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Pressure on Citi to drop fossil fuel clients as report shows transition plans lacking

A new Citi report puts the bank under pressure to drop clients focused on oil, gas, and coal due to 71% of these companies not having sufficient climate plans

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March 27, 2024

NEW YORK CITY – Citi is under pressure to drop clients focused on oil, gas, and coal as a new report by the bank shows 71% of these companies do not have sufficient climate plans to transition away from fossil fuels and address their massive emissions.

Only 28% of the oil, gas and coal companies Citi funds have a medium or strong transition plan into a clean energy future. The report categorizes oil and gas production and “energy process industries” as very high risk for not transitioning.

Citi’s report also shows it was responsible for 89.3 million metric tonnes of CO2 through their financing of fossil fuel companies, which is the equivalent of over 21 million cars driven for a year or 23 coal-fired power plants operating for a year.*

Despite the poor transition plans of the oil, gas and coal companies it funds, Citi fails to mention dropping clients, instead stating its will “hold conversations” with them and “continue facilitating solutions to support their transition planning.” Citi has been doubling down on its support for clients that do not have credible transition plans, including Exxon Mobil with Citi acting as lead advisor on the merger with Pioneer last year.

Richard Brooks, Climate Finance director at Stand.earth, called on Citi to explain how it can transition as a bank if the companies it lends to are not transitioning.

“Citi has laid out quite clearly that the vast majority of its clients are laggards and have no intention of transitioning away from oil, gas and coal. Because of this, Citi is responsible for over 23 coal plants worth of pollution due to the dirty energy companies it finances. Citi must take real action by divesting and transitioning its current relationships with these laggards who are failing to meet the needs of our clean energy future.”

Shawna Ambrose, spokesperson for Rainforest Action Network, added:

“Citi has a unique opportunity to lead the transition to a clean energy economy; instead the evidence is clear that Citi persists in bankrolling fossil fuel expansion and lacks credible, time-bound policies to achieve a transition that is aligned with what is needed to limit warming to below 1.5C and avert climate chaos. People from the Amazon to the US Gulf Coast are relying on Citigroup to make real and rapid progress on the targets it has promised – for the health of their children and all of our future generations on this planet.”

Citi is the second biggest funder of fossil fuels in the world, pumping in $322 billion between 2016-2022 according to the annual Banking on Climate Chaos report. The bank recently abandoned a bare minimum set of standards on risks to the environment and local communities where it finances oil, gas, coal, infrastructure and mining projects. These standards, called the Equator Principles, have also been dropped by  JP Morgan Chase, Bank of America and Wells Fargo. Citi is listed as having applied the Equator Principles to its funding of Cheniere’s Corpus Christi LNG expansion project in Texas in 2022, which is opposed by local communities over its health and environmental impacts.

The move is part of a concerning trend among banks headquartered in the US to backpedal on commitments on climate and to vulnerable communities affected by their financing deals. 

Bank of America has removed explicit bans on financing coal and Arctic drilling projects. JPMorgan Chase has introduced an “energy mix” for calculating its financed emissions, which will include renewable energy and make it harder to assess and recently left the voluntary CA100+ initiative. Citi’s chief executive, Jane Fraser, has also signalled a shift in priority.

Other global banks have continued to make policy changes to address climate and community risks. Barclays last month announced an end to funding for new oil and gas projects; HSBC in 2022 said it was ending funding for new fossil fuel projects. Danske Bank announced they would severely limit investments in fossil fuels via their asset management division after last year saying it would stop financing oil and gas projects and companies.

Last week the NYC Comptroller announced he had successfully pressured Citi to disclose information in 2024  on how much low carbon energy it finances in comparison to oil, gas and coal energy. Citi’s current ratio is 0.60:1 meaning for every $1 financing dirty fossil fuels only 60 cents are going into low-carbon energy like renewables. The International Energy Agency and others have stated the current ratio must by 4:1 to half economy wide emissions by 2030. As a result, Citi will no longer face a shareholder vote on the issue at its annual general meeting but the bank has yet to set a target to fix its energy ratio problem. 

 

* According to EPA greenhouse gas equivalents https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator#results

Press Contact:

Emily Pomilio, Stand.earth

[email protected]

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