JPMorgan hired NOAA's chief scientist to advise clients on navigating climate change
Sarah Kapnick started her career in 2004 as an investment banking analyst for Goldman Sachs. She was struck almost immediately by the overlap of financial growth and climate change, and the lack of client advisory around that theme.
Integrating the two, she thought, would help investors understand both the risks and opportunities, and would help them use climate information in finance and business operations. With a degree in theoretical mathematics and geophysical fluid dynamics, Kapnick saw herself as uniquely positioned to take on that challenge.
But first, she had to get deeper into the science.
That led her to more study and then to the National Oceanic and Atmospheric Administration (NOAA), the nation's scientific and regulatory agency within the U.S. Department of Commerce. Its defined mission is to understand and predict changes in climate, weather, oceans and coasts and to share that knowledge and information with others.
In 2022, Kapnick was appointed NOAA's chief scientist. Two years later, JPMorgan Chase hired her away, but not as chief sustainability officer, a role common at most large investment banks around the world and a position already filled at JPMorgan.
Rather, Kapnick is JPMorgan's global head of climate advisory, a unique job she envisioned back in 2004.
Just days before the official start of the North American hurricane season, CNBC spoke with Kapnick from her office at JPMorgan in New York about her current role at the bank and how she's advising and warning clients.
Here's the Q&A: Diana Olick, CNBC: Why does JPMorgan need you?
Sarah Kapnick, JPMorgan global head of climate advisory: JPMorgan and banks need climate expertise because there is client demand for understanding climate change, understanding how it affects businesses, and understanding how to plan. Clients want to understand how to create frameworks for thinking about climate change, how to think about it strategically, how to think about it in terms of their operations, how to think about it in terms of their diversification and their long-term business plans.
Everybody's got a chief sustainability officer. You are not that. What is the difference?
The difference is, I come with a deep background in climate science, but also how that climate science translates into business, into the economy. Working at NOAA for most of my career, NOAA is a science agency, but it's science agency under the Department of Commerce. And so my job was to understand the future due to physics, but then be able to translate into what does that mean for the economy? What does that mean for economic development? What does that mean for economic output, and how do you use that science to be able to support the future of commerce? So I have this deep thinking that combines all that science, all of that commerce thinking, that economy, how it translates into national security. And so it wraps up all these different issues that people are facing right now and the systematic issues, so that they can understand, how do you navigate through that complexity, and then how do you move forward with all that information at hand?
Give us an example, on a ground level, of what some of that expertise does for investors.
There's a client that's concerned about the future of wildfire risk, and so they're asking, How is wildfire risk unfolding? Why is it not in building codes? How might building codes change in the future? What happens for that? What type of modeling is used for that, what type of observations are used for that? So I can explain to them the whole flow of where is the data? How is the data used in decisions, where do regulations come from. How are they evolving? How might they evolve in the future? So we can look through the various uncertainties of different scenarios of what the world looks like, to make decisions about what to do right now, to be able to prepare for that, or to be able to shift in that preparation over time as uncertainty comes down and more information is known
So are they making investment decisions based on your information?
Yes, they're making investment decisions. And they're making decisions of when to invest because sometimes they have a knowledge of something as it's starting to evolve. They want to act either early or they want to act as more information is known, but they want to know kind of the whole sphere of what the possibilities are and when information will be known or could be known, and what are the conditions that they will know more information, so they can figure out when they want to act, when that threshold of information is that they need to act.
How does that then inform their judgment on their investment, specifically on wildfire?
Because wildfire risk is growing, there've been a few events like the Los Angeles wildfires that were recently seen. The questions that I'm getting are could this happen in my location? When will it happen? Will I have advanced notice? How should I change and invest in my infrastructure? How should I think about differences in my infrastructure, my infrastructure construction? Should I be thinking about insurance, different types of insurance? How should I be accessing the capital markets to do this type of work? It's questions across a range of trying to figure out how to reduce vulnerability, how to reduce financial exposure, but then also, if there are going to be risks in this one location, maybe there are more opportunities in these other locations that are safer, and I should be thinking of them as well. It's holistically across risk management and thinking through risk and what to do about it, but then also thinking about what opportunities might be emerging as a result of this change in physical conditions in the world.
