Citi pledges to cut emissions for more sectors including coal
- Citi unveils 2030 targets for coal, steel, auto, real estate
- U.S. bank says clients will need to use carbon credits
- Plans to buy carbon credits for own operational emissions
- Campaign group calls Citi's new updates disappointing
LONDON, March 2 (Reuters) - U.S. bank Citi (C.N) on Thursday announced targets for cutting emissions tied to loans it makes to coal mining, auto, steel and real estate clients by the end of this decade, in its latest update to its plan to reach net-zero emissions by 2050.
Banks globally are laying out plans for reducing emissions for the sectors most responsible for greenhouse gases, and last year Citi announced targets for its energy and power portfolios.
Some lenders are also restricting financing for the dirtiest energy projects. But environmental groups say they are not acting quickly enough to prevent global temperatures from rising more than 1.5 degrees Celsius (2.7 degees Fahrenheit) above pre-industrial times, the level needed to prevent the worst effects of climate change.
Deutsche Bank on Thursday drew criticism from climate activists when it said it had tightened its coal financing policies but has yet to change its criteria for the oil and gas industries.
Judging the ambition of banks' sectoral targets can be tricky, given lenders start with different exposures to industries and clients' emissions disclosures remain patchy. Banks use different base years for their targets, and some lenders include underwriting while others like Citi do not.
Citi's targets contain a pledge to cut absolute emissions from lending to thermal coal mining by 90% by 2030 from a 2021 baseline, the intensity of emissions for auto manufacturing by 31% and for commercial real estate in North America by 41%.
More detail on steel emissions and alignment with the 1.5C goal would be disclosed in future, Citi said.
Citi's targets cover direct financing but exclude the underwriting of stock and bonds, known as facilitated emissions, which it has said it will include once an agreed methodology for all banks is published.
The bank's emissions in 2021 for its energy portfolio dropped sharply versus a year earlier and were broadly unchanged for power. But Citi said financed emissions can fluctuate year-on-year, making analysis complicated.
The bank has previously announced restrictions on lending to some coal and unconventional oil and gas projects but it has not gone as far as some European lenders in tightening its policies.
Val Smith, Citi's Chief Sustainability Officer, told Reuters that the bank's approach was to engage with clients rather than divest.
According to an NGO-authored Banking on Climate Chaos report published last year, Citi between 2016 and 2021 was the second-largest funder of fossil fuels globally, although its financing has been falling since 2019.
Beau O'Sullivan, senior strategist for the Bank on our Future campaign, called Citi's sectoral updates disappointing when set against European banks restricting lending for new oil and gas.
"The success of engaging with their fossil fuel clients is a comforting fantasy that banks like Citi tell themselves: they could have more influence by restricting financing for companies that are expanding fossil fuels," he said.
Citi also said on Thursday it intends to begin purchasing voluntary carbon credits to help its operational emissions hit net zero by 2030, and it acknowledged clients in some sectors would need to use credits to reach their absolute net zero emissions by 2050.
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