dollar sovereign wealth fund – the largest in the world – has moved away from investments in coal and has dropped a number of palm and pulp-paper companies because of the forests they destroy.   There are also promising signs that businesses are waking up to the benefits of climate action. 

More than 130 of the world’s largest and most influential businesses plan to power their operations with 100 per cent renewable energy. 

Eighteen multinationals will shift to electric vehicle fleets. 

And more than 400 firms will develop targets based on the latest science in order to manage their emissions. 

One of the world’s biggest insurers – Allianz – will stop insuring coal-fired power plants. 

Investments are shifting too. 

More than 250 investors representing 28 trillion dollars in assets have signed on to the Climate Action 100+ initiative. 

They have committed to engage with the world’s largest corporate greenhouse [gas] emitters to improve their climate performance and ensure transparent disclosure of emissions.  

Many such examples are going to be showcased this week at the important Global Climate Action Summit being convened by Governor Brown in California.

All the pioneers I mentioned have seen the future. 

They are betting on green because they understand this is the path to prosperity and peace on a healthy planet.

The alternative is a dark and dangerous future.

These are all important strides. 

But they are not enough. 

The transition to a cleaner, greener future needs to speed up. 

We stand at a truly “use it or lose it” moment.

Over the next decade or so, the world will invest some 90 trillion dollars in infrastructure.

And so we must ensure that that infrastructure is sustainable or we will lock in a high-polluting dangerous future.

And for that to happen, the leaders of the world need to step up.

The private sector, of course, is poised to move, and many are doing so.

But a lack of decisive government action is causing uncertainty in the markets and concern about the future of the Paris Agreement.

We can’t let this happen.

Existing technologies are waiting to come online – cleaner fuels, alternative building materials, better batteries and advances in farming and land use. 

These and other innovations can have a major role in reducing greenhouse gas emissions, so we can hit the Paris targets and inject the great ambition that is so urgently needed. 

Governments must also end harmful subsidies for fossil fuels, institute carbon pricing that reflects the true cost of polluting greenhouse [gas] emissions and incentivizes the clean energy transition.

I have spoken of the emergency we face, the benefits of action and the feasibility of a climate-friendly transformation.

There is another reason to act -- moral duty. 

The world’s richest nations are the most responsible for the climate crisis, yet the effects are being felt first and worst by the poorest nations and the most vulnerable peoples and communities. 

We already see this injustice in the incessant and increasing cycle of extreme droughts and ever more powerful storms. 

Women and girls, in particular, will pay the price – not only because their lives will become harder but because, in times of disaster, women and girls always suffer disproportionally.

Richer nations must therefore not only cut their emissions but do more to ensure that the most vulnerable can develop the necessary resilience to survive the damage these emissions are causing. 

It is important to note that, because carbon dioxide is long-lasting in the atmosphere, the climate changes we are already seeing will persist for decades to come.

It is necessary for all nations to adapt, and for the richest ones to assist the most vulnerable.

This is the message I would like to make clear in addressing the world leaders this month’s in the General Assembly in New York.

I will tell them that climate change is the great challenge of our time. 

That, thanks to science, we know its size and nature. 

That we have the ingenuity, and the resources and tools to face it. 

And that leaders must lead.

We have the moral and economic incentives to act.

What is still missing – still, even after Paris – is the leadership, and the sense of urgency and true commitment to [a] decisive multilateral response.

Negotiations towards implementation guidelines for operationalizing the Paris Agreement ended yesterday in Bangkok with some progress -- but far from enough.

The next key moment is in Poland in December.

I call on leaders to use every opportunity between now and then -- the G7, the G20 gatherings as well as meetings of the General Assembly, World Bank and International Monetary Fund -- to resolve the sticking points. 

We cannot allow Katowice to remind us of Copenhagen.

The time has come for our leaders to show they care about the people whose fate they hold in their hands. 

We need them to show they care about the future – and even the present.

That is why I am so pleased to have such a strong representation of youth in the audience today.

It is imperative that civil society -- youth, women’s groups, the private sector, communities of faith, scientists and grassroots movements around the world -- call their leaders to account. As I was told myself by my Youth Envoy.

I call -- in particular -- on women’s leadership.  

When women are empowered to lead, they are the drivers of solutions. 

Nothing less than our future and the fate of humankind depends on how we rise to the climate challenge. 

It affects every aspect of the work of the United Nations.

Keeping our planet’s warming to well below 2 degrees is essential for global prosperity, people’s well-being and the security of nations. 

That is why, next September, I will convene a Climate Summit to bring climate action to the top of the international agenda. 

Today, I am announcing the appointment of Luis Alfonso de Alba, a well-respected leader in the climate community, as my Special Envoy to lead those preparations.

His efforts will complement those of my Special Envoy for Climate Action, Michael Bloomberg, and my Special Advisor Bob Orr, who will help to mobilize private finance and catalyze bottom-up action.

The Summit next year will come exactly one year before countries will have to enhance their national climate pledges under the Paris Agreement.

Only a significantly higher level of ambition will do. 

To that end, the Summit will focus on areas that go to the heart of the problem – the sectors that create the most emissions and the areas where building resilience will make the biggest difference. 

The Summit will provide an opportunity for leaders and partners to demonstrate real climate action and showcase their ambition.

We will bring together players from the real economy and real politics, including representatives of trillions of dollars of assets, both public and private.

I want to hear about how we are going to stop the increase in emissions by 2020, and dramatically reduce emissions to reach net-zero emissions by mid-century.

We need cities and states to shift from coal to solar and wind -- from brown to green energy.  

Our great host city, New York, is taking important steps in this direction -- and working with other municipalities to spur change.

We need increased investments and innovation in energy efficiency and renewable energy technologies across buildings, transport, and industry. 

And we need the oil and gas industry to make their business plans compatible with the Paris agreement and the Paris targets.

I want to see a strong expansion in carbon pricing. 

I want us to get the global food system right by ensuring that we grow our food without chopping down large tracts of forest. 

We need sustainable food supply chains that reduce loss and waste. 

And we must halt deforestation and restore degraded lands. 

I want to rapidly speed up the trend towards green financing by banks and insurers, and encourage innovation in financial and debt instruments to strengthen the resilience of vulnerable nations such as small island states and bolster their defences against climate change. 

And I want to see governments fulfilling their pledge to mobilize 100 billion dollars a year for climate action in support of the developing world.

We need to see the Green Climate Fund become fully operational and fully resourced.

But for all this, we need governments, industry and civil society reading from the same page – with governments front and centre driving the movement for climate action.

I am calling on all leaders to come to next year’s Climate Summit prepared to report not only on what they are doing, but what more they intend to do when they convene in 2020 for the UN climate conference and where commitments will be renewed and surely ambitiously increased.

And it is why I am calling on civil society, and young people in particular, to campaign for climate action.

Let us use the next year for transformational decisions in boardrooms, executive suites and parliaments across the world.  

Let us raise our sights, build coalitions and make our leaders listen.

I commit myself, and the entire United Nations, to this effort. We will support all leaders who rise to the challenge I have outlined today.

There is no more time to waste.

As the ferocity of this summer’s wildfires and heatwaves shows, the world is changing before our eyes. 

We are careering towards the edge of the abyss. 

It is not too late to shift course, but every day that passes means the world heats up a little more and the cost of our inaction mounts. 

Every day we fail to act is a day that we step a little closer towards a fate that none of us wants -- a fate that will resonate through generations in the damage done to humankind and life on earth.   Our fate is in our hands.

The world is counting on all of us to rise to the challenge before it’s too late.

I count on you all.

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The White House 1600 Pennsylvania Ave NW Washington, DC 20500

Remarks by Vice President Harris on Climate   Resilience

Florida International University Miami, Florida

4:11 P.M. EDT THE VICE PRESIDENT:  Can we give it up for Yendy, please?  (Applause.)  Please have a seat.  Please have a seat.  I said to Yendy he — he did an excellent job.  You know, public speaking is very difficult, but you — you hope that, at the end of your presentation, that you not only share something that people may not know and, in that way, teach them, but that you help them to feel something.  And your words caused all of us to feel something about our mutual commitment.  (Applause.)  So thank you for that.  Outstanding. Good afternoon, everyone.  Good afternoon.  It’s good to be with everyone.  And — and I want to just thank all of you for being here and for all that you have done. You know, it is a very challenging time in our country right now on this topic and many others.  And it is good to be back in Miami with all of you and with the leaders who are here — (applause) — on the campus of FIU — (applause) — to discuss a very important topic.  And I particularly want to thank the members of our administration, the leaders who have been doing extraordinary work on this subject — Secretary Alejandro Mayorkas, NOAA — (applause) — yes — NOAA Administrator Rick Spinrad — (applause) — and FEMA Administrator Deanne Criswell.  (Applause.)  Thank you all.  Thank you. I also want to thank the members of Congress who are here.  We have Congresswoman Frederica Wilson who is here — (applause) — and Congresswoman Sheila Cherfilus-McCormick who is here.  (Applause.)  They were kind enough to meet me on the tarmac as we arrived this afternoon, so thank you.  And I also want to thank the local officials who are here, including the Mayor of Miami Beach, Dan Gelber.  (Applause.) And to everyone, thank you for your leadership and thank you for your hard work.  So, for years, our nation and many of us have discussed, have lamented, have talked about the threat of climate change.  For years, we debated the potential impact that climate change could have on our communities, on our country, and our world. And today we know the impact, if folks weren’t clear about it before.  Just watch the evening news and see that the time for debate is long past.  (Applause.)  Climate change has become a climate crisis.  And a threat has now become a reality. In recent days, deadly floods have swept through Missouri and Kentucky, washing away entire neighborhoods, leaving at least 35 dead including babies, children.  As has been reported, four children from one family. So, the devastation is real.  The harm is real.  The impact is real.  And we are witnessing it in real-time. In the West, an historic megadrought has made access to clean water increasingly uncertain. In my home state of California, wildfires burned more than 2.5 million acres last year alone.  Andy I were talking about it; my brother-in-law is a firefighter.  And I thank you for giving praise to all of those who have dedicated their lives to that work. Devastating — it has been devastating what we are witnessing — to so many families and so many communities. And over the past few days in California, the McKinney Fire has left two dead and forced thousands in California to evacuate their homes. And here in Florida, every year, more and more powerful hurricanes and tropical storms make landfall on the coast. In addition, across our nation, heat waves have forced tens of millions of people to endure record-setting temperatures. Last year, our nation experienced a total of 20 climate-driven extreme weather events, which caused — each caused more than $1 billion in damage — each one — and, more importantly, resulted in the death of about 700 people. Earlier today, at the National Hurricane Center, I received a briefing on extreme weather fueled by climate change. And the takeaway is clear: As the climate crisis gets worse, extreme weather will pose a rapidly growing danger to a rapidly growing number of communities. So, to protect the people of our nation, let us understand that we can match that desire with action and that we must act now.  And I — and I can tell you, President Joe Biden and I, we understand that when disaster strikes anywhere in America, we have a duty to act, and — I think we all know here — we all, as leaders, certainly have the capacity to act. To provide support and resources has been a goal and a priority for our community but for our administration, so that we can respond and recover and rebuild when disaster hits certain communities.  The President and I also have a duty to act not only after disaster strikes but before disaster strikes.  And that is why we are here today.  (Applause.) Today, our administration is investing more than $1 billion through FEMA to fund climate resilient [resilience] projects in 343 cities, towns, and counties around our nation.  (Applause.) And here’s how it works: So, local governments apply for these grants.  They tell us which projects would be most impactful.  And together, then, we build those projects.  For example, our administration is partnering with Kern County, in California, to invest in underground water storage so families can have access to clean water during droughts. We are partnering with Austin, Texas, to upgrade Austin’s power grid so that homes and businesses and houses of worship can keep on the electricity during summer heat and winter storms.  And we are partnering with folks right here in Miami. Together, we will invest $50 million to protect low-lying neighborhoods from sea-level rise and storm surge.  (Applause.) All of these projects will create good jobs and good union jobs in our communities.  (Applause.)  And these projects will also strengthen our economy by preventing billions of dollars of damage from extreme weather.  This $1 billion investment is double what our administration did last year.  And as President Biden recently announced, next year we will be doubling that investment once again to more than $2 billion.  (Applause.) In awarding these grants, we have paid special attention to the issue of equity, something that has been an area of focus for our administration from the beginning.  (Applause.)  We know that the impact of the climate crisis is not felt equally across all communities.  Consider: Heat waves pose a greater threat to people who don’t have air conditioning or who work in high-heat workplaces, such as warehouses or farm fields.  Emergency evacuations are often more difficult for people with disabilities — for example, people who use wheelchairs or people who are visually impaired.  And emergency evacuations can also be more difficult for folks who travel with sick or aging family members, such as a child who might require constant medical attention. And low-income communities, including rural communities, often do not have the resources that are needed to invest in resilience or to rebuild after disaster has struck.  The climate crisis has exposed and intensified generations of economic and environmental inequities that have been present in communities across our nation.  And our administration remains committed to addressing those inequities through environmental justice.  (Applause.) In awarding these grants, we have prioritized projects that will protect the communities that are disproportionately impacted by the climate crisis.  And these investments are one part of a larger fight. The most effective way to protect our nation is not only to address the effects of climate disasters, but to address the cause of the climate crisis itself.  (Applause.) And that is why last year we set an ambitious goal.  Our nation will cut our greenhouse gas emissions in half by no later than 2030.  And by no later than 2050, we will reach net zero emissions.  (Applause.)  Some say that is an ambitious goal; I say it is doable.  It is doable.  (Applause.)  Think about it: The transportation sector is our nation’s single-largest source of greenhouse gas emissions.  So, to address that, we have invested tens of billions of dollars to put more electric vehicles on the road.  (Applause.)   In fact, when I was in the United States Senate, we were able to do the work of saying that we should focus on the issue of electric school buses.  And I was proud to introduce the first piece of legislation to electrify our nation’s fleet of school buses to that end.  (Applause.)  And the transition is now underway.  For example, in Miami-Dade County, public schools will soon have 50 electric school buses on the roads.  (Applause.)  And that is not all.  Our administration has also invested $65 billion into the electric grid and transmission infrastructure for our nation — so to build thousands of miles of new, resilient transmission lines.  And in that way, we can move clean energy from where it is created to where it is needed.  It is literally about the transportation of energy.  So, think: From a wind farm in Iowa to a suburb in Chicago, or from a solar farm in Nevada to a family farm in Missouri.  How exciting is that.  (Applause.)  And it will make our nation more energy independent.  (Applause.)  And it will lower electricity bills for millions of working families.  (Applause.)  So, these investments are an important step forward.  And our nation will soon take another great step forward in our fight against the climate crisis. President Biden and I strongly support the agreement announced last week by Leader Schumer and Senator Manchin.  (Applause.)  In addition to lowering the cost of healthcare and prescription drugs for millions of Americans, this agreement will invest nearly $370 billion in clean energy, zero-emission vehicles, environmental justice, and more. This is an historic opportunity to advance our fight against the climate crisis. And so, Congress, we ask that you pass it immediately.  (Applause.)  So, all of this to say: The climate crisis is here.  It has arrived, and we are experiencing it in real time.  And we have the ability — dare I say the responsibility — to take urgent action to protect the people of our nation.  And, again, we all have a role to play. So, Miami, I know that you know the urgency of this moment.  You are living it every day.  And your voice is so important on this issue. If we act now and we act together, we can protect our communities from the disasters that we are witnessing.  We can tackle the climate crisis and make sure all people can breathe clean air, drink clean water, and have access to clean energy. We can build a more sustainable future.  We can do this.  We can build a more equitable future.  It’s within our power.  And we can build a more resilient future.  That’s within our sights.  And in the process, yes, we will create millions of good jobs in the clean energy economy.  (Applause.)  So, to the leaders here, I say: Miami, together we are building that future.  And we will not tire in spite of all that we are witnessing that shows us such tragedy.  I know that while we send our prayers and our love, we also, with each day, renew our commitment to the urgency of now and the ability that we have collectively — all of us in it together — to do something about it. May God bless you, and may God bless America.  (Applause.)  Thank you all. END                4:28 P.M. EDT

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An Engineering Experiment to Cool the Earth

A new technology is attempting to brighten clouds and bounce some of the sun’s rays back into space..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

From “The New York Times,” I’m Katrin Bennhold. This is “The Daily.”

[MUSIC PLAYING]

After failing for decades to cut carbon emissions enough to stop the planet from dangerously overheating, scientists are increasingly looking at backup measures, some that would fight the warming by intervening in the climate itself. Today, my colleague Christopher Flavelle on the efforts to engineer our way out of the climate crisis.

It’s Friday, April 5.

So, Chris, you’ve been covering climate change for a while, but recently you’ve been focused on a very special project. Tell us about this.

Yeah, two things have been happening in climate change recently that are really important. Number one, records have been falling at alarming rates. Last year was, again, the hottest year on record. Much the world surpassed the important threshold of 1.5 degree Celsius above pre-industrial levels. So the world is getting warmer at an alarming rate.

At the same time, emissions aren’t falling. The message of the last generation has been, we need to cut emissions really to almost zero by the end of this century. And in fact, the reverse is happening. Emissions are continuing to rise.

At the same time, the number and characteristics of weather disasters have become really alarming. So the effects of that warming have become really clear. And it’s clear that the world is struggling to adapt to those effects.

So the other thing that’s happening at a high level is there’s more research and more consideration of OK, what if we can’t cut emissions fast enough? What if we’re going to have this really severe degree of warming? Can we do something else, maybe temporarily, to buffer those effects? And that’s led to this question of, what kinds of changes can we make deliberately to the atmosphere, to the environment that will maybe produce some sort of artificial cooling in the meantime?

So earlier this week I was able to watch, as scientists did, the first outdoor tests in the US on a technology that will aim to do just that. It’s called marine cloud brightening.

So what is this idea of brightening the clouds? Where did it originally come from?

So everyone I talked to pointed back to one really important moment in 1990 when a British physicist named John Latham was taking a hike in Wales with his young son. And they were looking out at the clouds over the Irish Sea.

And as Dr. Latham later told it, his son asked him, “Hey, why are clouds bright?” And Dr. Latham said, “Well, because they reflect sun right back in the sky.” And his son said, “So they’re like soggy mirrors.”

And Dr. Latham went on to write a letter in 1990 that was published in the Journal Nature, saying, you know what, if we can deliberately manipulate these clouds, maybe we can make them more reflective and actually counteract the effects of global warming. That was the inception point for this idea, and it led to decades of research culminating in this week’s test.

So the idea is if you can make clouds more reflective, you can reflect more of the sun’s heat back into space. So it won’t get trapped in the Earth’s atmosphere in the first place.

Exactly. That’s what they’re trying to do.

That’s a very simple, and at the same time, a very powerful idea. I love actually that they were hiking in Wales. That’s where I am right now, and we sure have a lot of clouds here, rain clouds. But tell me more about what you saw at the testing site.

So this Tuesday, a little after 7:00 in the morning, I pulled up in a parking lot on a dock at the edge of Alameda.

I’m standing at the gangplank to the USS Hornet, a decommissioned aircraft carrier in San Francisco Bay here for the first test in the US of a machine that was designed to try to brighten clouds, a way of maybe temporarily cooling the Earth.

And I made my way up one of the massive gangplanks and came in to find a cluster of some of the top atmospheric scientists in the world.

Have you met Sarah?

How do you do?

Hi, Rob. How are you?

Looking really excited. And they accompanied me out to the flight deck —

Here we are.

— of this aircraft carrier.

Pretty epic.

It’s pretty great.

Which was a bit like a party. They’d set up a little table on the side with some coffee and some sandwiches, and people were chatting and saying hi to each other. And I asked them why they were excited.

So I know a thousand of what you know, and I still find this exciting. You guys, walk me through. Is this like a big day for you or just like one more test?

No, this is a big day for me.

And they said this was actually a huge day in their research.

Just looking at it, going, yeah, this is the culmination of years of work, right?

Wow, and tell me about what exactly they were so excited about and what they were doing on the ship.

Yeah, the thing everyone was excited about was this machine set up at the far end of the flight deck of this aircraft carrier. It’s blue. It’s shiny. It looks a bit like a snow maker or maybe like a spotlight.

This machine is a sprayer. What it does is it sprays really, really, really small aerosol particles, in this case, smashed up sea salts, a long distance at just the right size and just the right volume. Because in theory, at some point, you could use this machine to change the size and number of the droplets in the clouds. You can make them brighter conceptually it’s possible. The question is, technologically, can we do it?

Yeah, the particles are coming out in a super concentrated there. So whatever’s coming out of that circle there is basically going to be huge by the time it gets to the cloud.

And so the goal with this test was they spent years building this sprayer that can use really high pressured air to smash salt particles into super small bits, about 1,700th the size of a human hair.

