Almost half of the energy companies Citi lends to are lacking plans to cut greenhouse-gas emissions, the fourth-largest U.S. bank said in a recent climate report.
Banks are combing through their loan books for information on the risks businesses face from climate change and how they are preparing to shift to a lower-carbon economy, as regulators around the world increase their own demands for disclosure.
Citi ranked the energy companies in its loan portfolio from "low" to "strong" on the basis of their plans to reduce emissions across three categories, known as scopes.
In 42% of cases, it found "absence of a substantive transition plan," and a lack of disclosure of Scope 3 emissions, which are released into the atmosphere from companies' supply chains and customers. Those gases usually represent 70% of their carbon footprints, according to Deloitte consultants.
Citi found just 8% of its energy clients had a "comprehensive and ambitious transition plan targeting Scopes 1–3 emissions reductions and demonstrated ability to execute." The proportion rose to 37% when Scope 3 emissions were excluded.