Six banks will define common standards of action for steel sector decarbonisation through a collective climate-aligned finance agreement.
Citi, Goldman Sachs, ING, Societe Generale, Standard Chartered, and UniCredit are working together to develop a climate-aligned finance agreement to support steel sector decarbonisation.
Under a business-as-usual scenario, steel sector emissions are expected to grow to 20 percent of the world’s 1.5°C carbon budget by 2050. Each of the six banks is a major lender to the steel sector.
The banks have formed the Steel Climate-Aligned Finance Working Group, facilitated by RMI’s Center for Climate-Aligned Finance, with the goal of crafting an industry-backed agreement before the COP26 in November.
The working group will forge the scope, emissions pathways, methodologies, and governance structure of the collective climate-aligned finance agreement in collaboration with existing decarbonisation initiatives.
The RMI Center for Climate-Aligned Finance will facilitate engagement between the working group and the Net-Zero Steel Initiative (NZSI) – comprising some of the world’s largest steel producers and suppliers – to ensure the objectives of steelmakers and their lenders are aligned.
The climate-aligned finance agreement will create a level playing field for measuring progress against climate targets in the steel sector, as well as a platform for proactively supporting the decarbonisation of the sector.
The agreement will be modelled after the Poseidon Principles, the first sector-specific climate-aligned finance agreement for maritime shipping. The Principles were launched in July 2019 with 11 banking signatories.
With the goal of setting global best practices on climate for financial institutions that fund steelmaking, the working group plans to enrol other banks in the final climate-aligned finance agreement to be released at COP26.