Last week, Citigroup CEO Michael Corbat announced a 10-year plan to invest, lend, or otherwise facilitate the flow of capital toward “activities that reduce the impacts of climate change and create environmental solutions that benefit people and communities.” The plan allocates up to US $100 billion in financing for the green economy. The announcement comes shortly after the investment bank–the US’s third largest financial institution–achieved its goal of investing $50 billion into the green economy between 2007 and 2016 three years ahead of time. “Today we commit Citi to a new more ambitious goal—the same timeframe, but a broader scope and double the amount,” Corbat told a gathering of employees, investors and stakeholders when the new targets were announced. The money will be directed towards environmental initiatives in three key categories: financing renewable-energy and sustainability projects that help combat climate change; liaising with Citigroup clients to address environmental and social risk in business; and reducing the environmental impact of the company’s own facilities and supply chain.
Citigroup’s announcement is part of a larger trend of green investment moving into the mainstream, proving that sustainability and economic growth can go hand in hand. A Bloomberg report released earlier this year showed that global clean energy financing was up 16 per cent last year, accounting for $310 billion in 2014 alone. While banks in countries like the US, Germany and China set the pace for green investment, Canadian institutions have also started making sustainability a selling point to customers. With the help of private sector issuers like TD Bank, as well as the Ontario provincial government, Canada’s green bonds assets went from zero to $1.4 billion in 2014. And in December, two Canadian pension funds entered an agreement with Spain’s Banco Santander to own jointly a clean energy portfolio valued at over USD $2 billion. While these efforts are dwarfed by Citigroup’s $100 billion announcement, they do signal a trend on both sides of the border that sees investment banks offering clients more diverse and sustainable investment products. Exploring the development of green financial tools is a main recommendation of PICS’ recent white paper on the economic impacts of divestment from fossil fuel campaigns. The paper generated a good deal of publicity, and PICS continues to publicize the conversation on a dedicated webpage.
Researchers calculate that Canada’s northern latitudes require astonishing number of batteries or solar panels