What they didn’t know, until this week, and they’re trying to find out right now, once you spray it, do those aerosols that are so finely tuned stay that size? In theory, they should.

What they don’t know is, things like wind and humidity and temperature could potentially cause them to coagulate, to regroup, which would throw the whole thing off. If the aerosols you’re shooting into clouds are too big, you can backfire the whole purpose. You can wreck what you’re trying to do because you make clouds less reflective, not more reflective.

So the whole goal of the experiment is, OK, can they make the spray just so, so that even in outdoor conditions, the aerosols that are so finely sized remain the size you want them to be. And that’s what they’re trying to find out.

And you watched the actual test of this. What did you see? What happened?

Those instruments are emitting a slight hum.

So operating the sprayer is not straightforward.

And they’re filling the tanks with the salt water that’ll be used to produce the mist.

There was somebody crouched on the control deck, the panel of instruments at the side of the sprayer. So I went over and tried to sit next to him and watch him as he turned a series of knobs and careful sequence.

OK. Yeah, everybody, we’re going to run some air. So the — ... We need two minutes here just to have power on this.

And after a series of tests to make sure the valves were clear —

OK, ear protection, please.

— finally the moment came, and he got an all clear over his walkie-talkie. And he turned on the water —

Water on, copy, over.

— and the air.

[COMPRESSOR ACTIVATING]

Since the sound of the compressor pushes pressurized air through the sprayer, it’s making a dull, throbbing sensation. You can feel it a little bit through the deck of the ship.

We all had ear protectors. And even with the ear protectors, it was really loud. And then you can almost feel the spray bursting out of this machine and watch it travel really hundreds of feet down the deck of the aircraft carrier.

OK, water off, fan off. Good job.

Awesome, guys, you’re done. Thank you. Excellent.

First test is done.

My first signal that things have gone well was I looked up when the spraying machine was turned off and saw some scientists high-fiving down the deck.

What’d you think?

It’s beautiful.

Is it what you thought it would be?

It’s better. And I’m optimistic that it will tell us a lot about what these things do. This made me really optimistic.

And the idea is to do several short bursts like that through the day?

And everyone seemed really excited that this thing they’d worked on for years was finally happening in this really important outdoor test.

OK, so it sounds like this test was a success.

Yeah, they stressed that they need a lot of time to really go over the results. They’ll be doing this test again and again in different weather conditions. But the initial reaction seemed positive. They seemed to think that the numbers they were getting were what they were hoping to see.

And so now the goal is, can they maintain the right size aerosols even in different conditions down the deck of this aircraft carrier? That’ll give them some confidence that if they decided one day to try and do this on the open ocean to actually brighten clouds, they’d have the ability to do it.

So, Chris, if all of this works, how and when do these researchers anticipate that this would actually be used?

Well, here’s a great example. In the month of February, a version of this testing was also happening in Australia, off the Coast of Australia, where researchers were testing whether marine cloud brightening could be used to cool the ocean just a little bit around the Great Barrier Reef.

Really high ocean temperatures are causing bleaching of that coral reef. The idea was, could they use marine cloud brightening to save some of those reefs from dying? And that’s probably a good idea of the fairly localized situation, where you could, in theory if you do it right, have a fairly quick degree of cooling that could maybe try to avert or mitigate something pretty acute like a heat wave or a stretch of warm weather that would kill coral. But the science is probably too new at this point to talk about the right situations to use it. Those conversations are all down the road as researchers look at these and other ideas for what they could do if things get really bad.

We’ll be right back.

So, Chris, when I think about solutions to climate change, it usually involves these very hard things we need to do, like, change the way we live, the way we drive, what we eat. We need these international treaties. We need carbon taxes regulation. There’s lots of hard stuff, and we haven’t gotten that far.

But here you’ve just told me about this technology that, if it ends up working, could actually help cool the planet without anyone needing to do any of these hard things. It sounds great.

It does sound great. Now, we’ve got to say, first of all that whenever anybody working on this stuff talks about it, the first thing they say is this is not an alternative to reducing emissions. This is looking for ways to buy time as we try to cut emissions. There’s no way to really deal with climate change that doesn’t entail burning less fossil fuel and quickly.

But yes, in addition to brightening clouds, there’s other ways to try to bounce more sunlight back into space and other ideas. My colleague David Gelles wrote the first piece in our series looking the idea of removing carbon dioxide directly from the air, reversing our past emissions.

Other ideas include finding ways to suck up more of the CO2 in the oceans. There’s even ideas that my colleague Cara Buckley covered of could we build a sort of a giant parasol way out in space that would reflect or scatter more of the sunlight and prevent some of that sunlight from even reaching the Earth in the first place?

So there’s a huge number of ideas that until very recently seemed just so bizarre and/or so expensive and/or so dangerous that they were hardly worth pursuing seriously. And what’s changed really quickly in the last really year or two is all of a sudden those ideas have switched from being too wild to spend much time on to being so important because the situation is so dire that we can’t not look at them. And that’s the pivot that my team has been trying to cover.

And what characterizes all these initiatives is that rather than reducing our own emissions, we’re now trying to intervene in the climate in a proactive way, engineering the climate in a way.

Yes, and you hear the phrase geoengineering to describe these ideas collectively. And what people who research this will stress is, we’re already geoengineering. For more than a century, we’ve been geoengineering in the sense of putting climate changing pollution into the atmosphere that’s caused the planet to change by trapping more heat in the atmosphere. So the question is, do we want to deliberately geoengineer in a way that will ease that pressure rather than just making it worse?

Of course, there some controversy attached to this. And there are some pretty valid concerns about what the consequences might be if we keep on pursuing these ideas.

And why are they controversial?

Well, the first concern that you hear is this idea of moral hazard, that if people come to think that there are ways of addressing climate change that don’t require them to change their lifestyle or sacrifice conveniences or change the kinds of cars they drive or how their power is generated that they will lose interest in those tough changes. And the momentum, such as it is, towards cutting emissions will fade even more. But we don’t know yet whether politicians or governments or companies or just people will misuse these ideas to try to shirk the harder work of reducing the amount of greenhouse gases we emit.

Another really important argument you hear is, OK, side effects. Do we really know what would happen if we tried these things? Marine cloud brightening is one of those situations where there are known unknowns and unknown unknowns, as they say.

The known unknowns are, well, what would happen to things like ocean circulation? What would happen to precipitation? What would happen to the effect on the amount of energy reaching the ocean? What would happen to the fisheries industry? We don’t really know, and researchers are trying to find out, what those effects might be.

Then there are the unknown unknowns. If you start deliberately changing the cloud system, well, what else might happen that we haven’t anticipated? Do you move the location of where rainfall happens? Do you perhaps upset the monsoon cycle in India? Do you change the ability to grow food in parts of the world?

So if you do this at a bigger scale, the consequences of those potential side effects get more and more severe. And I talked to environmentalists who said that’s a real concern. You just can’t model those risks. And you, to a degree, by pursuing this, have to accept that risk is real and almost roll the dice.

And I guess much like climate change, where you have a group of countries that is most responsible for CO2 emissions that have caused the global warming and then a whole other group of countries that are probably suffering the worst consequences, even though they haven’t contributed to those emissions nearly as much, you might see a situation where this kind of interference with the climate at the initiative of some countries, presumably the wealthy countries that have that technology, would then have unintended consequences in countries that have no control over this. So that’s tricky.

That’s right. And that takes us to a third category of concerns, which is, OK, let’s assume that things are bad enough, that collectively societies want to take those risks of those side effects. Well, then who chooses, who decides when we get to that point? Is there even a mechanism that would allow you to get informed consent from everybody who’d be affected?

And if these would affect everybody, it’s hard to imagine how you would build a governance mechanism that would allow you to say, before we push the button, are we sure everybody is OK with this? The only counter to all of these concerns is compared to what? And this is the point that researchers make.

OK, this is dangerous. OK, it presents challenges, but compared to what? Their point is, don’t compare it to a situation where everything’s fine. Compare it to a situation we’re actually in, where the trajectory of global warming is so serious and isn’t looking like it’ll get better any time soon. Well, compared to those risks, how do these risks compare?

And the question is, would you rather have a world of basically uncontrolled warming? And we have an idea of what that brings, wildfires and drought and sea level rise and storms and diseases. Is that better than some of these more perhaps controlled risks associated with deliberately tinkering with the environment?

So it’s almost like pick your poison. What sort of threats do you want to embrace? And that’s the overwhelming dilemma that we face with this technology.

In a way, what it makes me think, is that these crazy initiatives that we’ve been hearing about from you are yes, they’re testament to our failure in a way to combat climate change so far, because they’re such a last resort, really, such as an act of desperation. But at the same time, it seems like this urgency has actually unleashed a lot of energy and money to tackle the problem.

Yeah, and there’s good news in this. The good news is, the research we’re talking about demonstrates the really amazing capacity of scientists to come up with new ideas, develop new technologies, test them quickly, and at least build some options.

So if there’s any rays of hope around climate change, it’s that humanity’s capacity to innovate and find new ideas is almost endless. So the question is not, are we pursuing the wrong research ideas? The question is, can we find good ideas fast enough to avert the really serious consequences of climate change that we’re already facing?

Chris, I just remember that scientist we heard in the tape from your visit. And she was so excited. And she said that she was really optimistic. I wonder, how are you feeling?

I think the frustration that you’ll hear among climate reporters, and I’m in this group, is that most people seem not to appreciate the severity of the situation that we’re in. There seems to be a view that we’re dealing with this. People are buying electric cars, and we’re getting more solar power and wind power. And things are going the right way, and this will be OK.

Things are not going the right way. Not only are we on the wrong trajectory in terms of emissions, we are so far away from being on the right trajectory for emissions that it’s hard to imagine us cutting emissions globally at a rate anywhere near fast enough to avoid almost unbearable consequences of global warming. So that’s the downside.

[MUSIC PLAYING] Here’s the good news, though. I do think, and this again I think is a view among other climate reporters, the capacity of scientists and of companies to change track and to find new products and apply new ideas is really impressive. It just doesn’t feel like there’s a connection yet between the urgency of the situation and the way people and companies and governments are responding.

And so I guess if the question is, how I feel about this? I am constantly amazed at the ingenuity of the researchers I come across in my job every day. What I don’t yet know about is whether or not society will move fast enough to adopt and apply those ideas before the conditions that we face from climate change become almost unbearable.

Well, Chris, on this cautiously optimistic note, thank you very much.

Here’s what else you need to know today. In a tense phone call with Israel’s leader Benjamin Netanyahu on Thursday, President Biden called the airstrikes that killed seven aid workers this week unacceptable and threatened to condition future support for Israel on how it addresses concerns about civilian casualties and the humanitarian crisis in Gaza. It was the first time that Biden explicitly sought to leverage American aid to influence Israel’s conduct of the war against Hamas. But the White House stopped short of saying directly that the president would halt arms supplies or impose conditions on their use as some fellow Democrats have urged him to do.

And a centrist group called No Labels has abandoned its plans to run a presidential ticket in this year’s election after failing to recruit a candidate. The group, which last year said it raised $60 million, had planned to put forward what it called a bipartisan unity ticket in the event of a rematch between President Biden and former President Trump but in recent months suffered a string of rejections from prominent Republicans and Democrats who declined to run on its ticket.

Today’s episode was produced by Michael Simon Johnson, Eric Krupke, Luke Vander Ploeg and Rachelle Bonja. It was edited by Patricia Willens, contains original music by Rowan Niemisto, Elisheba Ittoop, and Marion Lozano, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

“The Daily” is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Yang, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, MJ Davis Lin, Dan Powell, Sydney Harper, Michael Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schroeppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez, and Brendan Klinkenberg.

Special thanks to Lisa Tobin, Sam Dolnick, Paula Szuchman, Larissa Anderson, Julia Simon, Sofia Milan, Mahima Chablani, Elizabeth Davis Moorer, Jeffrey Miranda, Renan Borelli, Maddy Masiello, Isabella Anderson, and Nina Lassam.

That’s it for “The Daily.” I’m Katrin Bennhold. See you Monday.

• April 16, 2024   •   29:29 A.I.’s Original Sin
• April 15, 2024   •   24:07 Iran’s Unprecedented Attack on Israel
• April 14, 2024   •   46:17 The Sunday Read: ‘What I Saw Working at The National Enquirer During Donald Trump’s Rise’
• April 12, 2024   •   34:23 How One Family Lost $900,000 in a Timeshare Scam
• April 11, 2024   •   28:39 The Staggering Success of Trump’s Trial Delay Tactics
• April 10, 2024   •   22:49 Trump’s Abortion Dilemma
• April 9, 2024   •   30:48 How Tesla Planted the Seeds for Its Own Potential Downfall
• April 8, 2024   •   30:28 The Eclipse Chaser
• April 7, 2024 The Sunday Read: ‘What Deathbed Visions Teach Us About Living’
• April 5, 2024   •   29:11 An Engineering Experiment to Cool the Earth
• April 4, 2024   •   32:37 Israel’s Deadly Airstrike on the World Central Kitchen
• April 3, 2024   •   27:42 The Accidental Tax Cutter in Chief

Hosted by Katrin Bennhold

Featuring Christopher Flavelle

Produced by Michael Simon Johnson ,  Eric Krupke ,  Luke Vander Ploeg and Rachelle Bonja

Edited by Patricia Willens

Original music by Rowan Niemisto ,  Elisheba Ittoop and Marion Lozano

Engineered by Chris Wood

Listen and follow The Daily Apple Podcasts | Spotify | Amazon Music

Decades of efforts to cut carbon emissions have failed to significantly slow the rate of global warming, so scientists are now turning to bolder approaches.

Christopher Flavelle, who writes about climate change for The Times, discusses efforts to engineer our way out of the climate crisis.

On today’s episode

Christopher Flavelle , who covers how the United States tries to adapt to the effects of climate change for The New York Times.

Background reading

Warming is getting worse. So they just tested a way to deflect the sun .

Can we engineer our way out of the climate crisis ?

There are a lot of ways to listen to The Daily. Here’s how.

We aim to make transcripts available the next workday after an episode’s publication. You can find them at the top of the page.

The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly. Special thanks to Sam Dolnick, Paula Szuchman, Lisa Tobin, Larissa Anderson, Julia Simon, Sofia Milan, Mahima Chablani, Elizabeth Davis-Moorer, Jeffrey Miranda, Renan Borelli, Maddy Masiello, Isabella Anderson and Nina Lassam.

Katrin Bennhold is the Berlin bureau chief. A former Nieman fellow at Harvard University, she previously reported from London and Paris, covering a range of topics from the rise of populism to gender. More about Katrin Bennhold

Christopher Flavelle is a Times reporter who writes about how the United States is trying to adapt to the effects of climate change. More about Christopher Flavelle

Luke Vander Ploeg is a senior producer on “The Daily” and a reporter for the National Desk covering the Midwest. More about Luke Vander Ploeg

Advertisement

U.N. climate chief says two years to save the planet

By Kate Abnett and Simon Jessop

LONDON/BRUSSELS (Reuters) -Governments, business leaders and development banks have two years to take action to avert far worse climate change, the U.N.'s climate chief said on Wednesday, in a speech that warned global warming is slipping down politicians' agendas.

Scientists say halving climate-damaging greenhouse gas emissions by 2030 is crucial to stop a rise in temperatures of more than 1.5 Celsius that would unleash more extreme weather and heat.

Yet last year, the world's energy-related CO2 emissions increased to a record high. Current commitments to fight climate change would barely cut global emissions at all by 2030.

Simon Stiell, Executive Secretary of the United Nations Framework Convention on Climate Change said the next two years are "essential in saving our planet".

"We still have a chance to make greenhouse gas emissions tumble, with a new generation of national climate plans. But we need these stronger plans, now," he said.

Speaking at an event at the Chatham House think-tank in London, Stiell said the Group of 20 leading economic powers - together, responsible for 80% of global emissions - urgently needed to step up.

The main task for this year's U.N. climate negotiations in Baku, Azerbaijan, is for countries to agree a new target for climate finance to support developing countries struggling to invest in shifting away from fossil fuels and fighting climate change.

U.N. climate summits have swelled in size in recent years, with thousands of lobbyists and business representatives attending alongside the government delegations directly involved in the negotiations.

Nearly 84,000 people attended last year's COP28 summit in Dubai, drawing criticism from campaigners after more than 2,000 fossil fuel lobbyists registered to attend.

Stiell said he would like to see future COP meetings reduced in size, while prioritising strong negotiation outcomes. He said he was in talks with Azerbaijan and Brazil - host of the next two U.N. climate summits - about this.

He called for more climate finance to be raised through debt relief, cheaper financing for poorer countries, new sources of international finance such as a tax on shipping emissions, and reforms at the World Bank and International Monetary Fund.

"Every day finance ministers, CEOs, investors, and climate bankers and development bankers, direct trillions of dollars. It's time to shift those dollars," Stiell said.

In a bumper year for elections around the world - with voters going to the polls from India, to South Africa and the United States - Stiell warned too often climate action was "slipping down cabinet agendas".

Politicians from Republican frontrunner Donald Trump in the United States, to far-right parties seeking gains in the EU's upcoming election, have pushed back on climate policies as they court voters.

(Reporting by Simon Jessop, Kate AbnettEditing by Ros Russell)

Dear Fellow Shareholders,

Across the globe, 2023 was yet another year of significant challenges, from the terrible ongoing wars and violence in the Middle East and Ukraine to mounting terrorist activity and growing geopolitical tensions, importantly with China. Almost all nations felt the effects last year of global economic uncertainty, including higher energy and food prices, inflation rates and volatile markets. While all these events and associated instability have serious ramifications on our company, colleagues, clients and countries where we do business, their consequences on the world at large — with the extreme suffering of the Ukrainian people, escalating tragedy in the Middle East and the potential restructuring of the global order — are far more important.

As these events unfold, America’s global leadership role is being challenged outside by other nations and inside by our polarized electorate. We need to find ways to put aside our differences and work in partnership with other Western nations in the name of democracy. During this time of great crises, uniting to protect our essential freedoms, including free enterprise, is paramount. We should remember that America, “conceived in liberty and dedicated to the proposition that all men are created equal,” still remains a shining beacon of hope to citizens around the world. JPMorgan Chase, a company that historically has worked across borders and boundaries, will do its part to ensure that the global economy is safe and secure.

In spite of the unsettling landscape, including last year’s regional bank turmoil, the U.S. economy continues to be resilient, with consumers still spending, and the markets currently expect a soft landing. It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus. There is also a growing need for increased spending as we continue transitioning to a greener economy, restructuring global supply chains, boosting military expenditure and battling rising healthcare costs. This may lead to stickier inflation and higher rates than markets expect. Furthermore, there are downside risks to watch. Quantitative tightening is draining more than $900 billion in liquidity from the system annually — and we have never truly experienced the full effect of quantitative tightening on this scale. Plus the ongoing wars in Ukraine and the Middle East continue to have the potential to disrupt energy and food markets, migration, and military and economic relationships, in addition to their dreadful human cost. These significant and somewhat unprecedented forces cause us to remain cautious.

2023 was another strong year for JPMorgan Chase, with our firm generating record revenue for the sixth consecutive year, as well as setting numerous records in each of our lines of business. We earned revenue in 2023 of $162.4 billion 1 and net income of $49.6 billion, with return on tangible common equity (ROTCE) of 21%, reflecting strong underlying performance across our businesses. We also increased our quarterly common dividend of $1.00 per share to $1.05 per share in the third quarter of 2023 — and again to $1.15 per share in the first quarter of 2024 — while continuing to reinforce our fortress balance sheet. We grew market share in several of our businesses and continued to make significant investments in products, people and technology while exercising strict risk disciplines.

Throughout the year, we demonstrated the power of our investment philosophy and guiding principles, as well as the value of being there for clients — as we always are — in both good times and bad times. The result was continued growth broadly across the firm. We will highlight a few examples from 2023: Consumer & Community Banking (CCB) extended its #1 leadership positions and grew share year-over-year in retail deposits, credit card sales and credit card outstandings (adding close to 3.6 million net new customers to the franchise); the Corporate & Investment Bank (CIB) maintained its #1 rank in both Investment Banking and Markets and gained more than 100 basis points of Investment Banking market share; Commercial Banking (CB) added over 5,000 new relationships (excluding First Republic Bank), roughly doubling the prior year’s achievement; and Asset & Wealth Management (AWM) saw record client asset net inflows of $490 billion, over 20% higher than its prior record.

In 2023, we continued to play a forceful and essential role in advancing economic growth. In total, we extended credit and raised capital totaling $2.3 trillion for our consumer and institutional clients around the world. On a daily basis, we move nearly $10 trillion in over 120 currencies and more than 160 countries, as well as safeguard over $32 trillion in assets. By purchasing First Republic Bank, we brought much-needed stability to the U.S. banking system while allowing us to give a new, secure home to over half a million First Republic customers.

