In a study on climate change that was opened in a new tab on Thursday, the fourth-largest U.S. bank stated that nearly half of the energy companies to which it extends loans have no plans to reduce greenhouse gas emissions.

As global regulators step up their own expectations for disclosure, banks are sifting through their loan books to find information about the dangers that businesses face from climate change and how they are getting ready to move to a lower-carbon economy.

Citi based its loan portfolio ranking of energy businesses from “low” to “strong” according to their intentions to cut emissions in three distinct categories, or scopes.

It discovered that in 42 percent of the cases, there was “absence of a substantive transition plan” and no notification of Scope 3 emissions—emissions that businesses’ consumers and supply chains emit into the atmosphere—to the public. Consultants from Deloitte estimate that these gases typically account for 70% of their carbon footprints.

Out of its energy clients, Citi discovered that just 8% had a “comprehensive and ambitious transition plan targeting Scopes 1-3 emissions reductions and demonstrated ability to execute.” After removing emissions from Scope 3, the percentage increased to 37%.

Beginning last year, the analysis is predicated on 2021 data. Valerie Smith, chief sustainability officer, stated that she anticipated better scheduling for data gathering and analysis.

“We are still in building mode. We understand the importance of moving forward on climate. We also understand the energy transition is a monumental effort, it is not happening overnight,” Smith said.

Similar to numerous other major banks and corporations, Citi has established a “net zero” goal, meaning that by 2050, no more greenhouse gas emissions would result from the businesses it finances than what can be absorbed by technology or natural systems like forests.

(Adapted from ThePrint.in)

Categories: Economy & Finance, Strategy, Sustainability