But you're not an economist. Do you work with others at JPMorgan to augment that?
Yes, my work is very collaborative. I work across various teams with subject matter experts from different sectors, different industries, different parts of capital, and so I come with my expertise of science and technology and policy and security, and then work with them in whatever sphere that they're in to be able to deliver the most to the bank that we can for our clients.
With the cuts by the Trump administration to NOAA, to FEMA, to all of the information gathering sources — we're not seeing some of the things that we normally see in data. How is that affecting your work?
I am looking to what is available for what we need, for whatever issue. I will say that if data is no longer available, we will translate and move into other data sets, use other data sets, and I'm starting to see the development out in certain parts of the private sector to pull in those types of data that used to be available elsewhere. I think that we're going to see this adjustment period where people search out whatever data it is they need to answer the questions that they have. And there will be opportunities. There's a ton of startups that are starting to develop in that area, as well as more substantial companies that have some of those data sets. They're starting to make them available, but there's going to be this adjustment period as people figure out where they're going to get the information that they need, because many market decisions or financial decisions are based on certain data sets that people thought would always be there.
But the government data was considered the top, irrefutable, best data there was. Now, how do we know, when going to the private sector, that this data is going to be as credible as government data?
There's going to be an adjustment period as people figure out what data sets to trust and what not to trust, and what they want to be using. This is a point in time where there is going to be adjustment because something that everyone got used to working with, they now won't have that. And that is a question that I'm getting from a lot of clients, of what data set should I be looking for? How should I be assessing this problem? Do I build in-house teams now to be able to assess this information that I didn't have before? And I'm starting to see that occurring across different sectors, where people are increasingly having their own meteorologist, their own climatologist, to be able to help guide them through some of these decisions.
Final thoughts?
Climate change isn't something that is going to happen in the future and impact finance in the future. It's something that is a future risk that is now actually finding us in the bottom line today.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNBC
an hour ago
- CNBC
Oil giant BP seeks buyers for one of its crown jewels as it looks to stave off a takeover
Britain's BP appears to be attracting a number of possible buyers for its Castrol lubricants business as the struggling oil giant seeks to fend off a prospective takeover . Energy companies including India's Reliance Industries and Saudi Arabia's oil behemoth Aramco , as well as private equity firms Apollo Global Management and Lone Star Funds, have all been touted as suitors for BP's Castrol unit, according to Bloomberg , citing people familiar with the matter. It's thought the sale of Castrol could fetch between $8 billion to $10 billion. BP, which launched a strategic review of its Castrol unit in late February, declined to comment on the speculation. The reports come as BP remains firmly in the spotlight as a prime takeover target. The London-listed oil company recently sought to restore investor confidence by launching a fundamental strategic reset. BP's new direction included a green strategy U-turn and the divestment of $20 billion of assets by the end of 2027. Analysts described BP's Castrol unit as one of the "crown jewels" of its portfolio, noting that reports of interested buyers should be viewed positively as the firm's management look to deliver on the new strategy. Read more Oil giant BP is seen as a prime takeover target. Is a blockbuster mega-merger in the cards? BP to slash renewable spending and double down on fossil fuels BP profit falls sharply but CEO says oil major 'off to a great start' in strategy reset Maurizio Carulli, energy and materials analyst at wealth manager Quilter Cheviot, told CNBC that it remains unclear whether the divestment of Castrol would stave off a potential takeover, however. He cited three considerations an industrial buyer might look at. Firstly, Carulli said the level of BP's debt would decrease with the sale of its high-performance lubricants business, potentially making the firm more attractive to a prospective buyer. Ongoing macroeconomic uncertainty could also make it difficult for BP to sell Castrol at an attractive valuation, he added. This could subsequently have a negative effect on BP's valuation, making it a cheaper proposition for any possible suitor. Thirdly, Carulli cited the level of cost and revenues that another energy firm could extract from the purchase, adding that the sale of Castrol is unlikely to substantially affect BP given that it is a small part of its overall business. 