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Policy & Politics

6 Global Banks Come Together to Decarbonize Steel

Originally published on

Leading lenders to the global steel industry — Citi, Goldman Sachs, ING, Societe Generale, Standard Chartered, and UniCredit — are working together to develop a climate-aligned finance agreement to support steel sector decarbonization.

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. A climate-aligned finance agreement establishes a framework for assessing and disclosing the degree to which the greenhouse gas emissions associated with a financial institution’s portfolio are in line with 1.5°C climate targets.

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). The agreement would create a level playing field for measuring progress against climate targets in the steel sector, as well as a platform for proactively supporting the decarbonization of the sector.

“ING aims to be a positive force in the fight against climate change. With our Terra approach we’re steering our lending book in line with the goals of the Paris Agreement. Steel is essential for modern life. The challenge for the steel sector to decarbonize is significant with alternative technology paths unproven and not yet commercialized. By leading this working group we signal our commitment to help define what the energy transition means for the sector and our clients. It will also help us to define our expectations for change and define an ambitious yet realistic trajectory to meet those ambitions.” —Arnout van Heukelem, global head metals, mining & fertilizers, ING Bank

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 the steel 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, steel sector 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, led by ING and co-led by Societe Generale, comprises senior representatives from each bank’s metals and mining teams. 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. With the goal of setting global best practices on climate for financial institutions that fund steelmaking, the Working Group plans to enroll other banks in the final climate-aligned finance agreement to be released at COP26.

The RMI Center for Climate-Aligned Finance (the Center) will facilitate engagement between the Working Group and the Net-Zero Steel Initiative (NZSI) to ensure the objectives of steelmakers and their lenders are aligned. “The formation of the steel finance working group is just the first step on the journey to a climate-aligned steel sector,” said James Mitchell, director at the Center. “Decarbonizing high-emitting sectors is challenging, but collective action efforts such as the Poseidon Principles show how the financial sector can meet its climate goals through serving its industrial clients in hard-to-abate sectors, such as steel. Now the hard work really starts.”

The agreement will be modeled 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 representing $100 billion — or 20% — of senior shipping debt and have since more than doubled to 24 signatories representing $175 billion as of March 2021. Developed through unprecedented multi-stakeholder collaboration between major shipping lenders, industrial corporations and experts, the Principles set the stage for a similar framework in other sectors, such as steel.

This effort is part of the Mission Possible Partnership (MPP), an alliance of leading nonprofit organizations and approximately 400+ businesses working to accelerate industrial decarbonization across seven sectors, including steel. Within MPP, the Working Group is part of NZSI, comprising some of the world’s largest steel producers and suppliers. By providing this crucial platform, the NZSI unites policy, customer demand, industry objectives, and financial commitments behind the sector’s net-zero transition.

“As a founding member of the UNEP-FI Net Zero Banking Alliance, Societe Generale is committed to work with its clients and partners across sectors to achieve net-zero no later than 2050. By co-leading the Steel Climate-Aligned Finance Working Group, our ambition is to help define a pathway consistent with the development of low-carbon industrial solutions in the steel sector. Steel is essential and Societe Generale is already supporting steel producers implementing breakthrough hydrogen technologies to produce low carbon steel demonstrating the climate adaptation potential of this industry. With the appropriate framework, all banks will be able to support their clients as they innovate and invest for a low carbon future. After the Poseidon Principles for maritime shipping, Societe Generale is proud to co-lead to the creation of a climate-aligned finance agreement for another hard-to-abate industry.”

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Since 1982, RMI (previously Rocky Mountain Institute) has advanced market-based solutions that transform global energy use to create a clean, prosperous and secure future. An independent, nonprofit think-and-do tank, RMI engages with businesses, communities and institutions to accelerate and scale replicable solutions that drive the cost-effective shift from fossil fuels to efficiency and renewables. Please visit for more information.


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