New York, June 21, 2022 – Three major lenders in the aluminum sector – Citi, ING and Societe Generale – announced today that they will partner with RMI’s Center for Climate Finance to help decarbonise the aluminum sector by forming a working group on climate finance. The working group will create a collective climate finance framework (CAF) that defines how lenders can support the decarbonisation of the aluminum sector, which accounts for 2 percent of all global warming emissions, and measure progress toward that goal. By signing the CAF framework, participating financial institutions will commit to assessing and disclosing the extent to which emissions are associated with their aluminum portfolios in line with the 1.5 ° C climate targets – in line with guidelines set by the Net-Zero Banking Association. convened by the UN.
The working group consists of senior metal and mining managers from each participating financial institution and will be facilitated by the RMI’s Center for Climate Finance. The working group aims to create a CAF framework in consultation with leading aluminum and climate organizations, such as the International Aluminum Institute and the Aluminum Management Initiative. The framework will create consistency and transparency in informing and measuring progress against climate goals. Financial institutions that adopt the final CAF framework will be able to estimate the emissions of their aluminum credit books and work with their clients to report their emissions, fund lower carbon solutions and support investment in new technologies.
Aluminum is an essential building block of modern life, it is used in everything from space travel to mobile phones, but its production is very intensive. The production of tons of aluminum produces more than six times more CO22 emissions from the production of tons of steel, for example, and require huge amounts of electricity. If the aluminum sector were the state, it would be the sixth largest consumer of electricity in the world. Aluminum is key in industrial processes, and the transition of the sector to net zero emissions will be key to achieving global climate goals.
Working with RMI, banks have already taken the lead in developing a framework for decarbonising other sectors that are difficult to reduce, such as steel and aviation. Support for the aluminum path to net zero is another opportunity that appears once in a generation for global banks.
Citi, ING and Societe Generale – the three leading working groups – are hiring more financial institutions to join the Working Group. In addition, all institutions interested in keeping up to date with the process and providing feedback during development are encouraged to join the Review Group. In order to join the Working Group or the Audit Group, institutions are invited to submit a statement of interest.
The working group will establish a measurement methodology, an emission scale, a data and reporting framework, and a governance structure for the CAF framework in cooperation with existing decarbonisation initiatives. The working group will invite other financial institutions to adopt the CAF framework in early 2023 and help set global best practices on climate finance for aluminum.
The Climate Finance Center will facilitate engagement between the Working Group, leading aluminum producers and partner organizations focused on sustainable financing to ensure that the goals of aluminum companies and their financial partners are aligned and operational.
The aluminum CAF framework will build on the experience gained from the initial framework of the Poseidon Maritime Principles and the CAF steel agreement to be launched soon. Poseidon’s principles were launched in 2019 with 11 bank signatories. Today, Poseidon has 28 signatories that cover more than 50 percent of global ship funding. The aluminum CAF frame is intended to be designed for similarly rapid adoption by aluminum financiers around the world.
Quotes from members of the Working Group and consultative partners:
William Husband, Global Director of Metals and Mining, Corporate Banking in Citi: “In order to achieve net zero emissions by 2050, it is essential that we continue our joint efforts to address climate risks and identify common targets and measures for sectors that are difficult to reduce. Building on our efforts with RMI to create a framework for the steel and aerospace sectors, Citi looks forward to helping RMI create tools to decarbonise the aluminum sector and support our customers as they strive to meet their climate goals. ”
Arnout van Heukelem, Global Director of Metals, Mining and Fertilizers, ING Bank: “ING aims to be a banking leader in building a sustainable future. With our Terra approach, we direct our lending book in line with net-zero goals. Aluminum is a key commodity for the energy transition and is widely used in modern society. The decarbonisation path poses significant challenges to the aluminum sector, which will require combining exciting new technologies with existing processes. Through our participation in this working group, we want to determine what the energy transition means for the sector and our customers. It will also help us determine what an ambitious but realistic path for this transition looks like. ”
Lenaig Trenaux, Global Director of Metals, Mining and Industry at Societe Generale: “The goals of the ESG and sustainability are embedded in the corporate purpose of Societe Generale. Following previous partnerships with the RMI Center for Climate Finance, Societe Generale is pleased to re-enter into a partnership with RMI and is one of the founders of the Working Group on Climate Finance. Our ambition is to help develop a framework for measuring and detecting emissions related to aluminum financing, and to support the goals of decarbonisation of stakeholders involved in this sector. We are proud to be part of the driving force behind shaping the future of the decarbonized aluminum industry. ”
Pernelle Nunez, Deputy Secretary-General and Director of Sustainability, International Aluminum Institute (IAI): “IAI has more than 50 years of experience in industrial data modeling and analysis, and we are committed to ensuring that common datasets and approaches are available for sector-specific climate change initiatives wherever possible. Given the important role that the financial community will play in expanding the technologies that are critical to the decarbonisation sector’s efforts, we are pleased to be working with RMI’s Climate Finance Finance Center as they develop a framework for the aluminum sector. “
Dr Fiona Solomon, Executive Director, Aluminum Stewardship Initiative: “The development and adoption of harmonized methods for the calculation and detection of emissions, for the development of targets and the measurement of performance is of key importance for the success of the sustainability certification scheme of the Aluminum Management Initiative. We are therefore delighted to partner with RMI’s Center for Climate Finance to bring together actors from the aluminum value chain, civil society and the financial sector to build the necessary tools for climate action. We look forward to the final implementation of the tools developed in the aluminum sector through ASI standards and beyond. ”
© 2021 Rocky Mountain Institute. Published with permission. Originally published on RMI Outlet.
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