RMI and Banking Giants Introduce Center for Climate-Aligned Finance

by | Jul 16, 2020

RMI and Banking Giants Introduce Center for Climate-Aligned Finance

(Photo Credit: Corey Collins, Unsplash)

Rocky Mountain Institute (RMI) established a new Center for Climate-Aligned Finance with support from financial institutions Wells Fargo, Goldman Sachs, Bank of America, and JPMorgan Chase. The goal for the center is to help the financial sector form partnerships that facilitate the transition to net-zero emissions by 2050.

RMI explained that the nonprofit will independently administer the center, and collaborate with the financial sector to develop integrated solutions and frameworks with industry clients from carbon-intensive sectors to drive decarbonization. The nonprofit added that the center would develop metrics, tools, and ways to track progress toward net-zero.

“Climate-aligned finance is the process of bringing a financial institution’s portfolio of lending and investment activities into alignment with 1.5°C-consistent emissions pathway,” RMI said. “Evolving from a patchwork of efforts to improve the sustainability performance of major financial institutions, climate alignment offers an integrated approach and comprehensive decision framework that encompasses scaling up green investment, scaling back fossil fuel investment, and measuring and disclosing progress.”

The center’s work will shape climate alignment initiatives for high-emitting industries, and be based in part on the Poseidon Principles, which the nonprofit helped create for the shipping center. Launched in New York City in June 2019, the Poseidon Principles establish a framework to quantitatively assess and disclose whether financial institutions’ lending portfolios are in line with climate goals set by the International Maritime Organization (IMO), according to RMI.

They were developed by global shipping banks Citi, Société Générale, and DNB in collaboration with Mærsk, Cargill, Euronav, Gram Car Carriers, Lloyd’s Register, and Watson Farley & Williams.

The Center for Climate-Aligned Finance aims to engage a broad group of stakeholders that includes corporate leaders, financial institutions, and civil society partners. Additional financial institutions such as Vision Ridge Partners and Amalgamated Bank are working with the center. Ceres, the Partnership for Carbon Accounting Financials, the United Nations Environment Program Finance Initiative, 2° Investing Initiative (2DII), Mission Possible Platform, and the Energy Transitions Commission are also part of the partnership.

“When the history of the energy transition is written, the financial sector could be seen as one of the most important drivers of transformative change — but only if we work quickly and boldly in the coming years to resolve the practical barriers to climate-aligned finance,” said RMI CEO Jules Kortenhorst.

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