'Point of maximum weakness' BP, which reported weaker-than-expected first-quarter profit, has faced renewed pressure from activist investors in recent months. In late April, for instance, U.S. hedge fund Elliott Management went public with a stake of more than 5% in the company. Elliott was first reported to have assumed a position in BP back in February, driving a share price rally amid expectations that its involvement could pressure the firm to shift gears back toward its oil and gas businesses. BP CEO Murray Auchincloss told CNBC's " Squawk Box Europe " on April 29 that the company was "off to a great start" in delivering on its strategic reset. He cited the firm's "highest upstream operating efficiency in history" and six recent oil and gas exploration discoveries. Lydia Rainforth, head of European energy, equity research at Barclays, said BP's future appears to be "really bright" — if the company can get through the next six months. "The sum of the parts is, I think, much greater than where the current share price is, but if I think about when that point of maximum weakness is for BP, it is over the next six months," Rainforth told CNBC's Steve Sedgwick on May 22. "As I get towards the end of the year, hopefully we will see some divestments taking down debt. Things like, they've talked about selling their lubricants business — that could raise $12 to $15 billion," she added. On the right track? Shares of BP, which have underperformed industry peers, are more than 20% lower over the last 12 months. The ongoing weakness has stoked speculation of a prospective tie-up with domestic rival Shell . U.S. oil giants Exxon Mobil and Chevron have also been touted as possible suitors. Shell has declined to comment on the speculation, while spokespersons for Exxon Mobil and Chevron have not previously responded to a request for comment. Russ Mould, investment director at AJ Bell, said shareholders are looking for BP to provide evidence that it can generate more cash to ensure net debt doesn't keep rising and buybacks and dividends can continue at current levels at the very least. Plans for $3 billion to $4 billion in asset sales and lower capital investment in 2025 are clearly part of BP's push to bring down net debt to between $14 billion and $18 billion by the end of 2027, Mould said. "Delivery here, perhaps via a successful disposal of Castrol, would help convince shareholders that BP is on the right track," Mould told CNBC via email. "But too many more quarters of weak cash flow and lower share buybacks may not help management's cause and lead to further engagement by the usually indefatigable Elliott."
Yahoo
4 hours ago
- Yahoo
Forget tacos, can Trump have his tariff cake and eat it too? Wall Street's biggest bull thinks so
If President Donald Trump's tariffs settle around 10%, that could still allow the Federal Reserve to cut rates later this year while they generate revenue that helps with the massive budget deficit, according to Wells Fargo's Christopher Harvey, who thinks a levy at that level could be split between importers, corporations, and consumers. There has been much talk lately about President Donald Trump and tacos, but another food entering the tariff conversation could be cake. While his 'Liberation Day' announcement roiled markets, he has largely pulled back from his most aggressive stance since then, though on Friday night he said he will double steel tariffs to 50%. The overall direction of travel remains positive for Chris Harvey, Wells Fargo Securities' head of equity strategy, whose S&P 500 price target of 7,007 makes him Wall Street's biggest bull. 'The Trump administration does want to move things forward,' he told CNBC on Friday, hours before the steel announcement. 'They appear to want to push the ball forward, and I think that's a positive. We're now at the point where I think we're going to start to hear some real tangible results over the next couple of weeks.' Harvey added that he thinks stocks could jump by double digits in the second half of the year. His S&P 500 forecast implies an 18.5% surge from Friday's close. A key piece to his thesis is Fed Governor Christopher Waller's recent statement that if tariffs end up around 10%, then the central bank could be in a position to cut rates in the second half of the year. Tariffs are generally seen as inflationary and could force the Fed to hold off on monetary easing. But if consumers treat them as one-off price hikes and keep their longer-term inflation expectations anchored, then there could still be leeway to lower rates. For now, the effective tariff rate remains above 10%, though estimates differ. The Budget Lab at Yale put it at 17.8% last month, while Fitch put it at 13%. Harvey expects tariffs to settle in the 10%-12% range and said that even as clients express anxiety about all the uncertainty, they are still comfortable with the economy's fundamentals. That prompted CNBC's Scott Wapner to ask if Trump can have his cake and eat it too, namely, moving ahead with his tariff agenda and getting the Fed rate cuts that he's been demanding. 