PROPOSAL:

Environmental Report

2004 – J.P. Morgan Chase & Co.

PROPOSAL:

RESOLVED that the shareholders request the Board to review the role of JPMorgan Chase as an underwriter, lender and financial adviser for transactions in environmentally and/or socially sensitive sectors; consider incorporating criteria related to a transaction’s impact on the environment, human rights and the potential to impact the company's reputation into the banks’ analyses; and to report its findings to shareholders (at reasonable cost and omitting proprietary information) by October 2004.

SUPPORTING STATEMENT:

WHEREAS, JPMorgan Chase (JPMC) has financed controversial companies and projects in environmentally and/or socially sensitive sectors such as dam building, oil drilling, and logging. We believe that, absent a clear understanding of key environmental and human rights issues raised by such projects, our company will expose itself to unnecessary financial impacts and endanger its reputation.

For example, JPMC was a lead manager for a $400 million loan for Iceland's National Power Company (2003), a project criticized for environmental, geological, economic and legal impacts and risks. (“An Icelandic Battle of Wildlife Versus Voltage,” New York Times, July 16, 2002) The bank also was the mandated arranger for the refinancing of the Kumtor mine (2002), which has a dangerous environmental and safety record with three toxic spills, including one that spilled two tons of cyanide into local drinking water supplies. In addition, JPMC was the financial advisor to the $900m Oleoducto de Crudos Pesados, a contentious pipeline in Ecuador (“Protests delay completion of Ecuador oil pipeline,” Financial Times, August 28, 2002), which according to an independent report by the former chief of the World Bank’s Environment Department, threatens the Amazon rainforest.

While many other large banks face similar risks to their reputation and financial position, we believe that JPMorgan Chase’s competitors are more effectively managing these risks with existing environmental policies, staff expertise and training programs to effectively identify or evaluate the risks of social and environmental impacts. For example:

· Citigroup has created and implemented environmental policies, procedures and standards as an integral part of investment, credit, and underwriting. Citigroup has also helped establish a coalition of 18 banks that have adopted “The Equator Principles”, agreeing to apply World Bank and IFC environmental and social standards to most of their project finance loans.

· Bank of America relies on the 67 sector-specific World Bank Pollution Prevention and Abatement standards.

· Fleet Boston is implementing a formal environmental awareness and business risk training program.

· Merrill Lynch and Morgan Stanley have Environmental Committees that include senior level bankers and policy makers, recognizing the growing relevance of social and environmental risks.

It is important for a leading bank like JPMorgan Chase to join its peers and competitors in establishing systems to identify, assess and control for social and environmental risks in its financing decisions. We believe that failure to create guidelines and policies and have employees responsible for managing environmental and social risk has the potential to open a company to severe criticism and may damage its reputation and impact the bottom-line and ultimately, shareholder value.