Citigroup has become the latest major investment bank to commit to net-zero financed emissions, after its brand new chief executive announced plans to reduce the emissions of the bank's operations and investments to net-zero by 2050.
CEO Jane Fraser announced the decarbonization drive on her first day at the helm of the U.S. bank earlier this week, emphasizing that major financiers had a critical role to play in meeting global climate goals and delivering a net-zero emission global economy.
"We believe that global financial institutions like Citi have the opportunity — and the responsibility — to play a leading role in helping drive the transition to a net-zero global economy and make good on the promise of the Paris Agreement," she wrote in a blog post detailing the plans.
The bank will publish a dedicated plan within the next year that will set out how it intends to achieve net-zero financed emissions by mid-century and reduce its operational emissions footprint to net-zero by the end of this decade, she said.
By announcing a net-zero target on day one, Citi's CEO is demonstrating much-needed leadership in addressing the climate crisis.
That plan will include interim emissions reduction targets for the carbon intensive sectors that the bank finances, such as energy and power, according to the update.
Fraser confirmed that after an initial implementation period, the bank would review the scope of its original net-zero plan to assess which additional sectors it could set emissions targets for, and how the bank could recruit other parts of its business to the mission.
"As the world's most global bank, we are interconnected with many carbon-intensive sectors that continue to help drive global economic development," she said. "We are committed to bringing as many clients as we can along with us on this journey and working with them relentlessly to get it right."
The bank has vowed to report publicly on its decarbonization progress. "We believe transparency and accountability are key to success," Fraser said.
The move comes after a clutch of investors filed a shareholder resolution calling for the bank to disclose whether and how it will reduce emissions generated from its financing in line with the global goal of capping warming to 1.5 degrees Celsius.
The resolution has been retracted, and Danielle Fugere, president of As You Sow, the shareholder advocacy group behind the move, applauded Fraser for setting the bank on a climate responsible pathway on her first day in her new role.
"By announcing a net-zero target on day one, Citi's CEO is demonstrating much-needed leadership in addressing the climate crisis," Fugere said. "This announcement aligns Citi with other major banks taking action on climate change and sends a clear signal that client companies must either begin transitioning to net-zero business models or face higher costs of capital."
The banking sector is under growing pressure from the public and investors to divest from fossil fuels and use its financial clout to instead support the roll out of the technologies and solutions that can enable a net-zero carbon future.
While Bank of America, Morgan Stanley and JP Morgan Chase have similarly outlined visions to align their activity with the Paris Agreement, major U.S. competitors Wells Fargo and Goldman Sachs have yet to do so.
Citi's announcement means that four of the top six U.S. banks have established net-zero greenhouse gas targets that cover not only their operations and supply chain, but also the impact of their financing and investment decisions. While Bank of America, Morgan Stanley and JP Morgan Chase have similarly outlined visions to align their activity with the Paris Agreement, major U.S. competitors Wells Fargo and Goldman Sachs have yet to do so.
Fugere urged the two laggards to urgently step up their ambition, pointing to the fact that Wells Fargo was attempting to keep a proposal from shareholders to measure, disclose and set net-zero targets off its proxy.
"Not only has Wells Fargo failed to take responsibility for its financed emissions by setting a reduction target in line with the Paris Agreement's net zero goal, or even take the first steps of measuring and disclosing its financed emissions, it is challenging shareholders' basic right to ask the bank about these critical issues," she said.
In the U.K., HSBC, Barclays and Natwest have pledged net-zero emissions across their portfolio; however, environmental campaigners have warned the pledges are too often accompanied by continued investment in the expansion of the fossil fuel sector.