Focus Sectors

Climate Finance for Aluminum

Aluminum is an essential building block of modern life, used in everything from space travel to beverage containers, as well as in many of the new technologies powering the energy transition. Yet aluminum production is also highly emissions intensive and responsible for 2 percent of global CO₂e emissions per year. As demand for aluminum grows, supporting the sector's net-zero transition will be critical to meeting climate goals.

Our Work

Recognizing the need for financial institutions to support the decarbonization of the aluminum industry, the Sustainable Aluminum Principles are a voluntary reporting framework that enables banks to assess and disclose the alignment of their aluminum lending portfolios against a 1.5°C pathway and effectively support their clients' decarbonization efforts. The Sustainable Aluminum Principles are the result of extensive consultations with banks, industry, experts, and civil society, ensuring their robustness and alignment with existing standards. Ultimately, the framework aims to enable standardized comparisons between clients and across portfolios and catalyze more effective collaboration between lenders and their clients on their transition to a low-carbon future.

The Sustainable Aluminum Principles are made up of three core components:

1. A robust methodology to track and report progress.
2. 1.5°C-aligned roadmaps for primary and recycled aluminum production and semi-fabrication.
3. Access to standardized data through comprehensive client reporting guidance and a high-quality data provider.

Resources

The Sustainable Aluminum Principles Framework

Launch Press Release

The Sustainable Aluminum Principles: Q & A

Interested in learning more?

Reach out for more information: contact RMI.

Participants

The Sustainable Aluminum Finance Framework is the result of extensive consultations with banks, industry, experts, and civil society, ensuring its robustness and alignment with existing standards. The following organizations participated in this multi-stakeholder process:

"Transparency, accuracy and comparability of GHG emission baseline and targets are key to building trust and confidence among all players, especially the finance sector. Designed by RMI, the Sustainable Aluminum Finance Framework is a great example of the power of collaboration. The IAI and its members have been supporting RMI in developing this tool to enable lenders to voluntarily assess and disclose the alignment of their aluminium lending portfolios against a 1.5°C climate pathway. I'm pleased that the tool aligns with IAI's three GHG pathways: electricity decarbonisation, direct emissions and recycling. I hope the tool will help the aluminium sector to further decarbonise and invest in decarbonisation projects around the world.”

- Marlen Bertram. Director - Scenarios and Forecasts at International Aluminium Institute

"The Net Zero Banking Alliance welcomes the Aluminium / Aviation climate-alignment methodology developed by RMI in collaboration with leading financiers. Members of the Alliance have committed to setting portfolio decarbonisation targets in this important sector. This methodology will assist banks in understanding the net zero pathways for the sector and thus support banks as they seek to measure and transparently disclose their climate alignment and set targets on an independent and individual basis. This will also help to inform discussions between financial institutions and their clients to support their transition to a net zero economy. We look forward to continuing our collaboration with RMI in the coming years as we navigate the transition to net zero."

- Tracey McDermott, Chair of the Net Zero Banking Alliance and Group Head, Conduct, Financial Crime and Compliance, Standard Chartered Bank

Participation in the multi-stakeholder consultation process does not signify endorsement of the Sustainable Aluminum Finance Framework.

Aviation Climate-Aligned Finance Working Group

Aviation accounts for 2.5 percent of global carbon emissions, and air traffic is projected to increase: In a business-as-usual scenario, aviation alone would use up 10 percent of the planet's remaining carbon budget by 2050.

The aviation sector must accelerate the transition to sustainable aviation fuels, invest in more efficient aircraft, and support the development of new aviation technology. The financial sector will play a crucial role in funding the technologies, projects, and companies involved in this transition. Therefore, the Center for Climate-Aligned Finance convened six top lenders to the aviation sector — Bank of America, BNP Paribas, Citi, Crédit Agricole, Société Générale, and Standard Chartered — in the Aviation Climate-Aligned Finance Working Group.

Press Release Flyer

Since its launch in April 2022, the working group has developed a draft framework — including an emissions intensity metric, the selection of a reference 1.5°C scenario-based benchmark, and technical resources to enable the sourcing of high-quality data. The Climate-Aligned Finance (CAF) framework will enable financial institutions to calculate and disclose a single portfolio-level alignment score, which represents the divergence between the portfolio's weighted average emissions intensity and an aviation-specific benchmark in the reporting year.