As always, we hold fast to our commitment to corporate responsibility, including helping to create a stronger, more inclusive economy — from supporting work skills training programs around the world to financing affordable housing and small businesses to making investments in cities like Detroit that show how business and government leaders can work together to solve problems.

We have achieved our decades-long consistency by adhering to our key principles and strategies (see sidebar on Steadfast Principles below), which allow us to drive good organic growth and promote proper management of our capital (including dividends and stock buybacks). The charts below show our performance results and illustrate how we have grown our franchises, how we compare with our competitors and how we look at our fortress balance sheet. Please peruse them and the CEO letters in this Annual Report, all of which provide specific details about our businesses and our plans for the future.

STEADFAST PRINCIPLES WORTH REPEATING (AND ONE NEW ONE)

Looking back on the past two+ decades — starting from my time as Chairman and CEO of Bank One in 2000 — there is one common theme: our unwavering dedication to help clients, communities and countries throughout the world. It is clear that our financial discipline, constant investment in innovation and ongoing development of our people have enabled us to achieve this consistency and commitment. In addition, across the firm, we uphold certain steadfast tenets that are worth repeating.

First, our work has very real human impact. While JPMorgan Chase stock is owned by large institutions, pension plans, mutual funds and directly by single investors, in almost all cases the ultimate beneficiaries are individuals in our communities. More than 100 million people in the United States own stocks; many, in one way or another, own JPMorgan Chase stock. Frequently, these shareholders are veterans, teachers, police officers, firefighters, healthcare workers, retirees, or those saving for a home, education or retirement. Often, our employees also bank these shareholders, as well as their families and their companies. Your management team goes to work every day recognizing the enormous responsibility that we have to all of our shareholders.

Second, shareholder value can be built only if you maintain a healthy and vibrant company, which means doing a good job of taking care of your customers, employees and communities. Conversely, how can you have a healthy company if you neglect any of these stakeholders? As we have learned over the past few years, there are myriad ways an institution can demonstrate its compassion for its employees and its communities while still strengthening shareholder value.

Third, while we don’t run the company worrying about the stock price in the short run, in the long run we consider our stock price a measure of our progress over time. This progress is a function of continual investments in our people, systems and products, in good and bad times, to build our capabilities. These important investments will also drive our company’s future prospects and position it to grow and prosper for decades. Measured by stock performance, our progress is exceptional. For example, whether looking back 10 years or even farther to 2004, when the JPMorgan Chase/Bank One merger took place, we have outperformed the Standard & Poor’s 500 Index and the Standard & Poor’s Financials Index.

Fourth, we are united behind basic principles and strategies (you can see the principles for How We Do Business on our website and our Purpose statement in my letter from last year) that have helped build this company and made it thrive. These allow us to maintain a fortress balance sheet, constantly invest and nurture talent, fully satisfy regulators, continually improve risk, governance and controls, and serve customers and clients while lifting up communities worldwide. This philosophy is embedded in our company culture and influences nearly every role in the firm.

Fifth, we strive to build enduring businesses, which rely on and benefit from one another, but we are not a conglomerate. This structure helps generate our superior returns. Nonetheless, despite our best efforts, the walls that protect this company are not particularly high — and we face extraordinary competition. I have written about this reality extensively in the past and cover it again in this letter. We recognize our strengths and vulnerabilities, and we play our hand as best we can.

Sixth, and this is the new one , we must be a source of strength, particularly in tough times, for our clients and the countries in which we operate. We must take seriously our role as one of the guardians of the world’s financial systems.

Seventh, we operate with a very important silent partner — the U.S. government — noting as my friend Warren Buffett points out that his company’s success is predicated upon the extraordinary conditions our country creates. He is right to say to his shareholders that when they see the American flag, they all should say thank you. We should, too. JPMorgan Chase is a healthy and thriving company, and we always want to give back and pay our fair share. We do pay our fair share — and we want it to be spent well and have the greatest impact. To give you an idea of where our taxes and fees go: In the last 10 years, we paid more than $46 billion in federal, state and local taxes in the United States and over $22 billion in taxes outside of the United States. Additionally, we paid the Federal Deposit Insurance Corporation over $10 billion so that it has the resources to cover failure in the American banking sector. Our partner — the federal government — also imposes significant regulations upon us, and it is imperative that we meet all legal and regulatory requirements imposed on our company.

Eighth and finally, we know the foundation of our success rests with our people. They are the front line, both individually and as teams, serving our customers and communities, building the technology, making the strategic decisions, managing the risks, determining our investments and driving innovation. However you view the world — its complexity, risks and opportunities — a company’s prosperity requires a great team of people with guts, brains, integrity, enormous capabilities and high standards of professional excellence to ensure its ongoing success.

I remain proud of our company’s resiliency and of what our hundreds of thousands of employees around the world have achieved, collectively and individually. Throughout these challenging past few years, we have never stopped doing all the things we should be doing to serve our clients and our communities. As you know, we are champions of banking’s essential role in a community — its potential for bringing people together, for enabling companies and individuals to attain their goals, and for being a source of strength in difficult times. I often remind our employees that the work we do matters and has impact. United by our principles and purpose, we help people and institutions finance and achieve their aspirations, lifting up individuals, homeowners, small businesses, larger corporations, schools, hospitals, cities and countries in all regions of the world. What we have accomplished in the 20 years since the Bank One and JPMorgan Chase merger is evidence of the importance of our values.

CELEBRATING THE 20TH ANNIVERSARY OF THE BANK ONE/JPMORGAN CHASE MERGER

J.P. Morgan Chase

By 2004, J.P. Morgan Chase already represented the consolidation of four of the 10 largest U.S. banks from 1990: The Chase Manhattan Corp., Manufacturers Hanover, Chemical Banking Corp. and, most recently, J.P. Morgan & Company. And some of their predecessor companies stretched back into the 1800s, one even into the late 1700s.

Bank One had been even busier on the acquisition front, especially across the United States. By 1998, then Banc One had more than 1,300 branches in 12 states when it announced a merger with First Chicago NBD, a Chicago-based bank created just three years earlier by the merger of First Chicago and Detroit-based NBD. Now headquartered in Chicago, the new Bank One became the largest bank in the Midwest, second largest among credit card companies and fourth largest in the United States. But the merger didn’t go as planned, with Bank One issuing three different earnings warnings. In March 2000, Bank One reached outside its executive ranks, and my tenure began as Chairman and CEO, working to overhaul the company and help bring it back to profitability and growth.

The story begins ... A merger 20 years ago helped transform two giant banks

Fast forward to 2003, and another wave of consolidation was well underway in U.S. banking. Most of the nation’s larger banks were trying to position themselves to be an “endgame winner.” In the biggest deal, Bank of America agreed to buy FleetBoston Financial Corp. for more than $40 billion. Those two banks — already amalgamations of several predecessor companies — touted the breadth of their combined retail branch network.

But they were hardly alone. In 2003, some 215 deals were announced among U.S. commercial banks and bank holding companies for a total value of $66 billion, according to Thomson Financial, which tracks merger data.

In July 2004, J.P. Morgan Chase and Bank One merged — as part of a 225-year journey — to form this exceptional company of ours: JPMorgan Chase. At its merger in 2004, the combined bank was the fourth largest bank in the world by market capitalization. But with patient groundwork over the years — fixing systems and upgrading technology, managing the notable acquisitions of Bear Stearns and Washington Mutual (WaMu) and continuing to reinvest, including in our talent — we have made our company an endgame winner.

In earlier years, banks worried about their survival. While the past two decades have brought some virtually unprecedented challenges, including the great financial crisis and a pandemic followed by a global shutdown, they did not stop us from accomplishing extraordinary things. Our bank has now emerged as the #1 bank by market capitalization.

Each of our businesses is among the best in the world, with increased market share, strong financial results and an unwavering focus on serving our clients, communities and shareholders with distinction and dedication. The strengths that are embedded in JPMorgan Chase — the knowledge and cohesiveness of our people, our long-standing client relationships, our technology and product capabilities, our presence in more than 100 countries and our unquestionable fortress balance sheet — would be hard to replicate. Crucially, the strength of our company has allowed us to always be there for clients, governments and communities — in good times and in bad times — and this strength has enabled us to continually invest in building our businesses for the future.

You can see from the following charts what gains and improvements we have achieved along the way.

Read footnoted information here

Within this letter, I discuss the following:

I. SUMMARY OF OUR 2023 RESULTS AND THE PRINCIPLES THAT GUIDE US

• Steadfast principles worth repeating (and a new one)
• A timeline of accomplishments
• Financial performance

II. UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY

• The critical impact of artificial intelligence
• Our journey to the cloud
• Acquiring First Republic Bank and its customers
• Navigating in a complex and potentially dangerous world
• What we learned: A five-point action plan to move forward on the climate challenge
• Powering economic growth in Florida
• Giving the bank regulatory and supervisory process a serious review
• Protecting the essential role of market making (trading)

III. STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS

• The pressure of quarterly earnings compounded by bad accounting and bad decisions
• The hijacking of annual shareholder meetings
• The evolving influence of proxy advisors
• The benefits and risks of private credit
• A bank’s strength: Providing flexible capital

IV. MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART

• Benefiting from the OODA loop
• Decision making and acting (have a process)
• The secret sauce of leadership (have a heart)

V. A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER

• Coalescing the Western world — A uniquely American task
• Strengthening our position with a comprehensive, global economic security strategy
• Manager’s Journal: "A Politician's Dream Is A Businessman's Nightmare"
• We should have more faith in the amazing power of our freedoms
• How we can help lift up our low-income citizens and mend America's torn social fabric

Update on Specific Issues Facing Our Company

Each year, I try to update you on some of the most important issues facing our company. First and foremost may well be the impact of artificial intelligence (AI).

While we do not know the full effect or the precise rate at which AI will change our business — or how it will affect society at large — we are completely convinced the consequences will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years: Think the printing press, the steam engine, electricity, computing and the Internet, among others.

THE CRITICAL IMPACT OF ARTIFICIAL INTELLIGENCE

Since the firm first started using AI over a decade ago, and its first mention in my 2017 letter to shareholders, we have grown our AI organization materially. It now includes more than 2,000 AI/machine learning (ML) experts and data scientists. We continue to attract some of the best and brightest in this space and have an exceptional firmwide AI/ML and Research department with deep expertise.

We have been actively using predictive AI and ML for years — and now have over 400 use cases in production in areas such as marketing, fraud and risk — and they are increasingly driving real business value across our businesses and functions. We're also exploring the potential that generative AI (GenAI) can unlock across a range of domains, most notably in software engineering, customer service and operations, as well as in general employee productivity. In the future, we envision GenAI helping us reimagine entire business workflows. We will continue to experiment with these AI and ML capabilities and implement solutions in a safe, responsible way.

While we are investing more money in our AI capabilities, many of these projects pay for themselves. Over time, we anticipate that our use of AI has the potential to augment virtually every job, as well as impact our workforce composition. It may reduce certain job categories or roles, but it may create others as well. As we have in the past, we will aggressively retrain and redeploy our talent to make sure we are taking care of our employees if they are affected by this trend.

Finally, as a global leader across businesses and regions, we have large amounts of extraordinarily rich data that, together with AI, can fuel better insights and help us improve how we manage risk and serve our customers. In addition to making sure our data is high quality and easily accessible, we need to complete the migration of our analytical data estate to the public cloud. These new data platforms offer high-performance compute power, which will unlock our ability to use our data in ways that are hard to contemplate today.

Recognizing the importance of AI to our business, we created a new position called Chief Data & Analytics Officer that sits on our Operating Committee.

Elevating this new role to the Operating Committee level — reporting directly to Daniel Pinto and me — reflects how critical this function will be going forward and how seriously we expect AI to influence our business. This will embed data and analytics into our decision making at every level of the company. The primary focus is not just on the technical aspects of AI but also on how all management can — and should — use it. Each of our lines of business has corresponding data and analytics roles so we can share best practices, develop reusable solutions that solve multiple business problems, and continuously learn and improve as the future of AI unfolds.

Clearly, AI comes with many risks, which need to be rigorously managed.

We have a robust, well-established risk and control framework that helps us proactively stay in front of AI-related risks, particularly as the regulatory landscape evolves. And we will, of course, continue to work hard with our regulators, clients and subject matter experts to make sure we maintain the highest ethical standards and are transparent in how AI helps us make decisions; e.g., to counter bias among other things.

You may already be aware that there are bad actors using AI to try to infiltrate companies’ systems to steal money and intellectual property or simply to cause disruption and damage. For our part, we incorporate AI into our toolset to counter these threats and proactively detect and mitigate their efforts.

OUR JOURNEY TO THE CLOUD

Getting our technology to the cloud — whether the public cloud or the private cloud — is essential to fully maximize all of our capabilities, including the power of our data. The cloud offers many benefits: 1) it accelerates the speed of delivery of new services; 2) it simultaneously reduces the cost of compute power and enables, when needed, an extraordinary amount of compute capability — called burst computing; 3) it provides that compute capability across all of our data; and 4) it allows us to be able to constantly and quickly adopt new technologies because updated cloud services are continually being added — more so in the public cloud, where we benefit from the innovation that all cloud providers create, than in the private cloud, where innovation is only our own.

Of course, we are learning a lot along the way. For example, we know we should carefully pick which applications and which data go to the public cloud versus the private cloud because of the expense, security and capabilities required. In addition, it is critical that we eventually use multiple clouds to avoid lock-in. And we intend to maintain our own expertise so that we’re never reliant on the expertise of others even if that requires additional money.

We invested approximately $2 billion to build four new, modern, private cloud-based, highly reliable and efficient data centers in the United States (we have 32 data centers globally). To date, about 50% of our applications run a large part of their processing in the public or private cloud. Approximately 70% of our data is now running in the public or private cloud. By the end of 2024, we aim to have 70% of applications and 75% of data moved to the public or private cloud. The new data centers are around 30% more efficient than our existing legacy data centers. Going to the public cloud can provide 30% additional efficiency if done correctly (efficiency improves when your data and applications have been modified, or “refactored,” to enable new cloud services). We have been constantly updating most of our global data centers, and by the end of this year, we can start closing some that are larger, older and less efficient.

ACQUIRING FIRST REPUBLIC BANK AND ITS CUSTOMERS

The purchase of First Republic Bank was not something that we would have done just for ourselves. But the regulators relied on us to step forward (we worked hand in hand with the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the U.S. Treasury), and the purchase of First Republic helped stabilize and strengthen the U.S. financial system in a time of crisis.

The acquisition of a major company entails a lot of complexity. People tend to focus on the financial and economic outcomes, which is a reasonable thing to do. And in the case of First Republic, the numbers look rather good. We recorded an accounting gain of $3 billion on the purchase , and we told the world we expected to add more than $500 million to earnings annually, which we now believe will be closer to $2 billion. However, these results mask some of the true costs. First, approximately one-third of the incremental earning was simply deploying excess capital and liquidity, which doesn’t require purchasing a $300 billion bank — we simply could have bought $300 billion of assets. Second, as soon as the deal was announced, approximately 7,600 of our employees went from working on tasks that would benefit the future of JPMorgan Chase to working on the merger integration. Overall, the integration involves effectively combining more than 165 systems (e.g., statement, deposit, accounting and human resources) and consolidating policies, risk reporting, and other various rules and procedures. We hope to have most of the integration done by the middle of 2024.

Fortunately, we were very familiar and comfortable with all of the assets we were acquiring from First Republic. What we didn’t take on was First Republic’s excessive interest rate exposure — one of the reasons it failed — which we effectively hedged within days of the acquisition.

Our people did a great job of respectfully managing this transition, knowing that circumstances were particularly tough for our new colleagues, whom we tried to welcome with open arms. We did everything we could to redeploy individuals whose jobs were lost because of the merger (we directly hired over 5,000 people). Our approach has always been to go into an acquisition knowing we can learn things from other teams, and in this case, we did: First Republic had done an outstanding job serving high-net-worth clients and venture capitalists, and we are developing what is effectively a new business for us following First Republic’s servicing model. We will serve these high-net-worth clients through a single point of contact, supported by a concierge service model, across our distribution channels — including more than 20 new JPMorgan Chase branded branches.

NAVIGATING IN A COMPLEX AND POTENTIALLY DANGEROUS WORLD

In the policy section, we talk about how we may be entering one of the most treacherous geopolitical eras since World War II. And I have written in the past about high levels of debt, fiscal stimulus, ongoing deficit spending and the unknown effects of quantitative tightening (which I am more worried about than most) so I won’t repeat those views here. However, the impacts of these geopolitical and economic forces are large and somewhat unprecedented; they may not be fully understood until they have completely played out over multiple years. In any case, JPMorgan Chase must be prepared for the various potential impacts and outcomes on our company and our people.

We remain wary of economic prognosticating.

While all companies essentially budget on a base case forecast, we are very careful not to run our business that way. Instead, we look at a range of potential outcomes for which we need to be prepared. Geopolitical and economic forces have an unpredictable timetable — they may unfold over months, or years, and are nearly impossible to put into a one-year forecast. They also have an unpredictable interplay: For example, the geopolitical situation may end up having virtually no effect on the world’s economy or it could potentially be its determinative factor.

We have ongoing concerns about persistent inflationary pressures and consider a wide range of outcomes to manage interest rate exposure and other business risks.

Many key economic indicators today continue to be good and possibly improving, including inflation. But when looking ahead to tomorrow , conditions that will affect the future should be considered. For example, there seems to be a large number of persistent inflationary pressures, which may likely continue. All of the following factors appear to be inflationary: ongoing fiscal spending, remilitarization of the world, restructuring of global trade, capital needs of the new green economy, and possibly higher energy costs in the future (even though there currently is an oversupply of gas and plentiful spare capacity in oil) due to a lack of needed investment in the energy infrastructure. In the past, fiscal deficits did not seem to be closely related to inflation. In the 1970s and early 1980s, there was a general understanding that inflation was driven by “guns and butter”; i.e., fiscal deficits and the increase to the money supply, both partially driven by the Vietnam War, led to increased inflation, which went over 10%. The deficits today are even larger and occurring in boom times — not as the result of a recession — and they have been supported by quantitative easing, which was never done before the great financial crisis. Quantitative easing is a form of increasing the money supply (though it has many offsets). I remain more concerned about quantitative easing than most, and its reversal, which has never been done before at this scale.

Equity values, by most measures, are at the high end of the valuation range, and credit spreads are extremely tight. These markets seem to be pricing in at a 70% to 80% chance of a soft landing — modest growth along with declining inflation and interest rates. I believe the odds are a lot lower than that. In the meantime, there seems to be an enormous focus, too much so, on monthly inflation data and modest changes to interest rates. But the die may be cast — interest rates looking out a year or two may be predetermined by all of the factors I mentioned above. Small changes in interest rates today may have less impact on inflation in the future than many people believe.

Therefore, we are prepared for a very broad range of interest rates, from 2% to 8% or even more, with equally wide-ranging economic outcomes — from strong economic growth with moderate inflation (in this case, higher interest rates would result from higher demand for capital) to a recession with inflation; i.e., stagflation. Economically, the worst-case scenario would be stagflation, which would not only come with higher interest rates but also with higher credit losses, lower business volumes and more difficult markets. Under these many different scenarios, our company would continue to perform at least okay. Importantly, being prepared means we can continue to help our clients no matter what the future portends.

The mini banking crisis of 2023 is over, but beware of higher rates and recession — not just for banks but for the whole economy.

When we purchased First Republic in May 2023 following the failure of two other regional banks, Silicon Valley Bank (SVB) and Signature Bank, we thought that the current banking crisis was over. Only these three banks were offsides in having the toxic combination of extreme interest rate exposure, large unrealized losses in the held-to-maturity (HTM) portfolio and highly concentrated deposits. Most of the other regional banks did not have these problems. However, we stipulated that the crisis was over provided that interest rates didn’t go up dramatically and we didn’t experience a serious recession. If long-end rates go up over 6% and this increase is accompanied by a recession, there will be plenty of stress — not just in the banking system but with leveraged companies and others. Remember, a simple 2 percentage point increase in rates essentially reduced the value of most financial assets by 20%, and certain real estate assets, specifically office real estate, may be worth even less due to the effects of recession and higher vacancies. Also remember that credit spreads tend to widen, sometimes dramatically, in a recession.

We seek to be engaged globally and carefully manage complex countries and geopolitical issues.

JPMorgan Chase does business in more than 100 countries, and we have people on the ground in over 60 countries. In almost all those locations, we do research on their economy, their markets and their companies; we bank their government institutions and their companies; and we bank multinational corporations, including the U.S. multinational corporations within their borders. This is a critical role — not only in helping those countries grow and improve but also in expanding the global economy.

