Several top lenders to the steel sector — Citi, Goldman Sachs, ING, Societe Generale, Standard Chartered, and UniCredit — have come together to define common standards of action for steel sector decarbonization through a collective climate-aligned finance agreement.
The banks have formed the Steel Climate-Aligned Finance Working Group (the Working Group), facilitated by RMI’s Center for Climate-Aligned Finance, with the goal of crafting an industry-backed agreement before the United Nations Climate Change Conference in November 2021 (COP26).
Steel is the foundation of modern society: a material input to buildings, cars, railways, roads and bridges.
While low-carbon technologies exist across many industries, for this sector, which emits roughly 8% of global energy emissions and is heavily coal-dependent, commercially viable alternatives are still at an early stage for industrial-scale applications.
Under a business-as-usual scenario, this sector’s emissions could grow to 20% of the world’s 1.5°C carbon budget by 2050.
The sector’s carbon intensity raises expectations of and from financial institutions to support its decarbonization, but to date, financial institutions lack the common practical tools to effectively support their clients’ decarbonization efforts.
The Working Group will forge the scope, emissions pathways, methodologies, and governance structure of the collective climate-aligned finance agreement in collaboration with existing decarbonization initiatives.
The agreement will be modeled after the Poseidon Principles, the first sector-specific climate-aligned finance agreement for maritime shipping.
Reference- RMI Media Release, Clean Technica, Forbes, Center For Climate-Aligned Finance