The framework has been developed in consultation with multiple stakeholders, led by RMI, guided by working group banks, with input from aviation experts, industry members, and additional financial institutions. Stakeholder consultations have directly informed the proposed framework to ensure the resulting standard is implementable by industry, meets lender requirements, and achieves harmonization across existing methodologies, to the extent possible.

The Aviation Climate-Aligned Finance Working Group is in the process of finalizing the CAF framework. Upon its completion, this standard will be available for use by financial institutions, including all accompanying technical guidance and resources.

RMI's Center for Climate-Aligned Finance has facilitated engagement between the working group and leading partner organizations focused on aviation and sustainable finance. Partner organizations include the Glasgow Financial Alliance for Net Zero, the Clean Skies for Tomorrow coalition, and the UN-convened Net-Zero Banking Alliance.

Data Provider Qualification Process: To enable financial institutions to secure high-quality data required for annual disclosure, the Center has drafted the CAF commercial data standard and will run a qualification process. This process--open from October 2 till November 13, 2023--will allow commercial data providers to ensure that their data products are compatible with the technical requirements of the CAF methodology. Commercial data providers who wish to demonstrate that their products meet the standards contained in this document may do so by completing the Qualification Test during the open qualification window. To participate or to learn more, please contact Meghan Morgan for more information at [email protected].

Interested in learning more?

Reach out for more information: contact RMI.

Climate Finance for Steel

Steel is used in everything from cars and fridges to buildings and planes. However, because of the sector's reliance on coal, it contributes 7 percent of CO₂ emissions globally. With demand for steel projected to grow 30 percent by 2050, emissions are set to rise significantly if we continue with business as usual.

Our Work

Under RMI's leadership, six top lenders to the global steel sector — Citi, Crédit Agricole CIB, ING, Société Générale, Standard Chartered, and UniCredit — announced the signing of the Sustainable STEEL Principles (SSP), the first climate-aligned finance (CAF) agreement for lenders to the steel industry. The Sustainable STEEL Principles provide a sector-specific measurement and disclosure framework for banks, enabling them to support the decarbonization of the steel sector and assess their own climate progress in line with Net-Zero Banking Alliance (NZBA) guidance.

Sustainable STEEL Principles signatories receive:

1. An industry-supported methodology that is material-specific and establishes a fixed system boundary of emissions.
2. An Alignment Zone, comprising two net-zero scenarios to inform target-setting and client engagement.
3. Standardized instructions for steelmaker reporting with a 3rd third-party data provider available as an alternative.
4. NZBA-compatible guidance to ensure that comparable bank-level disclosure occurs annually.
5. A robust governance arrangement to support implementation and the ability to amend the framework.

Resources

The Sustainable STEEL Principles Agreement Framework: Download the Framework

How the Principles were developed:Read more

For Signatories

• The Sustainable STEEL Principles Agreement Framework
• Governance Rules
• Signatory Application
• Standard Declaration

Supporting Materials

• One-Page Overview
• Alignment Zone Briefing
• Fixed System Boundary Briefing
• Split Trajectory Briefing
• Panel Discussions: The Financial Sector's Role in Decarbonizing Steel
• Climate Bonds Standard expands to the steel sector
• Banks Bet on Green Steel

Partners

Interested in learning more?

Reach out for more information: contact RMI.

Worlds First Climate Alignment Agreement for Financial Institutions

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 of 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.

Learn more at the Poseidon Principles website, and read about the first year of reporting here.

Interested in learning more?

Reach out for more information: contact RMI.

Real Estate Climate-Aligned Finance Team

The real estate sector is responsible for 40 percent of global greenhouse gas emissions. Three quarters is driven by building operations and associated electricity use, while the remainder comes from building materials used in construction such as steel and cement. In the United States, 110 million buildings represent 10% of GDP, and their operations contribute 13% to annual national greenhouse gas emissions.

RMI's Center for Climate-Aligned Finance, in collaboration with RMI's Carbon-Free Buildings team, seeks to accelerate the adoption of low-carbon technologies in the real estate sector. We aim to do this through expediting the deployment of transition capital and addressing pain points for effective real estate target-setting for financial institutions.

To design interventions that will achieve these goals, RMI is conducting a systems-level scoping and analysis of the real estate sector in the United States, including a detailed segmentation analysis. This analysis includes:

1. Where carbon is concentrated,
2. How capital flows into each real estate segment,
3. What decarbonization pathways exist and how they differ by region, and
4. How to address other barriers to decarbonization.

See blogs.

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Interested in learning more?

Reach out for more information: contact RMI.