Many of these countries are quite complex with different laws, customs and regulations. We are occasionally asked why we bank certain companies and even certain countries, particularly when countries have some laws and customs that are counter to many of the values held in the United States. Here’s why:

• The U.S. government sets foreign policy. And when it does, we salute. Wherever we do business, we follow the law of the United States, as it applies in that country (in addition to the laws of the country itself), in all respects. Think of trade rules, sanctions, anti-money laundering and the Foreign Corrupt Practices Act, among others. By and large, these things help improve those countries. In most cases, the U.S. government does not want us to leave because it agrees, generally, that the engagement of American business enhances our relationships with other countries and helps those countries themselves.
• Engagement makes the world a better place. We all should want the world to continue to improve. Isolation and lack of engagement do not accomplish that goal. While we believe that it makes sense for the United States to push for constant improvement around the world — from advocating for human rights to fighting corruption — this is rarely accomplished through coercion, and, in fact, is enhanced by engagement.
• We need to be prepared for emerging challenges and position ourselves to understand them. We created a new role — Head of Asia Pacific Policy and Strategic Competitiveness — to focus specifically on key policy issues critical to the firm’s (and, in fact, the country’s) competitiveness, such as trade restrictions, supply chains and infrastructure. We also created a new strategic security forum to focus on emerging and evolving risks, including trade wars, pandemics, cybersecurity and actual wars, to name just a few.

OUR EXTENSIVE COMMUNITY OUTREACH EFFORTS, INCLUDING DIVERSITY, EQUITY AND INCLUSION

JPMorgan Chase makes an extraordinary effort as part of our “normal” day-to-day outreach to engage with individual clients, small and midsized businesses, large and multinational firms, government officials, regulators and the press in cities all around the world. This dialogue is part of the normal course of business but it is also part of building trust and putting down roots in a community.

We believe that companies, and banks in particular, must earn the trust of the communities and countries in which they operate. We believe — and we are unashamed about this — that it is our obligation to help lift up the communities and countries in which we do business. We believe that doing so enhances business and the general economic well-being of those communities and countries and also enhances long-term shareholder value. JPMorgan Chase thrives when communities thrive.

This approach is integral to what we do, in great scale, around the world — and it works. We are quite clear that whether our efforts are inspired by the goodness of our hearts (as philanthropy or venture-type investing) or good business, we try to measure the actual outcomes.

It’s also interesting to point out that many of our efforts were spawned from our work around Advancing Black Pathways, Military and Veterans Affairs, and our work in Detroit. While we’ve banked Detroit for more than 90 years, our $200 million investment in its economic recovery over the last decade demonstrated that investing in communities is a smart business strategy. We are one of the largest banks in Detroit, from consumer banking to investment banking, and it’s quite clear that not only did our efforts help Detroit, but they also helped us gain market share. The extent of Detroit’s remarkable recovery was recently highlighted when Moody’s upgraded the city’s credit rating to investment grade — an extraordinary achievement just over 10 years after the city filed the largest municipal bankruptcy in U.S. history.

For JPMorgan Chase, Detroit was an incubator for developing models that help us hone how we deploy our business resources, philanthropic capital, skilled volunteerism, and low-cost loans and equity investments, as well as how we identify top talent to drive successful business and societal improvements. I hope that, as shareholders, you are proud of our focus on promoting opportunity for all, both within and outside our organization, which includes economic opportunity. Some of our initiatives are listed below.

• Business Resource Groups. To deepen our culture of inclusion in the workplace, we have 10 Business Resource Groups (BRG) across the company to connect more than 160,000 participating employees around common interests, as well as to foster networking and camaraderie. Groups welcome anyone — allies and those with shared affinities alike. For example, some of our largest BRGs are Access Ability (employees with disabilities and caregivers), Adelante (Hispanic and Latino employees), BOLD (Black employees), NextGen (early career professionals), PRIDE (LGBTQ+ employees) and Women on the Move.
• Women on the Move. At JPMorgan Chase, they sure are! Women represent 28% of our firm’s senior leadership globally. In fact, our major lines of business — CCB, AWM and CIB, which would be among Fortune 1000 companies on their own — are all run by women (one with a co-head who is male). More than 10 years ago, a handful of senior women at the company, on their own, started this global, firmwide, internally focused organization called Women on the Move. It was so successful that we expanded the initiative beyond the company; it now empowers clients and consumers, as well as women employees and their allies, to build their careers, grow their businesses and improve their financial health. The Women on the Move BRG has more than 70,000 employees globally.
• Advancing Black Pathways. This comprehensive program, which just reached the five-year mark, focuses on strengthening the economic foundation of Black communities because we know that opportunity is not always created equally. The program does so by, among other accomplishments, helping to diversify our talent pipeline, providing opportunities for Black individuals to enter the workforce and gain valuable experience, and investing in the financial success of Black Americans through a focus on financial health, homeownership and entrepreneurship. An important part of the program’s work is achieved through our investment in Historically Black Colleges and Universities (HBCU). We now partner with 18 schools across the United States to boost recruitment connections, expand career pathways for Black students and other students, and support their long-term development and financial health. As a measure of the program’s success, in four years we have made nearly 400 hires into summer and full-time analyst and associate roles at the firm.
• Military and Veterans Affairs. This firmwide effort sponsors recruitment, mentorship and development programs to support the military members and veterans working at JPMorgan Chase. Back in 2011, we joined with 10 other companies to launch the Veteran Jobs Mission (VJM), whose membership has since grown to more than 300 companies representing various industries across the United States and has hired over 900,000 veterans and military spouses. In 2023, VJM announced the creation of its Advisory Board, which is composed of 14 corporate leaders, to provide strategic direction and oversight of VJM as it continues to expand its commitment to support economic opportunities for veterans and military spouses, including its goal to hire 2 million veterans and 200,000 military spouses by 2030. JPMorgan Chase alone has hired in excess of 18,000 veterans since 2011 and currently employs more than 3,100 military spouses.
• Creating opportunity for people with disabilities. The firm’s Office of Disability Inclusion continues to lead strategy and initiatives aimed at advancing economic opportunity for people with disabilities. In 2023, we joined lawmakers and business leaders in Washington, D.C., to show support for passage of the Supplemental Security Income (SSI) Savings Penalty Elimination Act. Modernizing the SSI program, by updating asset limits for the first time in nearly 40 years, would allow millions of people with disabilities who receive SSI benefits the opportunity to build their savings without putting their essential benefits at risk. We also provided business coaching to more than 370 entrepreneurs with disabilities.
• Virtual call centers. When we sought to expand our customer service specialists program across the United States, we turned to Detroit, launching our first virtual call center in 2022. Investments in Detroit’s workforce development infrastructure helped us hire 90 virtual customer service specialists for a program that has outperformed many of our traditional call centers around the world. Following this success, we expanded our hiring efforts and this virtual program to Baltimore to create new jobs that jump-start careers. And now we’re evaluating the possibility of expanding even further.
• Entrepreneurs of Color Fund. A critical challenge we have seen in so many communities is that traditional lending standards render too many entrepreneurs — particularly entrepreneurs of color and those serving these communities — ineligible for credit. In response, we helped launch the Entrepreneurs of Color Fund (EOCF) in Detroit, a lending program designed to help aspiring small business owners gain access to critical resources needed for growth that are often not equitably available — capital, technical assistance and mentorship, among others. These challenges aren’t unique to Detroit so we worked with community development financial institutions to replicate the EOCF program in 10 markets across the United States in 2023, deploying more than 2,900 loans and $176 million in capital to underserved entrepreneurs across the country.
• Senior business consultants. To help entrepreneurs and small businesses make the transition from community lending to accessing capital from traditional financial institutions, we created a new job — senior business consultant — to provide support. Senior business consultants in branches that focus on underserved communities offer coaching and help business owners with everything from navigating access to credit to managing cash flow to generating effective marketing. Since 2020, these consultants have mentored more than 5,500 business owners, helping them improve their operations, grow revenue and network with others in the local business community.
• Advancing Cities The organizing principles that define the business and community investments we make and how we best achieve an overall impact in local economies were heavily influenced by our experience in Detroit. Seeing Detroit’s comeback begin to take shape several years ago, we created Advancing Cities to replicate this model for large-scale investments to other cities around the world. From San Francisco to Paris to Greater Washington, D.C., we’ve applied what we learned in Detroit to communities where conditions are opportune for success and require deeper investments — where community, civic and business leaders have come together to solve problems and get results.
• JPMorgan Chase Service Corps. Ten years ago, we launched the JPMorgan Chase Service Corps to strengthen the capacity-building of nonprofit partners. We brought employees from around the world to Detroit to assist with its recovery — from creating a scoring model for a nonprofit to helping prioritize neighborhoods for development funding to devising an implementation plan for an integrated talent management system. Since that time, the Service Corps has expanded, with more than 1,500 JPMorgan Chase employees contributing 100,000 hours to support over 300 nonprofits globally.
• Community Centers/Branches and Community Managers. A local bank branch, especially in a low-income neighborhood, can be successful only when it fits the community’s needs. That is why over the last several years we have shifted our approach to how we offer access to financial health education, as well as low-cost products and services to help build wealth. Since 2019, we have opened 16 Community Center branches, often in areas with larger Black, Hispanic or Latino populations, and have plans to open three more by the end of 2024. These branches have more space to host grassroots community events, small business mentoring sessions and financial health seminars, which have been well-attended — to date, over 400,000 people have taken advantage of the financial education seminars. In each of these Community Center branches, we hired a Community Manager (who acts as a local ambassador) to build relationships with community leaders, nonprofits and small businesses. The Community Manager concept and practice have become so successful that we have also placed these managers in many of our traditional branches in underserved communities. We now have 149 Community Managers throughout our branch network.
• Work skills development. Detroit showed us how talent in communities is often overlooked. We saw this in the early days of our investment when we visited our partners at Focus: HOPE, a training program designed to help Detroiters develop skills for high-demand jobs. Quickly, it became clear that the training and education system in Detroit was disconnected from employers and their talent needs. By investing in programs like Focus: HOPE, we have been able to help bridge local skills gaps by training people for in-demand jobs in communities like Dallas, Miami and Washington, D.C. Between 2019 and 2023, we supported more than 2 million people through our extensive learning and career programming around the world.
• Increasing our rural investment. We are proud to be the only bank with branches in all 48 contiguous states, which include many rural communities. Nearly 17 million consumers living in rural areas hold over $100 billion in deposits with us and $175 billion in loans. We are also a leading wholesale lender in these communities, helping to fuel local economies through relationships with local companies, governments, hospitals and universities. Since 2019, we have made material progress in extending our footprint to reach more rural Americans, including expanding our branch network into 13 new states with large rural populations. Now we are raising the bar. With our new strategy, we have a goal to have a branch available to serve 50% of a state’s population within an acceptable driving distance, including in heavily rural states such as Alabama and Iowa. This focus is part of our recently announced plan to build an additional 500 branches and hire 3,500 employees over the next three years. Through this expansion, we will partner across lines of business and our Corporate Responsibility organization to help advance inclusive economic growth and bring the full force of the firm to America’s heartland.

We’ve nearly completed our five-year, $30 billion Racial Equity Commitment — it will now become a permanent part of our business.

What began in 2020 as a five-year, $30 billion commitment is now transforming into a consistent business practice for our lines of business in support of Black, Hispanic, Latino and other underserved communities. By the end of 2023, we reported over $30 billion in progress toward our original goal. However, our focus is not on how much money is deployed — but on long-term impact and outcomes. And going forward, these programs will be embedded in our business-as-usual operating system.

• Affordable rental housing. Through our Affordable Housing Preservation program, we approved program funding to date of approximately $21 billion in loans to incentivize the preservation of over 190,000 affordable housing rental units across the United States. Additionally, we financed approximately $5 billion for the construction and rehabilitation of affordable rental housing.
• Homeownership. In 2023, we expanded our $5,000 Chase Homebuyer Grant program to include over 15,000 majority Black, Hispanic and Latino communities — and in January 2024, we increased our grant amount to $7,500 in select markets. Since our grant program began in 2021, we have provided about 8,600 grants totaling $43 million. We also have provided home purchase and refinance loans in 2023 worth over $4.6 billion for more than 14,000 Black, Hispanic and Latino households across the economic spectrum.
• Small business. The Business Card Special Purpose Credit Program, launched in January 2023, has provided over 10,900 cards, totaling over $43 million in available credit lines to underserved entrepreneurs and communities across the United States.
• Supplier diversity. In 2023, our firm spent approximately $2.3 billion directly with diverse suppliers — an increase of 10% over 2022. As a part of our racial equity commitment, over $450 million was spent in 2023 with more than 190 Black-, Hispanic- and Latino-owned businesses.
• Minority depository institutions and community development financial institutions. To date, we have invested more than $110 million in equity in diverse financial institutions and provided over $260 million in incremental financing to community development financial institutions to support communities that lack access to traditional financing. JPMorgan Chase also helped these institutions build their capacity so they can provide a greater number of critical services like mortgages and small business loans.

We’re thoughtfully continuing our diversity, equity and inclusion efforts.

Of course, JPMorgan Chase will conform as the laws evolve. We will scour our programs, our words and our actions to make sure they comply.

That said, we think all the efforts mentioned above will remain largely unchanged. And, in fact, around the world, cities and communities where we do business applaud these efforts. We also believe our initiatives make us a more inclusive company and lead to more innovation, smarter decisions and better financial results for us and for the economy overall.

We are often asked in particular about “equity” and what that word means. To us, it means equal treatment, equal opportunity and equal access … not equal outcomes. There is nothing wrong with acknowledging and trying to bridge social and economic gaps, whether they be around wealth or health. We would like to provide a fair chance for everyone to succeed — regardless of their background. And we want to make sure everyone who works at our company feels welcome.

We want to articulate how we weigh in on social issues and what it means for our customers.

Before I comment about culture issues, I have a confession to make: I am a full-throated, red-blooded, patriotic, free-enterprise (properly regulated, of course) and free-market capitalist. Our company is frequently asked to take a position on an issue, rule or legislation that might be considered “cultural.” When that happens, we take a deep breath and study the matter. Many of the laws in question have many specific requirements, some of which you would agree with but not others. But we are being asked to support the entire law. In cases like these, we simply make our own statement that reflects our educated view and values; however, we do not give our voice to others.

We believe in the values of democracy, including freedom of speech and expression, and are staunchly against discrimination and hate. We have not turned away — and will not turn away — customers because of their political or religious affiliations nor would we tell customers how they should spend their money.

Our commitment to these ideals is also reflected in our employees. The talent at our firm is a vibrant mix of cultures, beliefs and backgrounds. We are, of course, fully committed to freedom of speech. There are things that you can say that would be permitted under freedom of speech but would not be allowed under our Code of Conduct. For example, we do not allow intimidation, threats or highly prejudicial behavior or speech. Our Code of Conduct clearly stipulates that certain statements and behavior, while allowed under freedom of speech, can lead to disciplinary action at our company — from being reprimanded to being fired.

WHAT WE LEARNED: A FIVE-POINT ACTION PLAN TO MOVE FORWARD ON THE CLIMATE CHALLENGE

In May 2023, we gathered with knowledgeable and influential people from the energy industry writ large to the government and financial services arena in Scottsdale, Arizona, for an action forum. The goal was to explore various aspects of the climate challenge and try to devise effective solutions that could help lead to meaningful progress. The climate challenge is immense and complex. Addressing it requires more than making simplistic statements and rules; rather, energy systems and global supply chains need to be transformed across virtually all industries. And there is also a deep need for new research and development. Energy systems and supply chains provide the foundation of the global economy and must be treated with care.

At the same time, the opportunity here is immense. The investment required to meet climate goals — estimated at over $5 trillion annually — could generate economywide growth and opportunity at a scale the world has not seen since the Industrial Revolution.

The task for industry, policymakers and finance is to help formulate solutions that support the transition to a low-carbon economy, balancing affordable, reliable access to energy with generating economic growth.

To find a way forward, we sought input from diverse stakeholders in pursuit of a North Star. In Scottsdale and in discussions with clients across industries about what’s needed to achieve a low-carbon economy, these five action steps and reforms were top of mind:

• Supportive government policy and leadership to advance the transition. Policy that promotes favorable economic conditions to make the transition viable is a critical first step for clients. This includes government leadership via mandates, incentives or subsidies to support jobs and investment in the transition; actions on permitting and interconnection reform; and regulatory clarity and certainty, especially around long-term investments. As one vital example, current grid infrastructure is insufficient to accommodate the growth in renewables.
• Public/private partnerships in scaling bankable projects. Scaling investments needs to happen both for commercially proven technologies (e.g., wind and solar) and for emerging technologies (e.g., green hydrogen, sustainable aviation fuel and carbon capture). Developing “bankable” clean energy projects will require the application of smart financial tools, as well as further policy support. It will take public/private partnerships and innovation to create catalytic forms of capital that can step into these gaps, absorb first-mover risks and provide the necessary funding. The cost of capital is too high for some companies — and public funds ought to be deployed in a smart way that effectively attracts private capital.
• Public education and engagement. Without question, clients told us that public commitment to and investment in energy-related infrastructure is one of the most important parts of combating the climate crisis and running their businesses. Supporting the buildout of energy-related infrastructure with speed and scale is critical. Public acceptance of building and advancing the infrastructure needed to meet climate goals is at the heart of progress. While the energy transition is poised to deliver benefits to communities across the world, securing acceptance and support to build clean energy infrastructure at scale is challenging. Access to job-creating renewable energy projects can help rural communities thrive by advancing local economies. Ensuring public support and social license to operate requires better engagement strategies, including widespread stakeholder education about the benefits of these technologies for local communities.
• Communication about concrete successes. Across industries, market participants need to do a better job of celebrating and championing concrete successes and tangible milestones. This includes highlighting success stories around emerging technologies and the complex nature of the carbon transition. Stakeholders also should better convey the benefits of clean energy — across all technologies — to help combat misinformation and foster a more informed dialogue.
• Work skills training. Businesses depend on healthy, thriving communities so the carbon transition needs to work for everyone. This includes helping to ensure that workers are trained in the skills for the future, such as through improved engineering schools and job training programs. Work across the entire supply chain is essential to moving at pace. As one example, the U.S. Bureau of Labor Statistics estimates we will need more than 70,000 additional electricians per year through 2031; it is currently unclear how the market will meet that demand. If the deployment of heat pumps and electric vehicle chargers accelerates, demand for electricians will be even higher. A concerted focus to train electricians can help the United States meet some of its climate goals while providing well-paying jobs that do not require a four-year college degree. Also, broadly speaking, businesses are in a better position to make investments with confidence when labor requirements across the value chain — from design and manufacturing to installation — are satisfied.

We recently reconsidered certain memberships.

JPMorgan Chase recently exited Climate Action 100+ and the Equator Principles. “Why?” we are asked. While we don’t necessarily disagree with some of the principles many organizations have, we make our own business decisions. We think we have some of the best-in-class environmental, social and risk standards because we have invested in our own in-house experts and matured our own risk management processes over the years. As a result, we are going to go our own way and make our own independent decisions, gathering the best learnings of experts in the field, and, of course, we will follow all legal requirements.

We are engaged but recognize our role: three more important points.

First, everyone should understand that conquering the climate problem needs proper government action, particularly around taxes, permitting, grids, infrastructure building and proper coordination of policies — we are not there yet. Second, there is no known technology that can fill the gap between our “aspirations” and the current trajectory of the world. We hope and believe that this will be found (for example, through carbon capture, improved batteries, hydrogen or other measures). This new technology will also require proper government research and development funding, as the effort cannot be accomplished by private enterprise alone. And third, we are going to use the word “commitment” much more reservedly in the future, clearly differentiating between aspirations we are actively striving toward and binding commitments.

For JPMorgan Chase to play the right role in tackling the climate challenge, we have organized a special group around the green economy and related infrastructure investment. This group will coordinate and inform our work across all established industry groups (from auto to real estate, energy, agriculture and others) and includes hundreds of employees devoted to these efforts.

POWERING ECONOMIC GROWTH IN FLORIDA

From Tallahassee to Miami and from Tampa to Palm Bay, JPMorgan Chase has been committed to Florida for more than 130 years and has enjoyed being the bank for all communities. Each year, we contribute billions of dollars to the economy, hire and train local residents, help to revitalize neighborhoods and remove barriers to opportunity for Floridians across the state. Our partnerships with businesses, nonprofits, government entities and community organizations have enabled us to drive sustainable impact and help them achieve their goals. We couldn’t be more proud to help make opportunity happen in Florida.

This year, we forged a relationship with Inter Miami CF, one of the most recognizable sports teams in the world. Through this partnership and the newly named Chase Stadium, we’re continuing to contribute to South Florida and its local communities. In Tampa, home to nearly 6,000 of our employees, we’re triggering an additional $210 million in economic activity and creating over 660 local construction jobs through the renovation of our Highland Oaks campus and downtown Tampa office. We’re proud that one-third of all Floridians do business with us through deposits, credit cards or a mortgage. Through each of our investments across the state, we’re ensuring that residents have the resources and tools they need to thrive.

