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Citigroup has set a rare target for the banking industry—one of “absolute emission reductions” in its energy funding portfolio in its new approach to financing fossil fuels.
Citigroup, which has pledged net-zero emissions by 2050, said in its Taskforce on Climate-Related Financial Disclosures Report 2021 on Wednesday that it aims to achieve a 29-percent absolute reduction in financed emissions in the energy sector by 2030, and a 63-percent reduction in portfolio emissions intensity for the power sector. These targets put Citi firmly on track to meet its 2050 net-zero commitment, chief executive Jane Fraser said in the introduction to the report.
Most banks have so far set goals with “emissions intensity” wording instead of “absolute emission reduction.”
“For the Energy sector, absolute reduction is required to meet net zero goals and is the most transparent target selection,” Citi said.
“We will continue to assess our client relationships — a regular part of how we manage our business — and prioritize partnering on transition strategies before turning to client exits as a last resort,” CEO Fraser said.
Citigroup, alongside many other Wall Street banks, has been one of the largest financiers of fossil fuels.
Despite investor and societal pressure, banks worldwide continue to lend money and underwrite bonds issued by oil, gas, and coal companies, with bond deals in fossil fuels arranged by banks at nearly $250 billion in 2021, Bloomberg data showed last month.
JP Morgan financed the largest volume of loans and bonds combined so far this year, followed by Wells Fargo, Citi, RBC, and Mitsubishi UFJ, data as of December 3 compiled by Bloomberg showed.
Citi has financed fossil fuels with $237 billion since the Paris Agreement from 2015, the second-largest financier of oil, gas, and coal after JP Morgan Chase, environmental campaigners said in a report last year.
Some of those climate groups welcomed Citi’s commitment from Wednesday to reduce absolute financed emissions from the energy sector, saying it surpasses peers in the absolute emissions target. The environmentalists, however, criticized the bank for “failing to rule out support for fossil fuel expansion.”
“While an absolute target for energy represents a step forward, Citi has not ruled out expansion of fossil fuels — sidestepping the headline requirement of the IEA net-zero scenario that Citi’s energy target is based on,” said Rainforest Action Network Climate and Energy Senior Campaigner Jason Opeña Disterhoft.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.