The Center works with financial institutions to help decarbonize high-emitting sectors in the real economy by addressing common barriers to sectoral decarbonization, such as:
Working directly with financial institutions and their clients, suppliers, and regulators, the Center helps to create climate-aligned finance agreements that establish common sectoral decarbonization roadmaps and assessment methodologies.
As a Supporting Partner of the Mission Possible Partnership (MPP), the Center is leading finance work within net-zero sector platforms for:
Cement & Concrete
Steel production is heavily coal-dependent and lacks existing cost-competitive low-carbon alternatives. Globally, the steel sector emits roughly 7% of energy emissions—equivalent to the annual emissions of India.
The sector’s carbon intensity raises expectations of and from financial institutions to support its decarbonization, but to date, common tools to support steelmakers effectively in this regard have been lacking.
As a result, leading lenders to the global steel industry—ING, Citi, Societe Generale, Standard Chartered and UniCredit—are working together to develop a climate-aligned finance agreement to more effectively support the decarbonization of steelmaking.
To forge this framework, several banks have formed the Steel Climate-Aligned Finance Working Group, led by ING and Societe Generale, and facilitated by RMI’s Center for Climate-Aligned Finance. CRU is participating in the Working Group's Expert Committee.
The Working Group will apply best efforts for multi-stakeholder engagement through:
The Working Group ultimately aims to set global best practices on climate for financial institutions that facilitate steelmaking. Towards this end, we intend to enroll other banking signatories in a final climate-aligned finance agreement to be released in early 2022.
This Working Group on climate-aligned finance is one of several workstreams within the Net-Zero Steel Initiative (NZSI). NZSI comprises some of the world’s largest steel producers and suppliers, under the umbrella of the Mission Possible Partnership.
If you are interested in learning more, please contact Lucy Kessler at [email protected].
The Poseidon Principles, launched in June 2019, are a framework for responsible maritime shipping finance and have established a model for how the financial sector can kick-start sectoral decarbonization.
They provide a way quantitatively assessing whether financial institutions’ ship finance portfolios are in line with the climate targets agreed by the International Maritime Organization (IMO), the United Nation’s body that oversees international shipping.
Under the Poseidon Principles, signatories commit to assess and disclose the climate alignment of their shipping portfolios and work to bring their portfolios in line with climate targets. Signatories use the Principles to engage their clients when emissions hotspots are identified.
Only one year after launch, European signatories to the Principles structured over $1.2 billion in Poseidon-linked facilities. These loans tie the cost of capital to climate-aligned GHG performance.
The Center’s Alignment Insights Lab convenes leading financial institutions, climate experts, service providers, and representatives of alignment platforms to help implement the many promising climate-alignment commitments made to date by:
Following convenings, the Center publishes key findings in best practice reports for finance practitioners. These reports are designed to accelerate the exchange of alignment solutions in the financial sector. Publications also identify and recommend solutions for key stakeholders, including:
Alignment Platforms and Initiatives
The Center measures how many of the world’s largest financial institutions (LFIs) have committed to using their levers of influence to move the global economy toward net-zero emissions. This is important for:
Our July 2021 analysis covered the 119 firms with $500 billion or more in total assets, surveying banks, asset managers, asset owners, and insurers. We found:
Almost 40 percent of LFIs have made 2050 net-zero (or equivalent) commitments.
Commitments’ scope and transparency vary significantly. For example, some cover the entire business, while others focus on specific portfolios or business units.
Robust target-setting should be followed up with actions that drive the real economy toward a 1.5°C future.
Download the full Coming into Alignment report for more insights.
For further information on this analysis and our ongoing work, please contact Lizzy Harnett: [email protected]