Global financial services heavyweight Citi Group has announced a $100 billion commitment to financing and supporting projects around the world that will reduce the impacts of climate change and create sustainable solutions including renewable energy, energy efficiency and sustainable transport projects.
The funds will be deployed in the form of loans and investment, and also in support activities such as working with local and state governments to identify resource efficiency opportunities and develop the business case and financing model. There will also be direct support given to facilitating infrastructure projects such as improving access to clean water, better waste management, and support for green, affordable housing for people in low- and moderate-income communities.
Some of these actions will be delivered as part of the Citi for Cities program, which has been developed in partnership with the C40 Sustainable Infrastructure Finance Network and the WRI Ross Centre for Sustainable Cities.
Not a charity act
In comments to stakeholders when the announcement was made, Citi chief executive Michael Corbat said the initiatives and commitments were not a charitable exercise.
“These efforts do not constitute philanthropy, nor do they represent costs. In fact, they reduce costs – and also increase revenues, enhance client relationships, and help manage risk. In other words, these efforts are integral to Citi’s business strategy,” he said.
“For more than 200 years, Citi’s mission has been to enable progress by facilitating economic growth and financing transformative projects. The core mission hasn’t changed, but the way we approach it has. Incorporating the principles of sustainability into everything we do improves our own operations, enhances our clients’ work, and contributes to a better world.”
Sustainability not-for-profit Ceres had input to the company’s new commitment, and convened the other stakeholders that contributed to its development.
“Climate change is expected to impact virtually every sector of the economy,” Mindy Lubber, president of Ceres said.
“The financial services industry has a big role to play in scaling up global clean energy investments, and we applaud Citi’s leadership as the company continues to innovate and expand its efforts.”
Internal actions
Looking to its own footprint, Citi has also established new environmental goals for 2020, including 35 per cent reduction in greenhouse gas, 30 per cent reductions in energy and water use and 60 per cent reduction in waste, all against a 2005 baseline.
The initiative also includes a longer-term 2050 GHG emissions reduction goal of 80 per cent, created using a climate science-based methodology.
The bank is also targeting LEED certification for 33 per cent of its real estate portfolio and aiming for LEED platinum certification for the refurbishment of its soon-to-be global headquarters on Greenwich Street in New York City.
It has a track record for reaching goals ahead of proposed deadlines, with 2014 sustainability reporting showing it met its 2015 goals of 25 per cent GHG emissions reduction and 41 per cent reduction of waste to landfill two years early, in 2013. The company is also on track to meet its 2015 goals of reducing water usage by 20 per cent, have its global real estate portfolio improve energy efficiency by 20 per cent and achieve 15 per cent LEED certification.
It is also exploring innovative financing models for its own projects that can be applied more broadly. An energy efficiency measure that is cutting energy use at its London data centre by 10 per cent was funded from outside the firm via a financing structure that enables the cost to repaid through the savings on energy costs at no upfront cost to Citi.
“Citi has demonstrated its deep commitment to not only taking environmental consequences into account, but also finding innovative ways to finance projects that lead to sustainable growth,” Mr Corbat, said.
To date, the bank has financed some of the world’s largest renewable energy projects, including the Solar Star project in Southern California, which was financed under a renewable energy project finance bond offering. The project is expected to be online at the end of this year, generating 579 megawatts of solar power – enough electricity for more than 250,000 homes – while displacing 570,000 metric tonnes of CO2 annually and generating $500 million in regional economic activity.
In 2014 it also financed two national platforms in the US that provide loans for energy efficiency improvements, the Warehouse for Energy Efficiency Loans and Kilowatt Financial. It has been working with a number of state and local governments, the US Federal Department of Energy and a number of not-for-profit organisations to facilitate the adoption of an approach that will open the door to institutional investors to profitably engage with the platforms. To date, both have provided services for more than 6700 households.