Our support to government, higher education, healthcare and nonprofit organizations:

• We serve over 150 government, higher education, healthcare and nonprofit clients throughout the state, and over the last five years, we have provided more than $20.2 billion in credit and capital to them.
• Our clients range from the city of Jacksonville to the Orlando Utilities Commission, the University of South Florida, Broward Health and the District School Board of Pasco County — a decades-long client.
• We are the lead treasury bank for the Wounded Warrior Project, one of the largest veteran service organizations in the United States. Headquartered in Jacksonville, the organization caters to wounded veterans and service members who served in the military on or after 9/11.

Our support to investment and middle-market banking clients:

• Over the last five years, we have provided in excess of $318 billion in credit and capital to local clients, such as utility, technology and tourism companies.
• We have more than 12,500 large and midsized clients across the state.

Our support to local financial firms:

• Over the last five years, we have provided more than $24 billion in credit and capital for financial institutions, such as local banks, insurance companies, asset managers and securities firms.
• We bank over 50 of Florida’s regional, midsized and community banks, helping them play an essential role in maintaining the state’s economy and serve local communities.

Our support to small business:

• At the end of 2023, balances for loans extended to Florida’s small businesses totaled more than $1.2 billion — funds being used to help those businesses scale and grow, contribute to the economy and create local jobs.
• Across the state, we have over 654,000 small business customers.
• In 2023, our bankers and senior business consultants spent more than 375,000 hours advising and supporting Florida business owners.

Our support to consumer banking needs:

• We operate 1,445 ATMs and 410 branches across the state.
• In 2023, we supported more than 6.1 million customers with mortgages, auto loans and savings, checking and credit card accounts, giving JPMorgan Chase one of the largest consumer banking market shares in the state.
• We managed more than $70 billion in investment and annuity assets for local clients.

Our business and community investments:

• $3 million to The Miami Foundation’s Resilient 305: Building Prosperity Collaborative to increase access to quality jobs and develop small businesses through training, investments and capacity-building.
• $1.6 million to the Community Justice Project, which empowers community-based legal advocates to help delay displacement and improve conditions for housing stability for renters across nine Florida counties.
• A $1 million investment to Florida Memorial University, South Florida’s only HBCU, to help traditionally underresourced students pursue a career in technology.

Our support as a local employer:

• We employ more than 14,000 residents throughout the state, including nearly 1,900 veterans and over 660 people with a criminal background who deserve a second chance.
• In Florida, the average salary of our employees is more than $87,000 (plus a starting comprehensive annual benefits package worth nearly $17,600) compared with the statewide per capita income of nearly $40,300.

GIVING THE BANK REGULATORY AND SUPERVISORY PROCESS A SERIOUS REVIEW

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was finished 14 years ago, and we believe it accomplished a lot of good things. But it’s been quite a while since then, and we’re still debating some very basic issues. It’s time to take a serious, hard, honest look at what has been done and what can be improved.

It’s good to remember that the United States has the best financial system in the world, with diversified, deep and experienced institutions, from banks, pension plans, hedge funds and private equity to individual investors. It has healthy public and private markets, transparency, rule of law and deep research. The best banking system in the world is a critical part of this, and, integrated with the overall financial system, is foundational to the proper allocation of capital, innovation and the fueling of America’s growth engine.

This is not about JPMorgan Chase — we believe we can manage through whatever is thrown our way. This is about the impact on all parts of the system — from smaller banks to larger regional banks that may not have the resources to handle all of these regulatory requirements. It’s also about the effect on the financial markets and the economy from the rapidly growing shadow banking system, as well as the ultimate impact on the customers, clients and communities we serve. This is about what’s right for the system.

The banking and financial system is innovative, dynamic and constantly changing.

The banking system is not static: There are startup banks, mergers, successful upstarts and fintech banks, and even Apple, which effectively acts as a bank — it holds money, moves money, lends money and so on. Nonbanks are competing with traditional banks, and, in general, this dynamism and churn are good for innovation and invention — with success and failure simply part of the robust process. Innovation runs across payments systems, budgeting, digital access, product extensions, risk and fraud prevention, and other services. Different institutions play different roles, and, importantly, small banks and big banks serve completely different strategic functions. Large banks bank multinational corporations around the world, make healthy markets, and wield technology and a product set that are the best in the world. A small bank simply cannot bank these same multinational governments and safely move the amount of money and securities that large banks do. Regional and community banks have exceptional local knowledge and presence and are critical in serving thousands of towns and certain geographies.

It is also important to recognize that the banking system as we know it is shrinking relative to private markets and fintech, which are growing and becoming increasingly competitive. And remember that many of these new players do not have the same transparency or need to abide by the extensive rules and regulations as traditional banks, even if they offer similar products — this often gives them significant advantage.

To deal with this fluid environment, banks of all sizes develop their own strategies, whether to specialize, expand geographically or embark on mergers and acquisitions. There are certain banking services where economies of scale are a competitive advantage, but not all banks need to become bigger to gain this benefit (there are many highly successful banks that are smaller). What is clear is that banks should be allowed to pursue their individual strategies, including mergers and acquisitions, as they see fit. Overall, this process should be allowed to happen — it’s part of the natural and healthy course of capitalism — and it can be done without harming the American taxpayer or economy.

While we all want a strong banking and financial system, we should step back and assess how all the regulatory steps we have taken measure up against the goals we all share. Since Dodd-Frank was signed into law in 2010, thousands of rules and reporting requirements written by 10+ different regulatory bodies in the United States alone have been added. And it would probably be an understatement to say that some are duplicative, inconsistent, procyclical, contradictory, extremely costly, and unnecessarily painful for both banks and regulators. Many of the rules have unintended consequences that are not desirable and have negative impacts, such as increasing the cost of credit for consumers (hurting lower-income Americans the most).

The whole process, including the Basel III endgame, could be much more productive, streamlined, economical, efficient and safe.

Both regulators and banks should want the same thing — a healthy banking system, serving its clients and striving for continuous improvement. We all should also want the enormous benefits that would come from good collaboration between regulators and bank management teams and boards.

Over time, these relationships have deteriorated, and, again, are increasingly less constructive. There is little real collaboration between practitioners — the banks — and regulators, who generally have not been practitioners in business. While we acknowledge the dedication of regulators who work with banks on a daily basis, management teams across the industry are putting in a disproportionate amount of time addressing requests for extra details, documentation and processes that extend far beyond the actual rules — and distract both regulators and management from more critical work. We should be more focused on the truly important risks for the safety of the system. And unfortunately, without collaboration and sufficient analysis, it is hard to be confident that regulation will accomplish desired outcomes without undesirable consequences. Instead of constantly improving the system, we may be making it worse. A few additional points:

• The Basel III endgame disadvantages American banks. The Basel III endgame has been 10 years in the making, and it still has not been completed. In my view, many of the rules are flawed and poorly calibrated. If the Basel III endgame were implemented in its current form, it would hamper American banks: As proposed, it would increase our firm’s required capital by 25%, making our requirement 30% higher than it would be under the equivalent European Union proposal. That means for every loan and asset financed in the United States by a major American bank, that bank would have to hold 30% more capital than any international competitor. The proposed regulations would also damage market making (see the following section). There are many other flaws but suffice it to say that much of the work being done today to analyze the effects should have been done before the proposed rulemaking. One of the single most important lessons from the great financial crisis is that there is enormous value to having a bank that is well-managed and has diverse revenue sources. Yet regulation since then both punishes consolidation and diversification — and punishes performance — through many features of the GSIB surcharge.
• Built over many years, the framework is now full of duplication. The following is only a partial list: American gold-plating and conceptual inconsistencies among Comprehensive Capital Analysis and Review (CCAR), recovery and resolution plans, liquidity requirements, global systemically important bank (GSIB) requirements, and safety and soundness principles. The many overlapping rules contribute to the bureaucracy that generates an extraordinary amount of make-work (an 80,000-page CCAR and shockingly another, coincidentally, 80,000-page recovery and resolution plan).
• The new rules do virtually nothing to fix what caused the failure of SVB and First Republic. For example, they don’t improve certain liquidity requirements, limit HTM accounting or reduce allowable interest rate exposure.
• The current regulatory approach to liquidity might simply run counter to the stated intent. Regulations should recognize the value and importance of lending and borrowing against good collateral and using central bank resources, such as the discount window. Adhering to current liquidity requirements permanently ties up good liquidity in a way that makes the system more fragile and more risky.
• It is not clear what the full intent of the Basel III endgame was – it will have unintended consequences. Without real analysis of expected outcomes, additional regulation will likely reduce the number of banks offering certain services and increase costs for all market participants and activity, including loans, market making and hedging (by farmers, airlines and countries, among others). And new rules might even increase consolidation as companies race to achieve economies of scale in certain products and services.

Unfortunately, some recent regulations are ending up in court. You can imagine that no one wants to sue their regulators. Banks would not sue if they did not think they were right — or if they thought they had any other recourse — which they effectively do not. This is definitely not what anyone should want. A more constructive relationship with regulators would reduce confusion and uncertainty and would lead to better outcomes for banks, their shareholders, and their clients, customers and communities.

Collaboration between banks and regulators could improve the use of resources and create better outcomes.

True collaboration could dramatically improve the banking system. For example:

• Redirect enormous resources from things that don’t matter to things that do. As mentioned, it takes 80,000 pages to describe a CCAR test and 80,000 pages to detail recovery and resolution. The talent and resources at the banks and regulators could be better used elsewhere. Such overload is distracting and takes your eye off the ball on real, emerging risks, including China, trade, payment systems and cybersecurity, among others.
• Reduce bureaucratic processes that provoke a tendency to herd mentality. For example, CCAR is just a point-in-time stress test, and it can lull you into a false sense of security — for reference, we do more than 100 stress tests each week. On interest rate exposure, focusing on the documentation of details may stop you from thinking about big interest rate exposure. Sometimes analyzing “what ifs” and fat tail risks is better than excessive and rigid models and documentations.
• Examine risks outside the regulatory system that are rarely analyzed and largely unaddressed. These risks include data and privacy, as well as consumer banking and payment systems, which are growing fast in the unregulated market. In addition, there are potential risks from private credit markets (which I talk about later in this section).
• Let’s imagine what’s possible with real collaboration. Working together, we can improve how the FDIC manages failing institutions, how to limit contagion and restore confidence to depositors, how liquidity requirements can create more flexible funding for banks under stress, how the banking and Federal Reserve’s payment system can become more interoperable, how clearinghouse risk can be reduced, how stress tests can protect the system from a wider variety of outcomes, how costs and therefore consumer costs can be reduced (not increased), how anti-money laundering requirements can be simplified and improved at the same time, and how financial products can be brought to the unbanked. We can fix the housing and mortgage markets. For example, mortgage regulations around origination, servicing and securitization could be simplified, without increasing risk, in a way that would reduce the average mortgage by 70 or 80 basis points. The Urban Institute estimates that a reduction like this would increase mortgage originations by 1 million per year and help lower-income households, in particular, buy their first home, thereby starting them on the best way to build household net worth. There are many more things that can be improved — and we really should start working on them.

We need a detailed review and probably a complete revamp.

I know this might be wishful thinking, but now would be a good time to step back and have a thorough and candid review of the thousands of new rules passed since Dodd-Frank. After this review, we should ask what is it that we really want: Do we want to try to eliminate the possibility of bank runs? Do we want to change and create liquidity rules that would essentially back most uninsured deposits? Do we want the mortgage business and leveraged lending business to be inside or outside the banking system? Do we want products that are inside and outside the banking system to be regulated the same way? Do we want to reasonably give smaller banks a leg up in purchasing a failing bank? And while Dodd-Frank did some good things, shouldn’t we take a look at the huge overlapping jurisdictions of various regulators? This overlap creates difficulties, not only for banks, but for the regulators, too. Any and all of this is achievable, and, I believe, could be accomplished with simpler rules and guidelines and without stifling our critical banking system.

PROTECTING THE ESSENTIAL ROLE OF MARKET MAKING (TRADING)

Before we discuss market making and financial markets, readers should understand that market making occurs in almost all businesses. There are healthy markets in farm animals, foreign products, commodities, energy, logistics, healthcare and so on. Healthy markets increase customer choice and reduce cost. They almost always involve holding inventory and taking some risk, which is simply a part of the process. America’s financial markets are the biggest in the world — U.S. public debt and equity markets total $137 trillion, constituting the biggest “market” in the world, and are larger than America’s gross domestic product (GDP) of $27 trillion.

Market participants are not “Wall Street.” They are large and small, mainly sophisticated, global investors (pension plans, mutual funds, governments and individuals) representing retirees, veterans, individuals, unions, federal workers and others. They all benefit from our efficient, low-cost and transparent markets.

Some regulators seem to think that market making is a speculative, hedge fund-like activity — and this thinking is what might be leading them to constantly increase capital requirements. The proposed capital rules could fundamentally alter market-making activities that are critical to a thriving economy, particularly in difficult markets when market making is even more important . The new rules would raise capital requirements by 50% for major banks — which could undermine market stability, make banking services costlier and less accessible, and push even more activity to a less regulated banking system.

Our financial system and markets are the best in the world and benefit ALL participants; exceptionally good market making in the secondary market makes our primary markets the best in the world.

We should recognize that the United States has the biggest, deepest and most liquid capital markets in the world. For these markets to function, it is critical for transparency and liquidity to be in the secondary market . Market making provides this, promoting the flow of capital to real economy investments and supporting all sectors of the economy, including companies, state and local governments, universities, hospitals, pension plans and overall job creation. Without market making in the secondary market, it would be extremely difficult for companies to raise capital through the primary market — equity and debt offerings — which have totaled approximately $3.6 trillion on average over the past few years. The incredible strength of these markets enables companies of all sizes to grow and expand especially during times of volatility and stress. It also enables consumers to access cheaper credit and governments (local, state and federal) to reduce their borrowing costs.

JPMorgan Chase spends $700 million per year in extensive research coverage of nearly 5,200 companies across 83 countries. This massive effort continuously educates investors and decision makers around the world and often leads to improved governance and management. It also critically complements the firm’s market-making activities and further promotes transparency, enabling investors to make thoughtful choices around investing in capital markets.

I would also like our shareholders to know that our market making is backed by approximately $7 billion in support expenses, including over $2 billion in technology spend alone each year. This investment allows us to maintain global trading systems and constantly improve upon risk management and efficiency.

JPMorgan Chase deploys approximately $70 billion in capital to maintain our Markets franchise. This capital supports $500 billion in securities inventory (largely hedged) — and this inventory allows us to buy and sell $2 trillion (notional) in securities daily for our clients.

Market making entails risk but is not particularly speculative.

The main objective of market makers is to continuously quote prices and diligently manage an inventory to transact at those prices, which includes assuming certain risks to support heavy volumes and orderly trading. Market makers have a moral obligation to try to make markets in good times and in bad. Part of our brand promise is to stand ready as the willing buyer and seller. In this, we have never failed. In addition, in most cases regarding government debt, where we serve as a government securities dealer, we are legally obligated to make markets. This constant visibility into prices provided by market makers fosters investor confidence, keeps fees low and promotes economic growth by attracting more investors.

Many large market participants — for example, hedge funds and high-frequency traders, among others — have no obligation to make markets. In fact, many of these market participants often “step out” of the markets and dramatically reduce liquidity specifically when market conditions are difficult.

Market making is not particularly speculative since market makers generally hedge their positions, as you will see from some real life examples of the economics and risks. We earn revenue of approximately $100 million on a typical day. In the average year, the total is nearly $30 billion. On our $2 trillion in notional daily trading, this amounts to only one hundredth of a cent charged to the investor for these services — an extraordinarily low cost compared with any other market in the world.

Now let’s take a look at the actual risk and results versus the hypothetical risk and results. The hypothetical global market shock of the CCAR stress test has us losing $18 billion in a single day and never recovering any of it. Let’s compare that to actual losses under real, actual market stress.

Now consider these historical data points: First, over the last 10 years, the firm’s market-making business has never had a quarterly loss and has lost money on only 30 trading days. These loss days represent only 1% of total trading days, and the average loss on those days was $90 million. Second, when markets completely collapsed during the COVID-19 pandemic (from March 2 through March 31, 2020, the stock market fell 16%, and bond spreads gapped out dramatically), J.P. Morgan’s market-making activities made money every day prior to the Federal Reserve’s major interventions, which stabilized the markets. During that entire month, we lost money on only two days but made $2.5 billion in Markets revenue for the month. And third, in the worst quarter ever in the markets following the 2008 failure of Lehman Brothers, we lost $1.7 billion, but we made $5.6 billion in Markets revenue for the full year. The firm as a whole did not lose money in any quarter that year. In 2009, there was a complete recovery in Markets, and we made $22 billion in Markets revenue.

You can see that our actual performance under extreme stress isn’t even close to the hypothetical losses of the stress test.

Another major fallacy is that derivatives are objects of financial destruction. In reality, derivatives are an essential part of managing financial risk and are used by investors, corporations, farmers, businesses, countries, governments and others to manage their risks. And more than 85% of derivatives are fairly basic forms of foreign exchange or interest rate swaps.

One last fallacy is that the repo markets are all about speculation. While it’s true that repo is used by certain investors to leverage up their positions, about 75% of repo is essential to normal money market functioning, i.e., is done by broker-dealers financing their actual inventory positions, money market funds investing their cash backed by highly rated collateral and clients hedging their positions.

Market makers add confidence, liquidity and transparency to U.S. capital markets — market making helps stabilize markets and can reduce volatility.

In addition, more liquidity, not less liquidity, will be needed to maintain market stability. Large banks keep an inventory of securities they can deploy in times of stress to help soothe markets; however, with the implementation of new regulations, banks now hold 70% as much inventory in securities as they did before the 2008 financial crisis, while the total size of the market has almost tripled. Higher capital requirements will accelerate this trend even further, impacting banks’ ability to deliver support to clients and markets in times when it is needed the most.

Washington’s Basel III endgame proposal damages market making, hurts Americans and drives activity to less transparent, less regulated markets.

If this proposal is enacted as drafted:

• Everyday consumer goods could be impacted. Households contending with inflation could also feel the effects of higher capital requirements on market-making activities when they shop. From beverage companies that need to manage aluminum costs to farms that need to protect against environmental risks, if the cost of hedging those risks increases, it could be reflected in what consumers pay for everything from a can of soda to meat products.
• Mortgages and small business loans will be more expensive. Consumers seeking a mortgage — including first-time homebuyers and historically underserved, low- to moderate-income borrowers with smaller down payments — will face higher interest rates or will have a tougher time accessing one. This will occur not only because the cost of originating and holding these loans is higher but also because the cost of securitizing them will rise for banks, nonbanks and government agencies. Not only that, but the proposal will likely lead to reductions in the size of unfunded credit card lines, which will put pressure on FICO scores and thereby make it more difficult for some people to access other forms of retail credit such as mortgages. Again, this will have the greatest impact on low- to moderate-income borrowers who rely most heavily on credit cards for day-to-day spending and to build their credit history. It could even be argued that existing regulations go too far and that there is an opportunity to help underserved communities by dialing down regulations that lead to higher borrowing costs. This should be studied and the pros and cons analyzed. The same can be said for small business loans, which will become more expensive and less accessible.
• Saving for retirement or college will be harder. The cost of products that families count on to save for retirement or college will go up as a result of this proposal. Asset managers, money market funds and pension funds all buy, sell and safekeep securities and other financial instruments for American investors. Under the proposed rules, the cost of banking products used on behalf of clients each day — including brokerage, advisory, clearing and custody services — will go up and feed through to customers. That will lead to lower returns on retirement accounts, college funds and other long-term savings.
• Government infrastructure projects and corporate development will become more expensive. Federal, state and local governments, as well as corporations and other institutions, rely on large banks for access to U.S. capital markets to fund development. If accessing capital markets becomes more expensive, it will have a ripple effect on the hiring of American workers, investment in research and development, and funding to build hospitals, roads and bridges, including the planned infrastructure projects from the Inflation Reduction Act (IRA).

More market activity will move to unregulated institutions, out of sight from regulators and without the same level of consumer protections that Americans expect from their banks. Other market participants that don’t have holistic client relationships are less likely to provide liquidity to help stabilize markets.

In volatile times, banks have been able to intermediate to help their clients and to work with the regulators. With new regulations, they may be less able to do so. There have been several times in the past few years where banks had ample liquidity and capital but were unable to rapidly increase their intermediation in the markets due to very rigid liquidity and capital requirements. Finally, the proposed rules increase the chance that the Federal Reserve will have to step in again — and this is not something they should want to do on a regular basis but only in an extreme emergency.

