Citi CEO says banks must walk if clients won't reduce emissions
Citigroup Chief Executive Michael Corbat said banks should start walking away from clients who don't acknowledge the need to reduce their carbon emissions — even as he pledged support for the fossil-fuel industry.
Citigroup, one of the biggest lenders to energy companies, said the financial industry should be talking with clients about lowering emissions. He also urged competitors to identify and disclose ways their businesses potentially impact the environment.
"We must be willing to have frank conversations with our clients about what they need to do to reduce their emissions — and if we aren't aligned on the need to make this transition, then we must have the courage to walk away," Corbat said in an editorial published by CNN.
At the same time, Corbat acknowledged that his bank has heard repeated calls to divest entirely from the fossil-fuel industry, a move he said "would mean knocking the legs out from under the global economy since we remain so dependent on oil and gas." Instead, he said his bank will work with the industry to reduce its emissions.
"While we recognize that the fossil-fuel industry must drastically reduce its carbon footprint over the coming decade, we believe in working with them, not against them," Corbat said.
Citigroup last month said it will measure and disclose emissions tied to its massive lending portfolio and is working to finance $250 billion of sustainable activities by 2025 after reaching an earlier goal four years ahead of schedule. Citigroup also said it is on track to power its own facilities using only renewable electricity by the end of the year.
The bank has helped arrange about $167 billion of bonds and loans for energy companies, excluding solar, wind and other renewable producers, since the Paris climate accord was signed in late 2015, according to data compiled by Bloomberg. Only JPMorgan Chase and Wells Fargo have helped provide more financing for corporate emitters.
Citigroup has already vowed to stop providing financial services to thermal coal-mining companies over the next 10 years, and has made a commitment to reject financing for oil and gas exploration and production in the Arctic.