Leading banks partner with RMI to combat aluminium decarbonisation

On June 21, Rocky Mountain Institute (RMI) announced that three of the world's largest lenders to the aluminium industry, Citi, ING, and Societe Generale, will collaborate with the centre for climate-aligned finance of RMI to support the decarbonisation of the industry. The new Aluminum Climate-Aligned Finance Working Group, of which Aluminium Stewardship Initiative (ASI) is a member, intends to establish uniformity and openness in reporting and monitoring progress toward climate commitments.

The purpose of the Aluminum Climate-Aligned Finance Working Group is to develop collective climate-aligned finance (CAF) framework that specifies how lenders might assist in the decarbonisation of the aluminium sector, which is responsible for 2% of all yearly greenhouse gas emissions.

“In order to achieve net-zero emissions by 2050, it is essential to keep up our collective efforts to address climate risks and identify common goals and measurement for hard-to-abate sectors. Building on our efforts with RMI to create frameworks for the steel and aviation sectors, Citi looks forward to assisting RMI with creating tools for decarbonizing the aluminum sector and supporting our clients as they seek to meet their climate targets,” said William Husband, Global Head of Metals and Mining, Corporate Banking at Citi.

“The development and uptake of harmonized methods to account for and disclose emissions, to develop targets, and to measure performance is critical to the success of the Aluminium Stewardship Initiative’s sustainability certification scheme. We are therefore delighted to partner with RMI’s Center for Climate-Aligned Finance, to bring together actors from along the aluminium value chain, from civil society, and from the financial sector to build the necessary tools for climate action. We look forward to the ultimate deployment of the developed tools by the aluminium sector through ASI’s standards and beyond,” said Dr Fiona Solomon, CEO of Aluminium Stewardship Initiative.

To guarantee that the goals of companies in the aluminium industry and their financial partners are linked and actionable, the Center for Climate-Aligned Financing will enable communication between the working group, top aluminium producers, and partner groups focusing on sustainable finance.

The working group will be guided by RMI's Center for Climate-Aligned Finance and will include top metals and mining officials from each participating financial institution. In collaboration with prominent climate and aluminium groups, including the International Aluminium Institute and the Aluminium Stewardship Initiative, the Working Group seeks to develop a CAF framework.

The framework would bring uniformity and openness in reporting and tracking environmental progress. Financial institutions who adopt the final CAF framework will be able to evaluate the emissions of their portfolios of aluminium loans and collaborate with their customers to disclose their emissions, finance low-carbon solutions, and encourage investments in emerging technologies.

In coordination with current decarbonisation activities, the working group will design the measuring technique, emissions baseline, data and reporting system, and governance structure for the CAF framework. Early in 2023, the Working Group will invite more financial institutions to adopt the CAF framework and contribute to establishing international best practices for financing climate-friendly aluminium production.

Participating financial institutions will pledge to assess and disclose the extent to which the emissions associated with their aluminium portfolios are in line with 1.5°C climate targets by adhering to the CAF framework and abiding by the rules established by the UN-convened Net-Zero Banking Alliance.

Banks have previously taken the initiative in creating decarbonisation frameworks for other challenging industries like steel and aviation, working with RMI. For international banks, assisting aluminium's transition to net zero is yet another once-in-a-generation opportunity.