Staying Competitive in the Shrinking Public Markets

In previous letters, I have described the diminishing role of public companies in the American financial system. From their peak in 1996 at 7,300, U.S. public companies now total 4,300 — the total should have grown dramatically, not shrunk. Meanwhile, the number of private U.S. companies backed by private equity firms — which does not include the rising number of companies owned by sovereign wealth funds and family offices — has grown from 1,900 to 11,200 over the last two decades. This trend is serious and may very well increase with more regulation and litigation coming. Along with a frank assessment of the regulation landscape, we really need to consider: Is this the outcome we want?

There are good reasons for private markets, and some good outcomes result from them. For example, companies can stay private longer if they wish and raise more and different types of capital without going to the public markets. However, taking a wider view, I fear we may be driving companies from the public markets. The reasons are complex and may include factors such as intensified reporting requirements (including investors’ growing needs for environmental, social and governance information), higher litigation expenses, costly regulations, cookie-cutter board governance, shareholder activism, less compensation flexibility, less capital flexibility, heightened public scrutiny and the relentless pressure of quarterly earnings.

Along with the universal proxy — which makes it easier to put poorly qualified directors on a board — the pressures to retreat from the public market are mounting. In addition, corporate governance principles are becoming more and more templated and formulaic, a negative trend. For example, proxy advisors may automatically judge directors unfavorably if they have a long tenure on the board, without a fair assessment of their actual contributions or experience. Another example is the constant battle by some proxy advisors who try to split the chairman and CEO role when there is no evidence this makes a company better off — in fact, today, lead directors generally hold most of the authorities previously assigned to the chairman. The governance of major corporations is evolving away from guidance by governance principles that focus on a company’s relationship to long-term economic value toward a bureaucratic compliance exercise. Good corporate governance is critical, and a little common sense would go a long way.

THE PRESSURE OF QUARTERLY EARNINGS COMPOUNDED BY BAD ACCOUNTING AND BAD DECISIONS

There is something very positive about detailed and disciplined quarterly financial and operating reporting. But company CEOs and boards of directors should resist the undue pressure of quarterly earnings, and it is clearly somewhat their fault when they don’t. However, it is naïve to think that the pressure doesn’t exist because companies that “disappoint” can face extensive criticism, particularly those with a new or young CEO. It’s possible for companies to take short-term actions to increase earnings, such as selling more product cheaply at the end of a quarter, cutting certain investments that may be terrific but can show accounting losses in the first year or two, or just deploying more aggressive accounting methods at times. Once shortcuts like this begin, people all over the company understand that it is okay to “stretch” to meet your numbers. This could put you on a treadmill to ruin. Obviously, a company should not resort to these tactics, but it does happen in the public markets — and it’s probably less likely in the private markets.

THE HIJACKING OF ANNUAL SHAREHOLDER MEETINGS

One of the reasons it is less desirable to be a public company is because of the spiraling frivolousness of the annual shareholder meeting, which has devolved into mostly a showcase of grandstanding and competing special interest groups. We should treat shareholders with tremendous respect — and we do. At JPMorgan Chase, we are constantly talking with our investors — our directors, our lead director and our corporate governance experts visit most of our major investors whether they be direct owners or asset managers who manage the money for others. Meeting with your shareholders and investors is critical, but the annual shareholder meeting itself has become ineffective. We should try to come up with a far more constructive alternative.

THE UNDUE INFLUENCE OF PROXY ADVISORS

There are essentially two main proxy advisors in the United States. One is called Institutional Shareholder Services (ISS), and the second is called Glass Lewis. These proxy advisors started out providing reams of data from companies to help their institutional investor clients vote on proxy matters (information on executive compensation, stock returns, detail on directors, policies and so on). However, they soon also began to provide advice on how shareholders should vote on proxy matters. And, in fact, institutional investors generally execute their voting on an ISS or Glass Lewis platform, which often includes a clear statement of the advisory service’s position.

I should also point out, because it may be relevant, that ISS is owned by Deutsche Boerse, a German company, and Glass Lewis is owned by Peloton Capital, a Canadian private equity firm. I question whether American corporate governance should be determined by for-profit international institutions that may have their own strong feelings about what constitutes good corporate governance.

While asset managers and institutional investors have a fiduciary responsibility to make their own decisions, it is increasingly clear that proxy advisors have undue influence.

Asset managers (who manage money on behalf of others) and institutional investors (e.g., pension plans and endowments) may rely on a variety of information sources to support their valuation decision-making process. While data and recommendations may form pieces of the information mosaic, their votes should ultimately be based on an independent application of their own voting guidelines and policies. To the extent they use recommendations from proxy advisors in their decision-making processes, they should disclose that they do so and should be satisfied that the information upon which they are relying is accurate and relevant. However, many companies would argue that this information is frequently not balanced, not representative of the full view and not accurate. In addition, companies complain that they often cannot get the data corrected, and, therefore, a vote may go uncorrected.

Almost all asset managers receive proxy advisor data and recommendations; while some asset managers vote completely independently of this information, the majority do not. Most asset managers have formed corporate governance or stewardship committees that are responsible for their voting, and these committee positions are often held not by portfolio managers and research analysts (i.e., the people buying and analyzing the individual securities) but by stewardship experts. While it is good to have stewardship experts, the reality is that many of these committees default large portions of what they do to proxy advisors and, more troubling, make it harder for actual portfolio managers to override this decision making.

Some have argued that it’s too hard and too expensive to review the large number of proxies and proxy proposals — this is both lazy and wrong. If issues are important to a company, they should be important to the shareholder — for the most part, only a handful of proposals are important to companies.

We are making enhancements to J.P. Morgan Asset Management’s proxy voting processes to amplify the role of portfolio managers and to address the perception of asset managers’ reliance on third-party advisor voting recommendations.

Enhancements to the firm’s internal proxy voting process will include:

• More portfolio manager participation in proxy committee decision making. The firm has significantly expanded the representation of portfolio managers on its North American Proxy Committee in an effort to increase the diversity of viewpoints represented on the committee. As part of this change, and in recognition that portfolio managers, as fiduciaries, may differ in their views on how to vote on particular proposals depending on a mandate’s investment strategy and guidelines, we are broadening our capabilities to support voting results that may vary across our platform.
• Diminished role of proxy advisor recommendations. J.P. Morgan Asset Management makes its own independent proxy voting decisions (based on deep fundamental research) and stands behind the depth and rigor of its processes and historical information advantage. In most cases, the firm will only use proxy advisory firms for research, data and technical mechanics of vote transmission and not for outsourced recommendations. By the end of 2024, J.P. Morgan Asset Management generally will have eliminated third-party proxy advisor voting recommendations from its internally developed voting systems. Additionally, the firm will work with third-party proxy voting advisors to remove their voting recommendations from research reports they provide to J.P. Morgan Asset Management by the 2025 proxy season.
• Other enhancements. We are working to give a company and its management even greater access to the ultimate decision makers; to raise critical issues to a company as early as possible in a constructive and proactive way; and to be willing to tell companies how we have voted once our decision is made rather than waiting until votes are finally counted.

Taken together, these steps are designed to respond to a growing perception (and, I believe, reality) that the asset management industry generally places undue reliance on proxy advisors in how proxies are voted. We believe these actions will strengthen our relationships with our clients and with companies while helping to build trust between shareholders, investors and companies.

THE BENEFITS AND RISKS OF PRIVATE CREDIT

I have already mentioned some of the benefits of private credit, and I’ll now mention some more. Many people in the private credit arena are very smart and creative and want to help the companies they invest in navigate through market shoals. They can move quickly, discreetly and flexibly. Most generally understand that bad accounting drives bad decisions, and their goal is to make the right decisions for the future of the company.

On the other hand, not all players are that good. And problems in the private credit market caused by the bad players can leak onto the good ones, even though private credit money is locked up for years. If investors feel mistreated, they will cry foul, and the government will respond by putting a laser focus on the business. It’s a reasonable assumption that at some point regulations will focus on the private markets as they do on the public markets.

This scrutiny will include a look at how private credit values its assets, which isn’t as transparent as public market valuations. In addition, private market loans commonly lack liquidity in the secondary market and are not generally supported by in-depth market research.

New financial products that grow extremely rapidly often become an area of unexpected risk in the markets. Frequently, the weaknesses of new products, in this case private credit loans, may only be seen and exposed in bad markets, which private credit loans have not yet faced. When credit spreads gap out, when interest rates go up and when some leveraged companies suffer in the recession, we will find out how those loans survive stress testing. In addition, they can create a little bit of a “credit crunch” for borrowers since it might be hard for private creditors to roll over loans under those conditions. Under stress conditions, private creditors would have to charge exorbitant prices that companies simply cannot afford in order to book the new loan at par. Banks are in a slightly different position.

A BANK’S STRENGTH: PROVIDING FLEXIBLE CAPITAL

Banks generally try to be there for their borrowers in difficult times — striving to roll over loans, renegotiate terms and raise additional capital. Banks do this for multiple reasons: They normally feel an obligation to help their clients, they have long-term relationships and they can commonly earn other sources of revenue from client-driven transactions. Banks can also flex their capital and lending base as needed by their clients. This is because a bank can and should make decisions to help companies through good times and bad, seeking to retain them as long-term clients across many areas of the bank. They can and do take “losses” that help the client maintain the franchise. But an asset manager must act as a “fiduciary” of other people’s money and cannot lend based on a moral obligation or potential future relationship.

Recently, we have been witnessing a convergence between the public and private markets. But it’s too soon to say how this ultimately will play out, particularly if we go through a recessionary cycle.

Management Lessons: Thinking, Deciding and Taking Action – Deliberately and with Heart

I always enjoy sharing what I’ve learned from watching others, reading and experiencing through my own journey.

BENEFITING FROM THE OODA LOOP

The military, which often operates in extreme intensity of life and death and in the fog and uncertainty of war, uses the term “OODA loop” (Observe, Orient, Decide, Act — repeat), a strategic process of constant review, analysis, decision making and action. One cannot overemphasize the importance of observation and a full assessment — the failure to do so leads to some of the greatest mistakes, not only in war but also in business and government.

A full assessment is critical.

To properly manage any business situation, you need to perform a full and complete assessment of it. In business, you have to understand your competitors, their distribution, their economics, their innovations, and their strengths and weaknesses. You also need to understand customers and their changing preferences, along with your own costs, your people and their skills. Then there’s knowing how other factors fit in, like technology, risk, motivations … hope you get the point. For countries, you need a thorough grasp of their economies, strengths and weaknesses, population and education, access to raw materials, laws and regulations, history and culture. Research, data and analytics should be at a very detailed level and constantly reassessed. Only after you complete this diligent study can you start to make plans with a high degree of success.

Get on the road – it builds knowledge and culture.

I have frequently wondered about all the nonstop road trips, client meetings, briefings, greetings, bus trips, and visits to call centers, operating centers and branches, regulators and government officials, among others: Did they make a difference? The answer is absolutely yes because they enabled a process of constant learning, assessment and modification of best practices — gaining insights from employees to clients to competitors. Employees will tell you what you are doing well or poorly if you simply ask them, and they know you want to hear the real answer. Curiosity is a form of humility — acknowledging that you don’t know everything. Responding to curiosity allows other people to speak freely. Facts and details matter and inform a deeper and deeper analysis that allows you to continually revise and update your plans. This, of course, also means that you are constantly admitting prior mistakes.

You need to shed sacred cows, seek out blind spots and challenge the status quo.

Very often companies or individuals develop narratives based upon beliefs that are very hard to dislodge but are often wrong — and they can lead to terrible mistakes. A few examples will suffice. Stripe, Inc. built a payments business by working with developers — something we never would have imagined but might have figured out if we had tried to seek out what others were doing in this area. Branches were being closed, both at Bank One and Chase, because the assumption was that they would not be needed in the future. We underinvested for years in the wealth management business because we were always focused on the value of deposits versus investments. Question everything.

Use your brains to figure out the truth — not to justify what you already think.

It’s often hard to change your own attitudes and beliefs, especially those you may have held on to for some time. But you must be open to it. When you learn something that is different from what you thought, it may affect many conclusions you have, not just one. Try not to allow yourself to become rigid or “weaponized,” where other employees or interest groups jazz you up so much that you become a weapon on their behalf. This makes it much harder to see things clearly for yourself. When people disagree with you, seek out where they may be partially right. This opens the door for a deeper understanding and avoids binary thinking.

It's hard to see certain long-term trends, but you must try.

There is too much emphasis on short-term, monthly data and too little on long-term trends and on what might happen in the future that would influence long-term outcomes. For example, today there is tremendous interest in monthly inflation data, although it seems to me that every long-term trend I see increases inflation relative to the last 20 years. Huge fiscal spending, the trillions needed each year for the green economy, the remilitarization of the world and the restructuring of global trade — all are inflationary. I’m not sure models could pick this up. And you must use judgment if you want to evaluate impacts like these.

Also, a block of time as short as one year is an artificial framework for judging the impact of long-term trends that could easily play out over years. A helpful exercise is to think “future back,” in which you imagine different future outcomes, including the ones you want, and then work backward to events that are happening today (or that might happen or that you cause to happen), closely examining the connections between those events and your projected or desired outcomes. Those connections inform your risk and R&D planning. Similarly, when companies compare the attributes of their products and services with their competitors, they usually only consider where they are versus their competitors. But nothing is static — they should consider where their competitors will be in the future. Conditions are always changing, crises are always emerging. When analyzing the playing field, it is better to assume that your competitors are strong and are already in the process of improving and innovating. This minimizes the chance of arrogance leading to complacency.

DECISION MAKING AND ACTING (HAVE A PROCESS)

There is a time for an individual to decide and act.

Sometimes you should take the time to measure twice and cut once. And then sometimes making a quick decision is better than delaying. You should try to distinguish between the two. For example, with decisions that are hard to reverse, it’s usually better to go slow. With other decisions where you can test, learn, probe and change direction, it’s often better to go fast. It’s been my experience that it’s hard for some people to actually decide and act. This could be from analysis paralysis, lack of “perfect” information, fear of failure or the feeling that full consensus is needed before a decision can be reached. But whatever it is, it can slow down and possibly seriously damage a company.

To get people to think like decision makers and take a strong point of view, we like to ask, “What would you do if you were king or queen for a day?” It helps shift the direction to individual decision making. We also ask questions like, “What would you wish for if you knew X was going to happen?” (for example, higher interest rates). Decision making takes a mix of courage, grit and guts.

One exercise that I find useful (and sometimes painful) is to draw up a list of important decisions that need to be made — the ones I often avoid confronting. So I take time every Sunday to think about these tough issues and almost always make progress. Progress doesn’t always mean that you come to the final conclusion — sometimes it’s just a very rational next step that can put you on a path to the final decision.

Try to have a good decision-making process.

Try to give yourself the time to decide. Make sure you speak with the right people and make sure the right people are in the room. Information should be fully shared. People should be made very comfortable with open debate. Quite often, the “right” answer is simply waiting to be found — you don’t have to guess.

Crowdsourcing, compromise, consensus and committees have benefits and risks.

There are huge benefits to crowdsourcing intelligence. It is a form of full assessment, a strategy for getting the best ideas and challenging the status quo. We should do this for almost every major decision. It is perfectly fine on some occasions to compromise and gain consensus, particularly on decisions that are not critical and can easily be reversed. Often people spend too much time debating issues that are simply not that important; it’s better to decide and move on. Also, before you compromise, you should know exactly what you want to achieve and the consequences of any tradeoffs. However, sometimes compromise and consensus cannot work and only lead to a feel-good decision that is probably wrong — this could be the road to ruin.

The use of committees can be good when done properly. For example, if our risk committees could do a full assessment and crowdsource all potential risks, that would lead to better decision making. I will give one very personal and painful example, which is when we had a major trading scandal, called The London Whale. The scandal was not caused by the complexity of the trade but rather the failure to go to the proper Risk committee for a thorough review, which should have happened but didn’t. I have no doubt that had the trade been raised there, the flaws would have been exposed immediately, thereby dramatically reducing or eliminating the problem. On the other hand, the opposite can happen when a committee, with everyone staring at each other, devolves into herd-like behavior with people looking for confirmation and ending up with a compromise that is a poor choice.

Good leadership involves great observation and the ability to act, but there is more …

THE SECRET SAUCE OF LEADERSHIP (HAVE A HEART)

You need to earn trust and respect with your employees.

You can be great at assessment, you can be brilliant and you may often be willing to act. But all of that is not good enough for “complete” leadership. To become a true leader, you need to be trusted and you must earn your respect, every day. People have to know that you do not have ulterior motives and that you’re trying to do the right thing — not trying to burnish your personal reputation. Good people want to work for people they respect, and they will not respect people who take all the credit and share all the blame. People need to know that even when you make mistakes, you’re willing to admit them and take corrective action. And there is more …

The importance of vision, communication and inspiration.

The reason I’ve always hesitated to talk about “vision” is because often it is the basic BS of corporate speak — that somehow if you impart your vision to people, they will take the mountain. What it really is all about is this: After you’ve done your full assessment and decision making, you can then continuously educate, explain, train, simplify, propel and fight. But this only works if people know you are in the trenches with them, if they understand the mission and if they are there side by side with your effort.

We know that bureaucracy can lead to politics, corporate stasis and terrible decisions. So you can communicate your vision about how to fight bureaucracy by telling stories about the silly things we do — but with a smile — and then by showing people that you will actually fix the problems.

Finally, your vision needs to be clear, coherent and consistent. Within an organization, people very quickly pick up the pattern of management saying one thing but doing another. Because if words and actions are inconsistent (for example, and I could give many, when we say we want employees to be treated with respect, but we allow a jerk to be their boss), confidence in leadership will be eroded.

Heart cannot be overstated.

Heart matters. And it makes a difference when people know and see that you actually care. One example: Many years ago when I was new to JPMorgan Chase, I learned that the company’s security guards had been outsourced — to save money. Since after outsourcing, when the same guards continued coming to work every day at the same salary, I wondered, “How could this be?” (FYI, this was brought to my attention by the head of the Service Employees International Union, who came to see me over the objection of my management team.) The reason we were saving money is because the healthcare benefits were cut in half for the guards and their family members (currently worth approximately $15,000 a year), and the savings were split with us. This was a heartless thing to do — and the second I found out, I reversed the decision. JPMorgan Chase’s success will not be built off the backs of our guards — it will be the result of fair treatment of all of our employees — and we’re thankful that many of those guards are still with our company today.

You know heart and soul when you see it in effect on sports teams or with “the boys in the boat” — it’s a beautiful thing to watch. It’s not as obvious, but it happens in business, too.

It’s essential to build trust with your customers, constituencies and, yes, even competitors.

Of course, I’m not bringing this up as a matter of corporate governance or a corporation’s purpose: A business should, over the long run, try to maximize shareholder value. It is completely obvious that running a decent business —treating everyone ethically and earning trust and respect in all your communities — is not only fundamental to shareholder value but also to a healthy society.

A Pivotal Moment for America and the Free Western World: Strategy and Policy Matter

In past years, I have written extensively about public policy issues. It is important to engage in these conversations, particularly around domestic economic policy because policy matters . While JPMorgan Chase can execute specific plans to improve outcomes for customers and communities, there is no replacement for effective government policies that add to the general well-being of the country. A stronger and more prosperous country will make us a stronger company.

As CEO of this company, every year I visit numerous countries around the globe. I meet with foreign government leaders, presidents and prime ministers, business leaders, and civic and academic experts, which allows me to learn a significant amount about how public policy is executed around the world. It also reinforces some of the critical values and virtues that are essential to a healthy country.

Every time I see the American flag, it reminds me of the values and virtues of this country and its founding principles conceived in liberty and dedicated to the notion that all men and women are created equal. Talk with someone who has recently become a naturalized citizen or watch a ceremony where groups of people take the oath to America, and you will see extraordinary joy and newfound pride. They now live free, with individual rights protected by the Constitution and with their life and the well-being of their family and community protected by the U.S. military. As Americans, we have much to be grateful for and much to defend.

If you read the newspaper from virtually any day of any year since World War II, there is abundant coverage on wars — hot and cold — inflation, recession, polarized politics, terrorist attacks, migration and starvation. As appalling as these events have been, the world was generally on a path to becoming stronger and safer. When terrible events happen, we tend to overestimate the effect they will have on the global economy. Recent events, however, may very well be creating risks that could eclipse anything since World War II — we should not take them lightly.

February 24, 2022 is another day in history that will live in infamy. On that day, 190,000 Russian soldiers invaded a free and democratic European country — importantly, somewhat protected by the threat of nuclear blackmail. Russia’s invasion of Ukraine and the subsequent abhorrent attack on Israel and ongoing violence in the Middle East should have punctured many assumptions about the direction of future safety and security, bringing us to this pivotal time in history. America and the free Western world can no longer maintain a false sense of security based on the illusion that dictatorships and oppressive nations won’t use their economic and military powers to advance their aims — particularly against what they perceive as weak, incompetent and disorganized Western democracies. In a troubled world, we are reminded that national security is and always will be paramount, even if its importance seems to recede in tranquil times.

