The events of the past year have underscored that the transition to a net zero economy will not be smooth or linear. The global ramifications of Russia’s invasion of Ukraine have led to massive volatility in the energy markets and renewed concerns about energy security. This has created additional momentum for the energy transition to counter the growing climate crisis. It has also raised new considerations that must be accounted for.
Addressing the world’s energy and climate needs will be a balancing act. On the one hand, investing in energy security is essential – the global economy still runs primarily on oil and natural gas and many developing nations have neither the resources nor the infrastructure to make a quick shift to renewables. At the same time, investment in clean energy technologies is critical to addressing climate change, and support for companies working to dramatically reduce their carbon footprints must continue wherever they may be on their respective journeys. These considerations — the energy transition, energy security and access to energy — are not mutually exclusive and must be solved for simultaneously.
At Citi, we are putting our expertise and resources to work to help our clients tackle these climate and energy challenges. In January 2022, we released our initial plan for achieving net zero emissions by 2050, setting ambitious 2030 financed emissions reduction targets for our energy and power loan portfolios. In this year’s Task Force on Climate-Related Financial Disclosures (TCFD) Report, we share our first year of progress towards these targets and set out 2030 targets for additional sectors including auto manufacturing, commercial real estate, steel and thermal coal mining.
I have engaged with many of our clients around the world who are committed to doing what it takes to transition to a low-carbon economy. There is a universal acknowledgement, particularly within the hard-to-abate sectors and developing economies, that the transition will take time. So, we will continue to work alongside our clients as they map out pathways that are orderly but ambitious, whilst ensuring they can continue to meet the world’s energy needs.
We need to invest heavily to scale new sustainable technologies and their supporting infrastructures to be viable alternatives to fossil fuels, and we have to drive down their associated cost curves to ensure their affordability. Nowhere is the criticality of affordable solutions more important than in emerging markets. Our work last year supporting Indonesia and Vietnam’s Just Energy Transition Partnerships and Egypt’s landmark energy transition program has resulted in more actionable playbooks that other countries can learn from and follow.
Obtaining more reliable and actionable climate data also continues to be a challenge that we are navigating across our businesses, and we’ve been supportive of regulatory developments to ensure more consistent, comparable and reliable climate disclosures.
Over the past year, we have continued to build up our capacity to manage and mitigate climate risks, whilst also realigning our own business around opportunities in the energy transition. That includes augmenting our Clean Energy Transitions banking team, expanding our Climate Risk team and establishing a Head of Net Zero Operations to help realize our net zero commitment for Citi’s own sites and facilities. Despite the geopolitical and macroeconomic headwinds, we continue to make progress toward meeting our commitment to financing and facilitating $1 trillion in sustainable finance by 2030.
Meeting the need for energy access whilst also accelerating the transition to a low-carbon economy is no easy feat. But as the world’s most global bank that has an on-the-ground presence in 95 countries and does business in nearly 160 countries, we have the unique perspective and local knowledge to support solutions for the clients and communities we serve.
I invite you to learn more about Citi’s approach and initiatives across our firm. Our TCFD Report represents a hallmark of all our climate-related efforts — our commitment to transparency. The report describes our continued efforts towards our climate goals and disclosures in line with the TCFD framework. We are transparent about our progress and the challenges we face on the path to net zero and are committed to sharing our experience so that we all can learn together and chart the course to a healthier, more sustainable future.