Our Approach to Net Zero by 2050
By Jane Fraser, CEO, Citi January 19, 2022 09:00 AM
We know it is not enough to say Citi is committed to tackling climate change. That's the easy part. As the world's most global bank, we can help drive the transition to a net zero economy and make good on the promise of the Paris Agreement. We also know that the world has substantial energy needs and different countries are in different stages of development. I want to make sure Citi's transition plan reflects these realities.
Citi's Net Zero Transition Principles, which we have developed to serve as our North Star, will guide our efforts. In developing our path to net zero emissions by 2050, we are building on our sustainability track record of more than two decades and have set bold goals and commitments to accelerate this transition, including our recent $1 trillion sustainable finance goal. As we continue to finance clean energy solutions, realign our business models, and work towards a net zero future, we know we cannot do this alone. Tackling climate change will require tremendous collaboration from everyone our clients, industry peers, investors, NGO partners, and in particular, governments around the world. There is a critical need for strong public policy to accelerate the global economy's transition to net zero.
Getting to net zero means we must support our clients in their own transitions to net zero, and we must understand where they are in their journeys to make progress. Our intention is to work with all our clients, including our fossil fuel clients, to develop credible plans and transition to net zero together. We will also encourage the responsible retirement of carbon-intensive assets rather than divestment as part of these transition plans. We will continue to assess our client relationships a regular part of how we manage our business and prioritize partnering on transition strategies before turning to client exits as a last resort.
Efforts from the private sector must be complemented by governmental action to create the conditions we need to meet our climate commitments while remaining competitive in the global market including policies that drive consistent standards for climate disclosure. We encourage the development of harmonized data disclosures using frameworks like the Task Force on Climate-Related Financial Disclosures (TCFD) to guide the private sector forward, especially as we see more and more institutions pledging to reach net zero.
Our 2021 TCFD Report includes our 2030 emissions targets for the Energy sector, a 29% absolute reduction in financed emissions, and for the Power sector, a 63% reduction in portfolio emissions intensity which put us firmly on track to meet our 2050 net zero commitment. We will need to actively engage with our clients across all relevant sectors to map out what decarbonization pathways look like for each industry. And in our efforts, we want to ensure we're supporting a responsible transition for all, particularly in developing countries where there may be limited access to energy and the resources needed for the transition. We will strive to meet the current needs of developing countries without causing negative social impacts or exacerbating existing inequalities, so that we can help these markets prioritize the transition to net zero while balancing both environmental and social needs.
Climate data, disclosure and technologies continue to evolve, and we will adapt to the changing landscape as we pursue our net zero commitment and transition. Although there are many uncertainties, metrics and data like those disclosed in our initial net zero plan are essential to helping us understand where we are and how we move forward. And as we continue to build out our plan to reach net zero, one thing will remain constant: we will continue to be transparent and accountable. We will continue to share how we are assessing and managing our net zero plan and broader climate strategy, integrating climate risk and transition finance opportunities into our business and overall strategy, and reporting on our progress.
This report represents our continued leadership in climate change and disclosure in line with the TCFD recommendations and the progression of our efforts over the years. It has the full support of our management team, and our net zero plan was reviewed by our Board of Directors. Since publishing our second TCFD Report in 2020, we formed a new Global ESG Council consisting of senior members of management and grew our dedicated Climate Risk team to include expertise in credit risk, scenario analysis, stress testing and regulatory engagement. We also formed the Natural Resources and Clean Energy Transition team by combining the expertise and knowledge of existing teams to more effectively drive client engagement efforts in the Energy, Power and Chemicals sectors.
The existential threat posed by climate change will be with us for generations, but we know that it is this generation's time to act. We will act with urgency while understanding that our work to achieve net zero will not be a short-term effort. Supporting a fair and inclusive transition remains a top priority for Citi. This is part of who we are, and we will continue to learn and lead as the global community enters this next critical stage of climate action.