The fallout from these events should also lay to rest the idea that America can stand alone. Of course, U.S. leaders must always put America first, but global peace and order are vital to American interests. Only America has the full capability to lead and coalesce the Western world, though we must do so respectfully and in partnership with our allies. Without cohesiveness and unity with our allies, autocratic forces will divide and conquer the bickering democracies. America needs to lead with its strengths — not only its military but also its economic, diplomatic and moral forces. And now we must do so as America’s leadership is being challenged around the world. There is nothing more important.

Policy and strategy matter, and it’s important to be engaged.

In our increasingly complex world, there is a vital interrelationship between domestic and foreign economic policy, particularly around trade, investment, national security and other issues. And, of course, while American voters and leadership set U.S. foreign policy, being a constructive part of the global conversation has become more important than ever.

If you doubt how important public policy is for the health of a country, you need to look no further than the recent history of Greece, Ireland or Singapore. Each of these countries, starting from deeply challenging places, implemented effective government and policies that have done a great job of lifting up their people when many thought it wasn’t possible. Sweden is another great example of a country with good broad-based policies that have succeeded at precisely what we all may want — a dynamic, innovative, free-market economy (Sweden actually has fewer government-owned enterprises than America) and safety nets that work. Conversely, you need to look no further than North Korea or Venezuela to see the complete destruction and havoc that terrible public policies (often in the name of the people) can cultivate.

Strategy by its nature must be comprehensive. In the rest of this section, I try to answer the question: What must we do to ensure that the world stays safe, not only for America but for freedom and democracy? A comprehensive strategy entails four important pillars, and we must succeed at each:

• Maintain American leadership (including military).
• Achieve long-term economic success with our allies.
• Strengthen our nation domestically.
• Deepen focus and resolve on addressing our most pressing challenges.

COALESCING THE WESTERN WORLD — A UNIQUELY AMERICAN TASK

Only America has the full capabilities of military might, economic power and the principles that most people around the world yearn for — based on “liberty and justice for all” and the proposition that all people are created equal. America remains the bastion of freedom and the arsenal of democracy.

There is no alternative to American leadership.

In the free and democratic Western world, and, in fact, for many other countries, there is no real or good alternative to America. The only other potential superpower is China. Other nations know they can rely on the founding principles of America. If we reach out our hand, most nations will happily take that hand. America is still the most prosperous nation on the planet, which not only can guarantee our military strength but also positions us to help our allies develop and grow their nations (though we should minimize the “our way or the highway” type of behavior). This leadership is needed today to help Ukraine stay free in its battle with Russia.

Most of the world wants American leadership.

America continues to be the envy of much of the world, and as we’ve seen with the challenges at our borders, there is a reason people want to come here and not to autocratic nations. If you opened America’s borders to the rest of the world, I have little doubt that hundreds of millions of people would want to move here. By contrast, not many would want to emigrate to autocratic nations. Also, I have little doubt that if most investors across the globe could only invest in one country, they would choose the United States. Beyond our country’s borders, people and nations around the world understand the role that America has played in promoting world peace — known as Pax Americana. For the most part, Pax Americana has kept the world relatively peaceful since World War II and helped lead to enormous global economic prosperity, which has helped lift 1.3 billion people out of poverty.

Modern America does not engage in economic coercion or foreign wars to steal land or treasure. The fact that some of our foreign excursions might have been misguided does not negate this. We helped rebuild Europe and Japan after the devastation of World War II, and we, with our allies, have helped create global institutions to maintain peace. We are still trusted.

First and foremost, the Western world needs unquestioned military might — peace through strength.

“We know only too well that war comes not when the forces of freedom are strong, but when they are weak,” said Ronald Reagan in 1980.

So far, the Western world has done a good job in strengthening military alliances in response to the war in Ukraine. Ukraine is essentially the front line that needs immediate support. Providing that support is the best way to counter autocratic forces that would seek to weaken the Western world, particularly America. But the ongoing wars in Ukraine and the Middle East could become far worse and spread in unpredictable ways. Most important, the specter of nuclear weapons — probably still the greatest threat to mankind — hovers as the ultimate decider, which should strike deep fear in all our hearts. The best protection starts with an unyielding resolve to do whatever we need to do to maintain the strongest military on the planet — a commitment that is well within our economic capability.

American leadership requires not only the military but also the full “symphony of power.”

Former Secretary of Defense Robert Gates, in his book Exercise of Power, writes extensively in the first chapter about “the symphony of power.” He makes the critical point that America has often overused and misused military power and has massively underused other muscles — diplomacy, intelligence, communication (explaining to the world the benefits of democracy and free enterprise) and comprehensive economic policy.

America has the most extensive group of partners, friends and allies — both military and economic — that the world has probably ever seen. We should put this to better use.

The American public ought to hear more about why this is so important.

International isolationism has run through American foreign policy throughout our history, frequently with good reason. The chant, “Don’t get involved in foreign wars” was often right. That said, the American public should remember that even after the Revolutionary War, we did, in fact, have British and French armies on our soil. The sinking of American merchant and passenger ships during World War I and the surprise attack on Pearl Harbor in World War II brought isolationism to a close for a time. America is never far from being dragged into terrible conflicts. Global wars come to our shores whether we like it or not — we need to stay engaged.

In perilous periods of history when our allies and other democracies were under serious assault, great American leaders have inspired the American people — through words and actions — to stand up to help and defend them. Staying on the sidelines during battles of autocracy and democracy, between dictatorship and freedom, is simply not an option for America today. Ukraine is the front line of democracy. If the war goes badly for Ukraine, you may see the splintering of Pax Americana, which would be a disaster for the whole free world . Ukraine’s struggle is our struggle, and ensuring their victory is ensuring America first . It is imperative that our national leaders explain to the American people what is at stake and make a powerful case – with energy, consistency and clarity – for our strong enduring commitment to Ukraine’s survival for as long as it takes (and it could take years).

One last point: Ukraine needs our help immediately, but it’s important to understand that much of the money that America is directing to Ukraine is for purchasing weapons and equipment, most of which will be built in America. Not only is our aid helping Ukraine, but it is going directly to American manufacturers, and it is helping the country rebuild our military industrial capacity for the next generation.

STRENGTHENING OUR POSITION WITH A COMPREHENSIVE, GLOBAL ECONOMIC SECURITY STRATEGY

Sustaining America’s economic strength is a bedrock for our long-term military strength. There are many things we need to do to strengthen the U.S. economy, and I talk about that later in this section. This discussion is about foreign economic policies – the economic battlefield.

The whole Western world is rethinking and reimagining its military strategies and alliances. We need to do the same for our economic strategies and alliances, but we should be guided by a comprehensive global strategy that deals with critical issues. Done properly, such a strategy would help strengthen, coalesce and possibly be the glue that holds together Western democratic alliances over decades.

Foreign economic policy involves trade and investment, export controls, secure and resilient supply chains, and the execution of sanctions and any related industrial policies. It must also include development finance — think of the “Belt and Road” efforts in China — which are critical to most developing nations. This framework should tell us not only how to deal with our allies but also how to work with nonaligned nations around the world. These strategies should not be aimed against any one country (such as China) but rather be focused on keeping the world safe for democracy and free enterprise.

Economic national security is paramount — both for the United States and for our allies.

It is a valid point that the Western world — both government and business — essentially underestimated the growing strength and potential threat of China. It’s also true that China has been comprehensively and strategically focused on these economic issues, all while we slept. But let’s not cry over spilled milk — let’s just fix it.

We missed the potential threat from three vantage points. The first is companies’ overreliance on China as the sole link in their supply chain, which can create vulnerabilities and reduces resiliency. But to the extent this involves everyday items, like clothes, sneakers, vaccine compounds and consumer goods, this dependency is not as critical or complex and will eventually be sorted out.

The second is the most critical. The United States cannot rely on any potential adversaries for materials essential to our national security — think rare earths, 5G and semiconductors, penicillin and materials critical to essential pharmaceuticals, among others. We also cannot be sharing vital technologies that can enhance an adversary’s military capabilities. The United States should properly and narrowly define these issues and then act unilaterally, if necessary, to fix them.

The third is also complex, which is countering unfair competition or “mercantilist” behavior in critical industries; think electric vehicles, renewable energy and AI, among others. Examples of this would be where a state, any state, uses government powers, capital, subsidies or other means to dominate critical industries and deeply damage the economic position of other nations. Weakening a country economically can render it a virtual “vassal state,” reliant on potential adversaries for essential goods and services, which also weakens it militarily. We cannot cede our important resources and capabilities to potential adversaries.

All these issues can be resolved, though they will take time and need devoted effort.

Every nation will have different national security issues. For example, Europe in general and countries like India, Japan and Korea need reliable, affordable and secure energy; many nations would put food security as their top concern. This means that we must work with our allies to accomplish our own goals and to help them accomplish theirs. We have extraordinary common interests in our joint security: We must hang together — because if we don’t, we will assuredly hang separately.

We already engage in trade — improving it is good economics and great geopolitics.

We must have a better understanding of trade. As a nation, we refuse to get into genuine trade discussions, but this ignores the complete and obvious truth — we already have trade relationships with all these countries. Approximately 92% of the world’s consumers live outside the United States. Increased trade allows our workers and farmers to access those markets. We should negotiate trade agreements that can achieve more, economically, for ourselves and our allies, as well as meet all of our national security needs. While it is appropriate to use trade to continue to nudge allies in the right direction around human rights and climate, this objective should be subordinated to our national interests of long-term security.

Negotiating must be done in concert with our allied nations so as not to cause a fissure in economic relations. This is critical — strong economic bonds will help ensure strong military alliances. The Inflation Reduction Act has much good in it (more on this later), but it angered many of our allies. To them, the bill was by America and for America, and, subsequently, they felt a need to match it so their businesses would not be disadvantaged. The terms of the legislation could have been better negotiated with our allies in mind, strengthening our economic ties with the free world.

We should also immediately re-enter, if possible, the prior negotiated Trans-Pacific Partnership agreement. Not only is it good for the economy, but it also could be a brilliant, strategic, economic security move — an economic alliance that binds us with 11 other important countries (including Australia, Chile, Japan, Malaysia, Mexico, Singapore and Vietnam). Geopolitically and strategically, this might be one of the most important moves to counter China. While this is a challenging step, our political leaders need to explain and lead — and not be afraid of dealing with the tough issues. We also need to acknowledge that there have been real negative job impacts as a result of trade, which are usually concentrated around certain areas and businesses. So any new trade policy should be combined with a greatly enhanced Trade Adjustment Assistance program, which provides retraining, income assistance and relocation for those workers directly impacted by trade.

Trade is realpolitik , and the recent cancellation of future liquified natural gas (LNG) projects is a good example of this fact. The projects were delayed mainly for political reasons — to pacify those who believe that gas is bad and that oil and gas projects should simply be stopped. This is not only wrong but also enormously naïve. One of the best ways to reduce CO2 for the next few decades is to use gas to replace coal. When oil and gas prices skyrocketed last winter, nations around the world — wealthy and very climate-conscious nations like France, Germany and the Netherlands, as well as lower-income nations like Indonesia, the Philippines and Vietnam that could not afford the higher cost — started to turn back to their coal plants. This highlights the importance of safe, secure and affordable energy. Second, the export of LNG is a great economic boon for the United States. But most important is the realpolitik goal: Our allied nations that need secure and affordable energy resources, including critical nations like Japan, Korea and most of our European allies, would like to be able to depend on the United States for energy. This now puts them in a difficult position — they may have to look elsewhere for such supplies, tuning to Iran, Qatar, the United Arab Emirates or maybe even Russia. We need to minimize anything that can tear at our economic bonds with our allies.

The strength of our domestic production of energy gives us a “power advantage” — cheaper and more reliable energy, which creates economic and geopolitical advantages.

Industrial policy is now necessary, but it should be carefully constructed and limited.

In some cases, industrial policy (using government resources to subsidize investments to help make businesses more competitive) may be the only solution for quickly building up the industries we need (rare earths and semiconductors, among others) to guarantee resilient national security. The IRA and CHIPS Act are good examples of this and government has to get it right.

Such policy can also be used to help combat unfair competitive policies of nations that are using state capitalism and state control to dominate critical industries. However, when crafting industrial policy, the function of government needs to be narrowly defined and kept simple; i.e., governmental jurisdiction should be limited to very specific products and probably to what we know works, such as tax credits and, to a lesser extent, loan guarantees. And industrial policy should include twin provisions: 1) strict limitations on political interference, like social policies, and 2) specific permitting requirements, which, if not drastically improved, will badly inhibit our ability to make investments and allow infrastructure to be built. Adding social policy, politics and matters other than simple tax credits dramatically reduces the economic efficiency of industrial policy and creates conditions for corporate America to feed at the trough of government largess. We should quickly address how we can improve on already executed legislation. We do not want to look back and have great regrets about how so much of this policy work failed.

There are those who argue that the U.S. government needs much more far-reaching industrial policy to be able to micromanage and accomplish its many ambitious objectives. To those I say, read further in this section about how ineffective so many government policies have been.

We should be tough, but we should engage with China.

Over the last 20 years, China has been executing a more comprehensive economic strategy than we have. The country’s leaders have successfully grown their nation and, depending on how you measure it, have the first or second largest economy in the world. That said, many question the current economic focus of China’s leadership as they don’t have everything figured out. While China has become the largest trading partner to many countries around the world, its own GDP per person is $13,000. And the country continues to be beset by many economic and domestic issues.

China has its own national security concerns. The country is located in a very politically complex part of the world, and many of China’s actions have caused its neighbors (e.g., Japan, Korea, Philippines, among others) to start to re-arm and, in fact, draw closer to the United States. It also surprises many Americans to hear that while our country is 100% energy sufficient, China needs to import 10 million barrels of oil a day. It is clear that China’s new leadership has set a different course, with a much more intense focus on national security, military capability and internal development. That is their right, and we simply need to adjust to it.

America still has an enormously strong hand — plenty of food, water and energy; peaceful neighbors; and what remains the most prosperous and dynamic economy the world has ever seen, with a per person GDP of over $80,000 a year. Most important, our nation is blessed with the benefit of true freedom and liberty. See the sidebar on the amazing power of freedom later in this section.

While we may always have a complex relationship with China (made all the more complicated and serious by ongoing wars), the country’s vast size and importance to so many other nations requires us to stay engaged — thoughtfully and without fear. At the same time, we need to build and execute our own long-term, comprehensive economic security strategy to keep our position safe and secure. I believe that respectful, strong and consistent engagement would be best for both our countries and the rest of the world.

We need to strengthen and rebuild the international order — we may need a new Bretton Woods.

The international rules-based order established by the Western world after World War II is clearly under attack by outside forces, somewhat weakened by its own failures and inability to keep up with the increasingly complex world. This international order relies on a web of military alliances, trade agreements (e.g., World Trade Organization), development finance (e.g., International Monetary Fund and the World Bank) and related global tax and investment policies and diplomacy organizations (e.g., United Nations), which have evolved into a confusing and overlapping regime of policies. You can now add to it the new issues of cyber warfare, digital trade and privacy, and global taxes, among others.

It might be a good idea to convene a group of like-minded leaders to build and improve upon what already exists. The time may be right for a reimagined Bretton Woods — and by this, I mean revitalizing our global architecture. Since too many parts of the world have been neglected, any new system has to take into account and properly address the needs of all nations, including areas of concentrated poverty.

While we hope the wars in Ukraine and in the Middle East will end eventually (and, we hope, successfully from the standpoint of our allies), these other critical economic battles could possibly continue throughout our lifetime. If the Western world is slowly split apart over the next few decades, it will likely be the result of our failure to effectively address crucial global economic challenges.

PROVIDING STRONG LEADERSHIP GLOBALLY AND EFFECTIVE POLICY MAKING DOMESTICALLY

When you travel around the United States and talk with people of all types and persuasions, there is a rather common refrain; namely, why are we helping foreign nations with the safety of their borders and economies when we are not doing a particularly good job of protecting our own? While there is no moral equivalency in these arguments, they are understandable. It is clear that many Americans feel we need to do a better job here at home before we can focus over there . We can understand why some people living in this country, who have been neglected for decades, ask how their government can find the money for Ukraine and other parts of the world but not for them. It is a reasonable question.

From my point of view, our highly charged, emotional and political domestic issues are centered around 1) immigration and lack of border security and 2) the fraying of the American dream, particularly for low-income and rural Americans who feel left behind amid the growing wealth and prosperity of others around them. Please read the sidebar below, which I believe explains the legitimate frustration of some of our citizens. And I agree with them.

In the sidebar, I also explain how two policies (a large expansion of the Earned Income Tax Credit and focus on work skills and job outcomes at high schools, community colleges and colleges) would not only dramatically increase both the income and employment opportunities for many of those left behind but would also have the virtue of actually growing the workforce. The combined effect of all of this would be quite a boon to our GDP.

I believe that many affected Americans are not angry at hardworking, law-abiding immigrants and, in fact, acknowledge the critical role immigrants continue to play in building this wonderful country. Rather, they are angry that America has not implemented proper border control and immigration policies. It is astounding that many in Congress know what to do and want to do it but are simply unable to pass legislation because of partisan politics. Congress did come close on a few occasions — and I hope they keep trying.

Deliberate policies meant to drive healthy growth are needed.

For over two decades, since 2000, America has grown at an anemic rate of 2%. We should have strived for and achieved 3% growth. Had we done so, GDP per person today would be $16,000 higher, which would, in turn, have paid for better healthcare, childcare, education and other services. Importantly, the best way to handle our excess deficit and debt issues is to maximize economic growth.

Growth policies include (the list could be very long so I’ll just mention a few):

• Consistent tax policies, conducive to both employment and capital investment. Capital investment is the primary driver of innovation, productivity and, therefore, growth in America. Tax policies change too frequently, which causes uncertainty and complicates long-term capital investment decision making (I won’t bore you with the details here). A bipartisan committee of Congress is probably required to fix this — and the sooner the better.
• Well-conceived regulations (and related laws). This requires an ongoing concerted effort to streamline regulations to cost-effectively drive better outcomes for the United States. The last thing we need is a constant pile-on of politically driven, fragmented policies. Please read the sidebar, an editorial in The Wall Street Journal by George McGovern, one of the most liberal presidential nominees in our lifetime, in which he clearly lays out the complexity, risks and costs that businesses, large and small, face every day. While he acknowledges the worthiness of the goals of many regulations, he points out their negatives. He also calls out the “blame-shifting and scapegoating and the endless exposure to frivolous claims and high legal fees.” Not only is this state of affairs demoralizing, but it also reduces employment, capital investment and the formation of new businesses, as well as cause unnecessary bankruptcies. Estimates of the regulatory costs for America are approximately $19,000 per worker, dwarfing the regulatory burdens in other countries. We all want sensible regulations that make us a better and safer nation – but this number is astounding. We should be able to accomplish our goals while sharply reducing needless and wasteful expenses. And remember, it’s discouraging not only to companies but to all citizens who have to deal with it on a daily basis.

WALL STREET JOURNAL

June 1, 1992

(Copyright © I992, Dow Jones & Co., Inc.)

Manager's Journal: A Politician's Dream Is a Businessman's Nightmare

By George McGovern Wisdom too often never comes, and so one ought not to reject it merely because it comes late.

— Justice Felix Frankfurter

It's been 11 years since I left the U.S. Senate, after serving 24 years in high public office. After leaving a career in politics, I devoted much of my time to public lectures that took me into every state in the union and much of Europe, Asia, the Middle East and Latin America.

In 1988, I invested most of the earnings from this lecture circuit acquiring the leasehold on Connecticut's Stratford Inn. Hotels, inns and restaurants have always held a special fascination for me. The Stratford Inn promised the realization of a longtime dream to own a combination hotel, restaurant and public conference facility — complete with an experienced manager and staff.

In retrospect, I wish I had known more about the hazards and difficulties of such a business, especially during a recession of the kind that hit New England just as I was acquiring the inn's 43-year leasehold. I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.

Today we are much closer to a general acknowledgment that government must encourage business to expand and grow. Bill Clinton, Paul Tsongas, Bob Kerrey and others have, I believe, changed the debate of our party. We intuitively know that to create job opportunities we need entrepreneurs who will risk their capital against an expected payoff. Too often, however, public policy does not consider whether we are choking off those opportunities.

My own business perspective has been limited to that small hotel and restaurant in Stratford, Conn., with an especially difficult lease and a severe recession. But my business associates and I also lived with federal, state and local rules that were all passed with the objective of helping employees, protecting the environment, raising tax dollars for schools, protecting our customers from fire hazards, etc. While I never have doubted the worthiness of any of these goals, the concept that most often eludes legislators is: "Can we make consumers pay the higher prices for the increased operating costs that accompany public regulation and government reporting requirements with reams of red tape." It is a simple concern that is nonetheless often ignored by legislators.