'I think so,' Harvey replied. 'So the reason why we said 10% is with 10% we think a third will be eaten by the importer, a third eaten by the corporation, and a third will be eaten by the consumer. That's not a big impact.' At the same time, he added that the tariffs will generate revenue that can help with the federal budget, which has seen massive deficits in recent years. Fears that deficits will worsen under Trump's proposed budget working its way through Congress have led to volatility in borrowing costs as bond market jitters have jolted Treasury yields. Meanwhile, as trade talks continue, it's more important for the Trump administration to reach deals with India, Japan and the European Union, Harvey said, adding that China is less critical since the U.S. is in the process of disintermediation from it anyway. But if tariff uncertainty stretches into June and July, then companies may start resizing their payrolls and then 'things start to fall apart,' he warned. That's why it's necessary to make progress on trade and reach deals with big economies like India, Japan and the EU, Harvey said. That way, markets can focus on next year, rather near-term tariff impacts. 'Then you can start to extrapolate out,' he explained. 'Then the market starts looking through things. They start looking through any sort of economic slowdown or weakness, and then we start looking to '26 not at '25.' This story was originally featured on
Yahoo
4 hours ago
- Yahoo
Jim Cramer Predicts We're Headed To 'Prices We're Not Used To' – Says You Should Invest At Least $50 a Month to Tackle Financial Uncertainty
Jim Cramer, one of the most prominent hosts in financial television, recently celebrated the 20th anniversary of his CNBC show "Mad Money." In an interview with NBC's "Today" last month, Cramer reflected on two decades of his show and explained why he believes it resonated with the general public. He was asked to give advice on tackling financial uncertainty as Americans brace for the impact of tariffs. Cramer said when he started his show, it was not a "great time" for the economy, but investors who stayed in the market "did great." Cramer urged people to keep investing despite broader market headwinds. Don't Miss: Hasbro, MGM, and Skechers trust this AI marketing firm — How do billionaires pay less in income tax than you?. "Same thing is going to go on here," Cramer said. "Stay the course. And if it gets too crazy, just continue to stay the course. Put more money in. $50 a month. Okay? $50 a month is a great amount." When asked where investors should put their money, Cramer said people should start with an S&P fund. "Never, ever lose faith in the country. Remember the country and the market — they're very separate from what happens in Washington," he added. Trending: Maximize saving for your retirement and cut down on taxes: . Cramer expects a lot of "bad stuff" in the weeks ahead due to inflation. However, he believes that it would not "last forever." "It will be tough on the regular person because you're not going to be making enough to cover what is basically a tax," Cramer said. "And I'm not saying Republican or Democrat. I'm just telling the truth." Earlier this month, the Federal Reserve kept its benchmark lending rate unchanged, but warned that inflation could increase due to the impact of tariffs. "If the large increases in tariffs that have been announced are sustained, they're likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment," Fed Chair Jerome Powell said at a news conference at the Fed President Raphael Bostic said in a recent interview with CNBC that the economy and policies are in a lot of flux and pointed to inflation risks. "I worry a lot about the inflation side, and mainly because we're seeing expectations move in a troublesome way," Bostic said. Asked whether he believes we are headed for a recession, Cramer said "absolutely not," adding that the US is poised to see strong jobs growth. "But we'll be headed for prices that we're not used to seeing," he said. Read Next: Can you guess how many retire with a $5,000,000 nest egg? .Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Jim Cramer Predicts We're Headed To 'Prices We're Not Used To' – Says You Should Invest At Least $50 a Month to Tackle Financial Uncertainty originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
