Citigroup is warning that more than 40% of their energy sector clients are unprepared for the “net-zero” emissions transition, according to the financial institution’s latest climate report.
Forty-two percent of the bank’s energy clients do not have a substantive emissions reduction plan, and an additional 29% have a plan that they may or may not be able to actually carry out, according to the 2023 Citi Climate Report, released Thursday. Only 8% of the firm’s clients in the energy sector have major emissions reductions plans and also the clear ability to execute those plans.
Citi — the fourth-largest bank in the U.S. — issued its climate report signaling that most energy clients may not be prepared to execute emissions reduction plans just weeks after the Securities and Exchange Commission (SEC) approved a final rule requiring medium-sized and large public corporations to disclose climate change-related risks and data on the emissions created directly by their businesses in financial reports. (RELATED: John Podesta Cited A Major Investment Bank’s Solar Projections. There’s Just One Problem)
Federal Court Halts Biden Admin’s Corporate Emissions Disclosure Rule https://t.co/oMsOGZB2Xi
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Citi determined its clients’ preparedness ratings by assessing a wide variety of factors, such as executive oversight of transition plans, the strength of emissions data and the share of capital investments dedicated to “transition-related activities,” according to the report’s description of the bank’s Net Zero Review Template.
Lenders are beginning to realize that they will not be able to comply with the mounting green regulatory regime in the financial sector over the long-term unless they start to quickly drop large numbers of clients, a move that could upend national and regional economies that are heavily reliant on fossil fuel production or use, according to Bloomberg News. Accordingly, many financial institutions are quietly beginning to backpedal on ambitious climate-related commitments.
“This is good news, because it shows that the immense amount of pressure that financial service industry cartels have tried to exert on the energy industry has not been especially successful, which is fantastic news for the consumer,” Will Hild, the executive director of Consumers’ Research, told the Daily Caller News Foundation regarding the Citi climate report. “That Citi is even measuring this suggests that they have a long way to go to get back to their core business, which is to provide financing for American and global industry.”
Major asset managers, such as State Street and Vanguard, have pushed environmental, social and corporate governance (ESG) investment and corporate management strategies in part by participating in asset manager coalitions with a shared commitment to decarbonizing business. JP Morgan’s asset management arm and State Street withdrew from one of these groups, known as Climate Action 100+, in February amid a congressional probe into the coalition examining whether it has facilitated illegal collusive behavior.
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