For example, the papers today are filled with stories about businesses dropping health coverage for employees. We provided a substantial package for our staff at the Stratford Inn. However, were we operating today, those costs would exceed $150,000 a year for health care on top of salaries and other benefits. There would have been no reasonable way for us to absorb or pass on these costs.

Some of the escalation in the cost of health care is attributed to patients suing doctors. While one cannot assess the merit of all these claims, I've also witnessed firsthand the explosion in blame-shifting and scapegoating for every negative experience in life.

Today, despite bankruptcy, we are still dealing with litigation from individuals who fell in or near our restaurant. Despite these injuries, not every misstep is the fault of someone else. Not every such incident should be viewed as a lawsuit instead of an unfortunate accident. And while the business owner may prevail in the end, the endless exposure to frivolous claims and high legal fees is frightening.

Our Connecticut hotel, along with many others, went bankrupt for a variety of reasons, the general economy in the Northeast being a significant cause. But that reason masks the variety of other challenges we faced that drive operating costs and financing charges beyond what a small business can handle.

It is clear that some businesses have products that can be priced at almost any level. The price of raw materials (e.g., steel and glass) and life-saving drugs and medical care are not easily substituted by consumers. It is only competition or antitrust that tempers price increases. Consumers may delay purchases, but they have little choice when faced with higher prices.

In services, however, consumers do have a choice when faced with higher prices. You may have to stay in a hotel while on vacation, but you can stay fewer days. You can eat in restaurants fewer times per month, or forgo a number of services from car washes to shoeshines. Every such decision eventually results in job losses for someone. And often these are the people without the skills to help themselves — the people I've spent a lifetime trying to help.

In short, "one-size-fits-all" rules for business ignore the reality of the marketplace. And setting thresholds for regulatory guidelines at artificial levels — e.g., 50 employees or more, $500,000 in sales — takes no account of other realities, such as profit margins, labor intensive vs. capital intensive businesses, and local market economics.

The problem we face as legislators is: Where do we set the bar so that it is not too high to clear? I don't have the answer. I do know that we need to start raising these questions more often.

Mr. McGovern. the 1972 Democratic presidential candidate, is president of the Middle-Eastern Policy Council in Washington.

(See related letters: "Letters to the Editor: A Politician's Dream Is a Businessman's Nightmare" •· WSJ July 2, 1922)

• Timely permits on projects large and small. There is virtually no industry — from agriculture and construction to transportation, technology, and oil and gas — or business, large or small, that isn’t disadvantaged by the tedious process and the length of time it takes to get approvals for permits to get things done. This includes federal, state and local requirements. These bottlenecks also make investment far more costly and slow. Timely permits would improve infrastructure and save lives, not endanger them.
• Proper federal government budgeting and fiscal management. The staggering inability of the government to draft and pass a proper budget causes deep and unnecessary damage to our growth. Some people estimate that the waste alone (due to improper payments, overlapping programs, and fragmented and duplicative contracts, among other things) could cost the nation hundreds of billions of dollars annually. This uncertainty filters through virtually every part of the American economy and should not be accepted.

We can all forgo a little self-interest to do what is right for our country.

Those of us who have benefited the most from this country bear even greater responsibility to do this. It’s perfectly understandable that institutions, including businesses, unions and industries, lobby in Washington, D.C., to protect themselves — in good ways and bad — but we should more regularly put national interests ahead of self-interests. It’s good to want to ensure well-paying jobs and healthy industries. But it is not good when it reduces competition, stops the deployment of enhanced technology, harms efficiency, creates fake jobs or builds bridges to nowhere or damages the general health of the economy. Doing the right thing, the right way – which is achievable – would be better for everyone. As former President John F. Kennedy said, “Ask not what your country can do for you — ask what you can do for your country.”

Celebrate American exceptionalism.

We can safely say that America is an exceptional nation built and grounded on principles — principles of freedom of speech, freedom of religion, free enterprise (capitalism), and the freedom and empowerment brought to us by our democracy through the power to elect our leaders and of our Constitution, which makes these individual freedoms sacrosanct. Much of the world yearns to be here because of those principles — the right to life, liberty and the pursuit of happiness. We should extol those virtues while recognizing that America has never been a perfect nation, like all other nations. We can acknowledge our flaws and strive to constantly correct them, without denigrating our nation.

Let’s celebrate the shared sense of sacrifice that gives us all strength.

There were very few positives from the pandemic, but I’m mentioning one, which, unfortunately, didn’t last, but reflected the best of us. In New York City, at 7 p.m. every evening, people throughout the city would open their windows, shouting and screaming and banging pots and pans to show gratitude to the essential workers — sanitation workers, police, firefighters, emergency responders, nurses and doctors. Of course, these workers were always essential, but I was hoping that spirit and civility would become deeply embedded and have longer lasting effects in our society.

I can understand when an individual for conscientious reasons chooses not to do work that helps our military. But I cannot understand when an entire company takes that position. How can we have a sense of shared sacrifice, when America is home to 18 million veterans who were willing to risk their lives for America’s safety, and yet some companies are not even willing to use their fingertips to help?

For example, back in 1969 the cancellation of the Reserve Officers’ Training Corps programs by the country’s most prestigious universities and colleges likely fueled the great divide – between elites and others in our country – that persists today. Our strength as a nation is best served when the best students and the best soldiers are brought together and we would all benefit from more civility and better teaching around basic virtues like hard work, shared sacrifice, justice, rationality and more respect for the enduring values of American freedom and free enterprise.

Resist being “weaponized.”

We can start by trying to understand other people’s and other voters’ points of views, even around deeply emotional topics. We can stop insulting whole classes of voters. We can stop name calling. We can stop blame-shifting and scapegoating. We can stop being petty. Politicians can cease insulting, baiting and belittling each other, which diminishes them and the voter. It has also become too acceptable for some politicians to say one thing in private and deliver a completely different message in public. It would also be nice to see some cabinet members from the opposing party. We should also stop degrading and demonizing American business and American institutions, which are the best in the world, because it erodes confidence in our very country.

Social media could do more.

There is no question that social media has some real negative effects, from the manipulation of elections to the increasingly documented negative effects on the mental health of children. These are issues impacting our individual and collective spheres, and it’s time for social media companies to take more action to remedy these challenges — and swiftly. Rapid advances in technology will not only make these existing issues harder to address, but they will likely create new ones. The current state of the online information landscape has wide-ranging implications on trust in institutions, information integrity and more — and it bears on institutions like ours, where platform policy has increasingly widespread implications for concerns about fraud, security and other issue spaces.

A range of tools and approaches is required to address this complex and important situation — and there are several measures that platform companies can immediately enact, voluntarily, while strengthening and improving their business models. One common sense and modest step would be for social media companies to further empower platform users’ control over what they see and how it is presented, leveraging existing tools and features — like the alternative feed algorithm settings some offer today. I believe many users (not just parents) would appreciate a greater ability to more carefully curate their feeds; for example, prioritizing educational content for their children.

Platforms could also consider enhanced authentication measures; i.e., having users identify themselves to the platform or to a trusted third party. This would have the virtue of increasing individual accountability and reducing imposters, bots and possibly foreign political actors on platforms. It would have immediate benefits for users who prefer content from authenticated sources that take responsibility for their postings. There are clear competing values that need to be balanced in such an approach, including those related to our cherished right to free speech, individual privacy and inclusion (for example, roughly 850 million people globally don’t have a way to easily authenticate themselves today). There are also legitimate questions as to whether authentication would be used as a tool to chill or block speech or quash bona fide political dissenters, and real work needs to be done to identify policy and technical solutions that balance such risks and benefits.

I offer these approaches as a starting place, understanding that it's crucial to continue honest conversation across sectors about the immediate, incremental improvements we can make to our online public square, considering the high stakes involved in how information is created and shared.

Effective measures will require time, money, learning and improvement, all in service of significantly enhancing the well-being, quality, and civility of our experiences online and in the world around us.

Healthy collaboration with business is needed.

Companies big and small create jobs, pay for employee healthcare and benefits, and build bridges, roads and hospitals. The people who work for and run these companies care deeply about their country — they are patriots, and they want to see people and communities succeed and prosper.

Unfortunately, the message America hears is that the federal government does not value business — that business is the problem and not part of the solution. There are fewer individuals in government who have any significant experience in starting or running a company, which is apparent every day in the political rhetoric that demonizes businesses and free enterprise and that damages confidence in American’s institutions. The relationship between business and government, in fact, might improve if there were more people from the business sector working in government. Inexperience with business is also evident from the regular lack of transparency or curiosity from regulators as they develop economic policies with potentially seismic consequences for the economy.

When I travel around the country, I experience a very different perspective on the street and at the local level — I see that many governors, mayors and city council members understand they are not facing big challenges alone. They stand shoulder to shoulder with our company, even when some of their constituents disagree or are skeptical about big banks. These government officials know they need partners who have the same stake in helping successful communities thrive and who care about building a prosperous future as much as they do. For example, in fewer than 10 years, Detroit saw one of the greatest turnarounds because of a vibrant collaboration between government and business. And businesses know they cannot succeed if individuals, families, towns and cities are not flourishing. We obviously don’t agree on everything, but there is a shared belief that we must work together. We can and should be full partners in developing solutions to our big problems.

The federal government, regardless of which party is in charge, needs to earn back trust through competence and effective policymaking.

The world is becoming more complex, more technologically competent and faster. Unfortunately the government simply is not built to innovate, compete and move quickly, as in the competitive business world. This may be the reason why government is becoming less effective. We need to take action on this because the loss of trust in government is damaging to society. We should be brutally honest about the staggering number of policies, systems and operations that are underperforming: Too many ineffective public schools do not give students the skills they need to land a well-paying job; we have over 25 million uninsured Americans, soaring healthcare costs and too many bad outcomes; we are unable to plan, permit and build infrastructure efficiently; our litigation system is capricious and wasteful; progress on immigration policies and reform is frustrating; lack of efficient mortgage markets and an affordable housing policy keep housing out of reach for many Americans; problems plague the Department of Veterans Affairs, the Federal Aviation Administration and the Internal Revenue Service; public universities don’t take responsibility for their costs and are often funded by excessive student lending; underinvestment in the electric grid results in high costs and unreliable service; highly inefficient U.S. merchant shipping and ports; and we have unfunded pension plans and no action on deficit spending, Social Security and Medicare. I’ll stop here. This should be unacceptable to all of us.

We need to find a way to bring more varied expertise and accountability to government.

We should be more ambitious in striving for excellence in government. I acknowledge that some of the best and the brightest are in government and the military today. Yet we should return to a government that seeks out more of the best and the brightest people from every background , including the private sector, to benefit from their knowledge and experience. Government also needs to leverage the expertise of business to address problems that it cannot solve on its own. And to be fair, business could use its influence to do less to further its own interest and more to enhance the nation as a whole.

We need good government. And there are some things only governments can do, such as oversee the military and justice systems. And while most innovation happens through the private sector, there are certain types of foundational innovations that can only be advanced by the government, such as basic research that simply cannot be funded by business. The Democrats want the government to do even more and the Republicans even less — I think we should spend more time trying to do even better . But no one, not even my most liberal Democratic friends, thinks that sending the government another trillion a year would be a wise use of money.

OUT OF THE LABYRINTH, WITH FOCUS AND RESOLVE

Even America, the most prosperous nation on the planet with its vast resources, needs to focus its resources on the complex and difficult tasks ahead.

I hope to never read a book about How the West Was Lost, summarized as follows: The failure to save Ukraine and find peace in the Middle East led to more bickering among the allies and weakened military alliances. This accelerated a division within the Western world, splitting countries into different economic spheres and with each nation trying to protect its economy, trade and energy sources. America’s economy weakened, eventually leading to the loss of its reserve currency status. Besotted by populism and partisanship and crippled by bureaucracy and lack of willpower, America failed to focus on what it needed to do to lead and save the Western world. The enemy was within — we just didn’t see it in time.

Paraphrasing what Winston Churchill was thought to have said: America, after it had exhausted all other possibilities, would do the right thing.

What I want and hope to see is a book about How the West Was Won. As the wars in Ukraine and the Middle East dragged on and as the fears of the Western world mounted, America rose to the challenge as it had in other turbulent times in history. America coalesced with its allies to form the alliances necessary to keep the world safe for freedom and democracy.

I remain with a deep and abiding faith in the strength of the enduring values of America.

WE SHOULD HAVE MORE FAITH IN THE AMAZING POWER OF OUR FREEDOMS

The heart and soul of the dynamism of America is human freedom — freedom of speech, freedom of religion, free enterprise (capitalism), and the freedom and empowerment brought to us by our democracy through the right to elect our leaders. Free people are at liberty to move around as they see fit, work as they see fit, dream as they see fit, and invest in themselves and in the pursuit of happiness as they see fit. This freedom that people enjoy, accompanied by the freedom of capital, is what drives the dynamism — economic and social — of this great country.

Our civil liberties depend upon the rule of law, property rights, including intellectual property, and restrictions on government encroachment upon these freedoms. Our Constitution and Bill of Rights secure our individual freedoms and reserve all rights to the individual other than those important but limited authorities given to the government.

The issue of individual rights is not all or none or freedom versus no freedom. There are, of course, terrible examples where individual rights were trampled upon, and the results were devastating — both for the individual and for the economy — in East Germany, Iran, North Korea, Russia, Venezuela, to name a few. And there are many countries that protect individual rights and are on a spectrum closer to American values. Think of Europe, for example. But even in some countries that have some of these rights, a lack of dynamism — often due to bureaucracy, weak institutions and government, and corruption — is palpable and has clearly led to less innovation, lower growth and, in general, a lower standard of living.

Freedom must necessarily be joined with the principle of striving toward equal opportunity. Equal opportunity is what allows individuals to rise to the best of their ability — it also means unequal outcomes. Equal opportunity is the foundation for fairness and meritocracy. The fight for equality, which is a good moral goal, should not damage the rights of the individual and their liberties.

Democracy and freedom are cojoined — together, they make freedom more durable. Democracy also has a self-correcting element — every four years you get to throw out leadership if you don’t like them (which you do not see in autocracies). But we all know that democracy can be sloppy: Maintaining an effective democracy is hard work. Democracy fosters open debate and compromise, which lead to better decisions over time (whether in government or in business). Intelligence is effectively “crowdsourced” with constant feedback. Good public policy comes from good debate and analytics, guided by reason coupled with a firm understanding of what you would like the outcomes to be and complemented with an honest assessment of what is really happening.

Even democracies can become stagnant, bureaucratic and self-perpetuating. Good government does many admirable things, but admitting to mistakes is often not one of them. It takes civically engaged citizens and a strong free press to bring sunlight to issues and keep a nation strong.

Autocratic societies by their nature subjugate the individual to the state. By definition they are not meritocracies — they are more about “who you know,” and they exist to perpetuate the existing ruling class. Their decisions are based on a completely different calculation, and their decision-making process does not encourage and, therefore, benefit from open debate. Democracy means that it is immoral to subjugate individual freedoms to state actors other than to protect the existence of the nation itself.

There are values that many of us hold dear, such as religion, family and country. But none may be more important than the freedoms that allow us to choose to live our life as we see fit. We should do more to applaud the virtue and amazing power of our freedoms.

HOW WE CAN HELP LIFT UP OUR LOW-INCOME CITIZENS AND MEND AMERICA’S TORN SOCIAL FABRIC

To fix problems, we must first acknowledge them. Despite decades of government programs and all the moralizing that surrounds them, we have not done a particularly good job lifting up our low-income fellow citizens. I may be wrong, but I do believe this is tearing at the social fabric of America and is among the root causes of the fraying of the American dream.

The gap between low-wage and well-paid workers has been growing dramatically. From 1979 to 2019, the wage growth of the top 10% was nearly 10 times that of the bottom 10% — which, basically, had not increased at all. The growth of low-income workers’ annualized real wages after the pandemic was, for the first time in decades, higher than the top 60%, but that’s not enough. The net worth for the bottom 25% of households is $20,800, and the net worth for the bottom 10% is essentially $0. This makes it increasingly difficult for low-wage workers to support their families. Of the 160 million Americans working today, approximately 40 million are paid less than $15 per hour.

Low-income individuals bear far greater burdens than the rest of us. Nearly 40% of Americans don’t have $400 in savings to deal with unexpected expenses, such as medical bills or car repairs, which leads to financial distress. More than 25 million Americans don’t have medical insurance at all; of these, one in five are in a family with income below the federal poverty level. People who live in low-income neighborhoods also tend to have worse health outcomes, including higher rates of mental health issues, depression and suicide, and a lower life expectancy — as many as 20 years. Finally, low-income Americans generally experience higher unemployment and more crime.

No one can claim that the promise of equal opportunity is being offered to all Americans through our education systems. Students in the lowest socioeconomic bracket are 50% less likely to attend college than those in the highest socioeconomic groups. Many inner city schools graduate under 50% of their students — and even those who graduate may not be well-prepared for the workforce. In addition, boys growing up in the bottom 10% of family income are 20 times more likely to be incarcerated. Those who do run afoul of our justice system generally do not get the second chance that many of them deserve. Their exclusion from the workforce is not only unfair to them but also results in an estimated $87 billion average annual cost to the economy.

Too many policies that are wrong — affecting housing and mortgage markets, healthcare, immigration, regulation, education and student lending, to name a few — are jeopardizing the opportunity for American citizens to succeed. The people who suffer the most, throughout all of this, are not high-income individuals. I strongly believe that these outcomes are destroying the concept of “fair” in America and are driving populism and diminishing, if not eliminating, trust — not only in government but in all our institutions. Simply put, the social needs of far too many of our citizens are not being met. We should never accept these outcomes — we must fix them.

There are two policy changes that I believe can have a dramatic effect on jobs, growth and equality — and they go a long way toward repairing the frayed American dream. Let’s start by treating all jobs with respect. Even starter jobs, which are the first rung on the ladder of opportunity, bring dignity and create better social outcomes in terms of health, higher household formation and lower crime. Of these two policy changes, one would better utilize existing resources, and the other would cost some money. But both would significantly change outcomes for low-income Americans.

The free one is so blindingly obvious that it’s almost embarrassing to propose. Our schools (high schools, community colleges and perhaps even four-year colleges) should take responsibility for outcomes — they should be judged on the quality and income level of the jobs that their graduates and even non-graduates attain. This means providing graduating students and other individuals with work skills (in fields such as advanced manufacturing, cyber, data science and technology, healthcare and so on) that will lead to better paying jobs. These schools should work with local businesses to replicate effective programs that are in place — because that is where the actual jobs are now. This would be good for growth and, as there are so many examples of successful programs, we already know what to do. With nearly 9 million job openings and just under 6 million unemployed workers in the United States, job skills training has never been needed more. We already spend a tremendous amount of money on education — just not the right way.

The second step is related to the first: Get more income to low-paid workers. While this one would cost money, it is to me a complete no-brainer since it is an expansion of an existing program, the Earned Income Tax Credit (EITC), which many Democrats and Republicans already agree upon. Today, the EITC supplements low- to moderate-income working individuals and couples, particularly with children and people living in rural areas. For example, a single mother with two children earning $9 an hour (approximately $20,000 a year) could receive a tax credit of more than $6,000 at year-end. Workers without children receive a very small tax credit (96% of all EITC dollars were received by families with children). This should be dramatically expanded, including eliminating the child requirement from the calculation altogether. We should convert the EITC to make it more like a negative income payroll tax, paid monthly. Any tax credit income should not be offset by any other benefits these individuals already receive (we have to eliminate benefit “cliffs” that disincentivize work).

An increase in the EITC to a maximum of $10,000 would cost tens of billions a year, but I have little doubt that these policy changes would do more than anything else to lift up low-income families and their communities. Well-paying jobs have been shown to reduce crime, increase household formation, improve health and reduce addiction. Both of these policies would have the virtue of increasing the number of people in the workforce. I also have little doubt that this would add to GDP.

We should attack all our other problems as well, but these two policy changes alone would dramatically improve our low-income neighborhoods, broadly strengthen the economy and give more opportunity to deserving citizens. It would restore the American Dream for many.

It’s been 20 years since the Bank One-JPMorgan Chase merger — and it’s been an extraordinary journey. I can’t even begin to express my heartfelt appreciation and respect for the tremendous character and capabilities of the management team who got us through the good times and the bad times to where we stand today. And I recognize that we all stand on the shoulders of many others who came before us in building this exceptional company of ours.

I would also like to express my deep gratitude to the 300,000+ employees, and their families, of JPMorgan Chase. Through these annual letters, I hope shareholders and all readers have gained a deeper understanding of what it takes to be an “endgame winner” in a rapidly changing world. More important, I hope you are as proud of what we all have achieved — as a business, as a bank and as a community investor — as I am. Thank you for your partnership.

Finally, we sincerely hope to see the world on the path to peace and prosperity.

Jamie Dimon Chairman and Chief Executive Officer April 8, 2024

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