Citi: Why achieving Net Zero will be ‘hard... really hard’
At TTU we highlight cutting edge thinking that helps leaders make the big changes needed on the Climate Emergency.
Jane Fraser has been CEO at Citi since March. Here she outlines the huge challenges facing one of the world’s biggest banks to help achieve Net Zero.
Citi is having tough conversations with clients. There must be new pragmatism and partnerships. If a client isn’t interested in decarbonisation, then a long term relationship with the bank may not be possible.
We publish here her lightly edited remarks to President Biden’s virtual Climate Change summit on 22 April 2021.
I have been CEO for only a short time. But Citi has been helping lead our industry’s drive to sustainability around the world for many years.
We helped create the equator principles back in 2003, and the green bond principles in 2014. Both have been establishing important industry standards.
In 2018 Citi became the first US bank to report on our efforts to implement the taskforce on climate related financial disclosures framework, which provides transparency about the impact climate change has from a risk management perspective.
So I’m very happy to see the cross section of institutions participating today. This is because solving climate change is really going to require the ultimate public private partnership. Agreeing on common metrics and common standards is going to be fundamental.
Our Net Zero priorities
At Citi our goals for 2030 are grounded on three principles and priorities.
The first is financing climate solutions. The second is measuring the reduction of climate risk and impact of our own clients in the portfolio. And the third is continuing to minimise our own company’s direct impacts on the planet.
We recently committed to $500 billion in environmental projects and activities by 2030. This is a tenfold increase over our very first commitment back in 2007.
Combined with our plans to finance $500 billion by 2030 in areas such as healthcare and affordable housing, like Bank of America we’ve committed a total of $1 trillion to advance the UN Sustainable Development Goals. And we’re proud to do this.
Confronting Climate Change creates economic prosperity
Some think that confronting climate change and creating jobs and economic inclusion are in conflict.
But we believe we’re only going to be successful in tackling our global challenges if these three agendas are working together. So solving climate change must be a driver of jobs and of economic prosperity.
In what is our biggest challenge yet as a firm, we’re targeting Net Zero emissions by the year 2050. Underscoring its importance, I announced this commitment on my very first day as CEO.
This is a bold goal for a global bank like ours. It means not only addressing the emissions from our own operations - which we intend to have done by 2030 - but also those emissions produced by our client portfolio.
We’re very proud to help launch the Net Zero banking alliance with Brian [Moynihan, CEO of Bank of America] and others to establish a common industry framework for Net Zero.
Achieving Net Zero: ‘hard… really hard’
But we know that to truly fight climate change our clients - which include many of the biggest world multinationals, as well as investors, and countries like the ones we’ve heard from today - will also need to transition to Net Zero. And we will join them on this journey.
Net Zero is very easy to say. But it’s going to be hard to do. And make no mistake, this is going to be really hard. We think it’s going to require three critical things.
First, putting hard numbers to this. When we look across our client portfolio - particularly in carbon intensive sectors - measuring our finance emissions is a rather Herculean task.
Second, having tough conversations with our clients. Do they have a Net Zero plan themselves? And how can we partner with them on the execution of this critical transition? If a client isn’t interested in decarbonisation, well, what does that really mean for our long term relationship?
The third element is looking outside the company. We’ve all got to accelerate technology development, whether it’s through renewables or carbon capture. We all have to get behind supporting the public policy that is really going to be essential to making this all happen.
Pragmatism and partnership
So yes, we are acting with urgency. We’re excited about this road ahead. But I do want to underscore, it’s not going to be easy. We’re going to need all the pragmatism and the partnership that we can muster together.
I can assure you, whether it’s the drive to Net Zero, or the other important parts of our ESG agenda, including closing the gender pay gap, and promoting racial equity, we’re going to back up our commitments with real action and with measurable results.
Because that’s what matters.
Our clients and our shareholders and our people, well, they’re expecting nothing less.
So thank you for having me today.