Citigroup widened its disclosure of greenhouse gas emissions and set new 2030 reduction goals in a report that drew a mix of praise and concern from activists who want stronger climate commitments from the banking industry.
In its annual emissions report released on Thursday, Citi unveiled its most complete accounting to date of an expansive carbon footprint, which touches virtually every sector of the global economy. The $2.4 trillion-asset bank based its measurements on widely accepted guidelines from the Task Force on Climate-related Financial Disclosures.
Despite the progress in measuring emissions, Citi Chief Sustainability Officer Val Smith cautioned that climate reporting is still in the early stages of standardization. A lack of comparable information from portfolio companies can affect the precise measurement and estimation of total emissions, Smith said in an interview.
“For many sectors, there’s still a dearth of data,” Smith said. “Even as we work to operationalize targets, there’s a significant effort underway to improve the quality and quantity of available climate data.”
Citi’s report includes measurements of its exposure to high-emitting industries across its loan portfolio. And the bank expanded on 2030 net-zero targets that it set last year for the energy and power sectors.
Specifically, the bank committed to reducing 90% of its “absolute” emissions from exposure to the coal-mining industry by 2030. The planned 90% reduction is from a baseline of 7.9 million metric tons of carbon dioxide equivalents in 2021.
Citi also set new interim decarbonization targets for the auto manufacturing, commercial real estate and steel industries in support of its goal to reach net-zero emissions by 2050.
And the bank committed to expanding its climate reporting further in the coming years to include emissions disclosures in the agriculture, aluminum, aviation, cement and shipping industries.
The bank’s newest climate disclosures focused on its exposure to sectors with the “highest emissions footprints,” Smith said.
In North American commercial real estate lending, Citi committed to a 41% reduction in so-called “intensity” emissions by 2030, excluding the bank’s Community Capital portfolio. And in auto manufacturing, the bank committed to a 31% abatement of intensity emissions by 2030.
For the steel industry, Citi committed to reaching a score of zero, which is the best possible score under the Sustainable STEEL Principles, a reporting framework developed by the Rocky Mountain Institute. The Rocky Mountain Institute, a nonprofit organization focused on decarbonization efforts, published the framework last September in coordination with Citi and five other banks.
In response to Citi’s new disclosures, climate groups, which in recent years have ratcheted up pressure on banks and other companies to assume greater accountability for the impact corporations have on the environment, gave mixed reviews.
“Citi is showing some encouraging signs of progress,” Adèle Shraiman, a representative of the Sierra Club Foundation’s fossil-free finance campaign, said in a statement. Shraiman commended the bank for providing new information on existing decarbonization targets and setting new goals.
“Despite this, the bank still has a long way to go,” Shraiman added, urging Citi to begin disclosing emissions associated with its capital markets activities. “Considering the amount of new capital flowing into fossil-fuel expansion … it is imperative that banks quickly integrate facilitated emissions into their disclosures.”
Danielle Fugere, president and chief counsel of As You Sow, an advocacy group, said that Citi is “a leader among other banks” when it comes to climate commitments. As You Sow has filed climate-related shareholder proposals at Citi and other banks.
But Fugere also raised concerns about the fact that the bank’s 2030 targets are based on intensity, rather than absolute emissions. The difference between those two metrics, Fugere said, is that absolute disclosures quantify the exact volume of emissions a company is producing, while intensity measures the efficiency of the process that generates pollutants.
Fugere said that intensity measurements are helpful because they reveal whether a bank is becoming more efficient. But she also argued that intensity measurements have certain shortcomings.
“Banks can say that they’re reducing emissions and hitting their targets, yet they could be expanding the dollars that they’re spending in each of these sectors,” she said.
Dan Saccardi, a program director at Ceres, a nonprofit group that works with global companies on sustainability initiatives, said “there’s nothing inherently better or worse” about an absolute or intensity target, as long as the company is able to show progress toward meeting its decarbonization commitments.
“You can have an absolute target that is not ambitious, and you can have an intensity target that’s very ambitious,” Saccardi said in an interview.
“Our perspective is, regardless of whether it’s an intensity or absolute target, what’s important is that companies make sure their trajectory is still pegged to the 1.5-degree pathway,” Saccardi said, referring to the standard that’s been identified as a consensus goal to limit the effect that emissions have on warming the planet.
In its report, Citi expanded its disclosure of information about financed emissions from the energy and power sectors. The report includes financed emissions data related to loans that are both committed and already drawn by clients in the auto, commercial real estate, steel and coal sectors.
This data is “a big addition,” considering the complexity of calculating financed emissions as well as the size of Citi’s portfolio, said Alexis Normand, CEO and co-founder of the Paris-based carbon accounting company Greenly.
Measuring financed emissions can be difficult due to a reliance on data that may not be easily comparable, Normand said.
“It’s much more difficult than it might seem to be accurate,” said Normand, whose company assesses the emissions profiles of hundreds of companies. “Citi did a good job from a methodological perspective and seems to be pretty transparent about its process.”