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February 27, 2015
Citi Announces $100 Billion Sustainability Commitment
    by Robert Kropp

Having met several targets of a $50 billion goal two years early, the bank now commits twice that amount to activities such as financing large renewable-energy projects and reducing its absolute emissions by 80%.


With some exceptions, the banking industry has lagged in addressing climate change. While the direct greenhouse gas (GHG) emissions of banks are comparatively low, the Scope 3 emissions from their investment and lending portfolios often are considerable. But according to the Greenhouse Gas (GHG) Protocol and the UNEP Finance Initiative, “only six percent of financial companies in the FTSE Global 500 reported any emissions associated with lending and investment portfolios to CDP” in 2013.

That said, $100 billion—the amount that CitiGroup recently committed to improved sustainability in its financing and operations—is a lot of money. “Citi will seek to finance and support activities that enable communities to adapt to climate change impacts and directly finance infrastructure improvements that increase access to clean water and manage waste, while also supporting green, affordable housing for clients, including in low- and moderate-income communities,” the bank stated.

In 2007, Citi committed $50 billion to improving its sustainability measures by 2015; several of its goals—such as reducing its operational emissions, as well as energy and water use—were realized in 2013. The bank's new commitment includes further reductions in emissions, energy and water use, and waste, with a target of 2020 for meeting the goals.

“These efforts do not constitute philanthropy, nor do they represent costs. In fact, they reduce costs – and also increase revenues, enhance client relationships, and help manage risk,” Citi chief executive Michael Corbat said. “Incorporating the principles of sustainability into everything we do improves our own operations, enhances our clients’ work, and contributes to a better world.”

A 2012 International Energy Agency report stated that $36 trillion in global investment in clean energy will be required by 2050, a total which averages out to $1 trillion per year until then. In 2014, Bloomberg New Energy recently reported, clean energy investment reached $310 billion. “It’s just not enough,” Mindy Lubber, President of Ceres, r ecently blogged.

“Ceres supported the development of Citi’s sustainability strategy over the past several years,” Lubber continued, “in large part by bringing together investors, NGOs and other experts to have a 'no holds barred' discussion about the company’s vision for leadership in the financial services sector.”

At the 2014 Investor Summit on Climate Risk, Ceres announced the launch of the Green Bond Principles, a set of “voluntary guidelines on recommended process for the development and issuance of Green Bonds.” Citi was among the thirteen investment banks that initially stated their support for the Principles.

“Financial institutions must evaluate carbon asset risk in their portfolios and continue to move money into the clean energy projects we need to keep our economy moving forward, not stuck in the past,” Lubber wrote. “ Investors must accelerate the transition to a clean energy economy by managing climate risks in their portfolios, investing in clean energy opportunities that offer competitive risk-adjusted returns across asset classes, and engaging with companies to improve their practices on clean energy and climate change.”

Another of Citi's partners in its sustainability efforts is C40 Cities Climate Leadership Group, a network of the world’s megacities taking action to reduce GHG emissions. “Reducing carbon emissions and becoming more climate resilient is a key priority and major challenge for the world’s megacities and their business communities,” said James Alexander of C40. “This announcement from Citi will add further opportunities to help cities achieve their climate targets, and allow businesses to become more sustainable.”

 

 
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