Banks join forces to cut carbon in steel industry

Six banks, including Citi, Société Generale and Standard Chartered, have joined forces on an agreement aimed at improving carbon emissions disclosures related to lending to steel producers.

Along with ING, Credit Agricole and UniCredit, the banks have signed the Sustainable Steel Principles, the first agreement of its kind aimed at lenders to the steel industry.

The initiative has been facilitated by RMI, a non-profit organization focused on reforming the global energy sector.

The six signatories have committed to upholding five principles:

• Standardized assessment to provide a consistent measure of portfolio emissions
• Transparent reporting, pledging to disclose decarbonization progress annually
• Enactment of actions to obtain quality, credible data
• Engagement with borrowers on net-zero plans
• Leadership to advocate more widely for the decarbonization of the steel sector.

“Given the high level of greenhouse gas emissions emitted by the global steel sector, decarbonizing the steel production process is among the biggest challenges the industry faces today,” said William Husband, global head of metals and mining for Citi’s corporate banking arm.

“As a leading lender and arranger of capital to the steel sector, Citi is proud to join this working group to support our collective journeys to net zero and to facilitate the financing of our steel clients’ decarbonization efforts.”

Arnout van Heukelem, global head of metals, mining and fertilizers at ING, added: “The decarbonization of this industry will require very significant investments over the next thirty years. Banks will have a large role to play in providing part of the funding required to realize this. The SSP is a methodology that allows banks to not only disclose their climate alignment, but also to benchmark their clients and use this data to engage with them to further stimulate decarbonization.”

In a statement, the RMI described the principles as “the turn-key solution for measuring and disclosing the 1.5°C alignment of steel lending portfolios” — a reference to the 2015 Paris Agreement on climate change, which set the aim of limiting global warming to below 1.5°C above pre-industrial levels.