Citi revealed in a climate report released on Thursday that nearly half of the energy companies it lends to do not have plans in place to reduce greenhouse gas emissions.
Citi categorised the energy companies in its loan portfolio as ranging from “low” to “strong” based on their emissions reduction plans across three categories, referred to as scopes.
In 42% of the cases, it identified an “absence of a substantive transition plan” and insufficient disclosure of Scope 3 emissions, which emanate from companies’ supply chains and customers.
According to Deloitte consultants, these emissions typically constitute 70% of companies’ carbon footprints.
“Access to energy is crucial and it is important to minimize global disruption while moving toward clean energy production and distribution. At the same time, failure to limit global average temperature rise to 1.5OC will mean increasing physical risks and rising costs of adaptation,” said the bank in the report.
According to the bank, only 8% of its energy clients had a “comprehensive and ambitious transition plan aimed at reducing Scopes 1-3 emissions and showed the capability to implement it.” However, when excluding Scope 3 emissions, this proportion increased to 37%.
