Sarah Kapnick started her career in 2004 as an investment banking analyst for Goldman Sachs. It was made almost immediately by overlapping financial growth and climate change and the lack of customer advice on this topic.
The integration of the two would help investors to understand both the risks and the opportunities and to help them use climate information in finance and business. With a degree in theoretical mathematics and geophysical fluid dynamics, Kapnick saw himself as uniquely positioned to face this challenge.
But first she had to go deeper into science.
This led them to more studies and then to the national ocean and atmospheric management (NOAA), the scientific and regulatory authority of the nation within the US Ministry of Trade. His defined mission is to understand and predict changes in climate, weather, oceans and coasts and to share this knowledge and this information with others.
In 2022, Kapnick was appointed chief scientist of Noaa. Two years later, JPmorgan Chase Dissed it, but not as Chief Sustainability Officer, a role that is common with most large investment banks around the world and a position that was already occupied by JPMORG.
Rather, Kapnick is the global director of the JPmorgan climateadium, a unique job she presented in 2004.
Just a few days before the official start of the North American hurricane season, CNBC spoke with a capnick from her office at JPMorgan in New York about her current role in the bank and about how she advises and warns customers.
Here is the questions and answers:
(This interview was easily processed for length and clarity.)
Diana Olick, CNBC: Why does JPmorgan need you?
Sarah Kapnick, JPMorgan Global Head of Climate Advisory: JPMorgan and banks need climate expertise, since customer demand for understanding the climate change, understanding of how it affects companies and to understand how to plan. Customers want to understand how to think framework conditions for thinking about climate change, how they strategically think about how they think about their business activities about how they can think about their diversification and long -term business plans.
Everyone has a chief sustainability officer. You are not. What is the difference?
The difference is that I go hand in hand with a deep background in climate science, but also how this climate science is committed to business. Noaa works most of my career at Noaa and is a science agency, but the science agency under the Ministry of Commerce. And my task was to understand the future based on physics, but then to translate what this means for the economy? What does that mean for economic development? What does this mean for economic production and how do you use this science to support the future of trade? I have this deep thinking that all this science, all of this trade think this economy, as it translates into national security. And so does it complete all of these different problems with which people are confronted with, and the systematic problems so that they can understand how they navigate through this complexity and how they then progress with all the upcoming information?
Give us an example in front of the ground, which some of these specialist knowledge do for investors.
There is a customer who worries about the future of the forest fire risk, and so they ask how the risk of forest fire unfolds. Why is it not in building regulations? How can the building regulations change in the future? What happens for this? What type of modeling is used for this. What kind of observations are used for this? So I can explain the entire flow of where are the data? How are the data used for decisions, where do regulations come from? How do you develop? How can you develop 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 to prepare or be able to move this preparation over time when the uncertainty falls and further information is known
So do you make investment decisions based on your information?
Yes, you make investment decisions. And they make decisions about when to invest because they sometimes know something when something develops. You either want to act early or you want to be known as further information, but you want to know the entire sphere of the possibilities, how the possibilities are and when information could become known or become known, and what conditions you know more information so that you can find out when you want to act, that this threshold of information is that you need to act.
How does this inform your judgment about your investment, especially about the running fire?
Since the forest fire is growing, there were some events such as the recently seen forest fires in Los Angeles. The questions I get could this happen in my location? When will it happen? Do I have an advanced announcement? How should I change and invest in my infrastructure? How should I think about differences in my infrastructure, my infrastructure construction? Should I think about insurance and various types of insurance? How should I access the capital markets to do this type of work? There are questions in a number of attempts to find out how to reduce how the financial exposure can be reduced, but if there is risks in this one place, there may be more options in these other places that are safer, and I should also think of it. It is holistic risk management and thinking through risks and what to do, but to think about what opportunities could result from this change in the physical conditions in the world.
But you are not an economist. Do you work with others at JPmorgan to expand that?
Yes, my work is very collaborative. I work in various teams with experts from different sectors, various industries, different parts of capital and I am with my know -how in relation to science and technology as well as politics and security and then work with you in the area in which you are in to deliver the bank the most for our customers.
With the cuts of the Trump administration to Noaa, the Fema, for all information that collects the sources, we do not see some of the things we normally see in data. How does that affect your work?
I am looking for what we need, available for every problem. I will say that if data is no longer available, we will translate other data records and switch to other data records, use other data records, and I start to see the development in certain parts of the private sector in order to draw these types of data that were previously available elsewhere. I think we will see this adaptation period in which people search all the data they need to answer the questions they have. And there will be opportunities. There are a lot of startups that develop in this area, as well as more extensive companies that have some of these data records. They start making them available, but there will be this adjustment period because the people will find out where they get the information they need because many market decisions or financial decisions are based on certain data records that people thought of were always there.
However, the government data were regarded as the best, irrefutable, best data there was. How do we know when we go to the private sector that this data will be as credible as government data?
There will be an adaptation time when people find out what data records they trust and what they don't and what they want to use. This is a time when there will be adaptation because everyone has got used to the fact that they will not have it now. And that's a question that I get from many customers, what data record should I look for? How should I evaluate this problem? Do I now set up internal teams to evaluate this information that I haven't had before? And I start to see that in various sectors in which people are increasingly able to make their own meteorologists, their own climatologists, are able to make them through some of these decisions.
Last thoughts?
Climate change will not happen in the future and influence financing in the future. It is something that is a future risk that actually finds us today.