Dive Brief:
- Citigroup has financed and facilitated $441.2 billion toward sustainable finance four years into a goal to invest $1 trillion in the sector by 2030, the bank said in its 2023 ESG Report Monday.
- Citi also has reached or surpassed targets for five of eight goals to decrease its operational footprint by 2025, against a 2010 baseline, including goals on reducing location-based greenhouse gas emissions, renewable energy sourcing, water consumption and waste reduction.
- The financial group said its investment banking sector accounts for the largest portion of its sustainable investments — 85% — and renewable energy-related activities were a “major driver” of the bank’s progress in 2023. Citi said part of this was due to clients who were spurred by the Inflation Reduction Act and its $369 billion in clean energy tax credits.
Dive Insight:
Citi said it remains on track to reach its 2030 sustainable finance goals, which it called “an integrated effort” across its operations. The bank invested $92.7 billion in green infrastructure, climate tech and social initiatives in 2023 to work toward this goal. For activities to qualify, they must meet at least one of the company’s established ESG criteria.
Sustainable finance activities that touched environmental issues accounted for 64% of that spending, or $59.3 billion, while social activities accounted for 16% or $14.7 billion. Twenty percent of the 2023 financing touched both environmental and social issues, accounting for $18.7 billion in spending. Citi said in the report it is consistently being presented with activities that meet “multiple sustainability criteria and [result] in both environmental and social impact.”
“At a time of unprecedented pressure and opportunity to address rising environmental and social challenges, sustainable finance remains a critical tool for supporting action on these issues,” Citi said in the report. “Investors, companies and governments alike recognize the role the financial services sector can play in mobilizing capital and advising clients to support their transition to a more sustainable, inclusive and low-carbon economy.”
Renewable energy accounted for the largest single-issue sustainable finance criteria in 2023, as the bank invested $14 billion in renewable energy-related activities; nearly the same amount spent on all solely social issues. Affordable housing represented the bank’s largest issue area on social issue financing, and Citi said it invested $7.1 billion in affordable housing-related activities last year. Included in that tally is $6.5 billion in direct financing for affordable housing projects in the U.S.
The bank said that while renewable energy continues to pace its investment growth, it also saw growth in its thematic bonds — green, social or sustainable bonds — and its services business. The bank’s services sector particularly saw growth in its export agency and sustainable supply chain financing services, according to the report. However, Citi said it saw a decline in sustainability-linked mergers and acquisitions last year.
On its 2025 operational targets, the bank said it has reduced its location-based GHG emissions 49%, compared to a 45% goal; sourced 100% renewable energy, which it has done every year since 2020; reduced its waste by more than half and its water consumption by one-third; and more than 40% of its buildings have a sustainable building certification, compared to 2010 baselines.
Citi, a member of the United Nations-backed Net-Zero Banking Alliance, still has three 2025 goals that have yet to be achieved. The bank’s operations have reduced energy consumption 35%, compared to a 40% goal; it got 9% of its water from reclaimed or reused sources in 2023, compared to a 25% goal; and diverted 30% of its waste from landfills, with a goal to divert half of its waste from landfills by 2025.
The bank also surpassed its $1 billion financing goal for its Action for Racial Equity program, according to the report. The goal was set in 2020, after the unrest following George Floyd’s murder, and the program was officially allowed to proceed unabated after the Department of Labor issued an advisory opinion in October.
Citi also agreed to disclose its clean energy financing ratios last month, prompted by a shareholder resolution filed by the New York City Comptroller’s Office, the New York City Employees’ Retirement System and Teachers’ Retirement System in January. The bank announced it would disclose its financing ratio of low-carbon energy supply to fossil fuel energy supply shortly after JPMorgan Chase unveiled its decision to do so.
The bank’s latest ESG report comes a month after its 2023 Task Force for Climate-related Financial Disclosures report, which found that 71% of the bank’s energy sector clients lack a substantive transition plan that accounts for all scoped emissions, or have one in place with an “unclear ability to execute on it.”
