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 decarbonizing steel through a collective climate-aligned finance agreement. The banks have formed the Steel Climate-Aligned Finance 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 steel sector climate targets, as well as a platform for supporting the sector's decarbonization.

Low-carbon technologies exist across many industries. However, for the steel sector, which emits roughly 7% of global energy emissions and is heavily coal-dependent, commercially viable alternatives are still at an early stage. The sector's carbon intensity raises expectations of and from financial institutions to support its decarbonization.

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 initiatives.

The agreement will be modeled after the Poseidon Principles, the first sector-specific climate-aligned finance agreement for maritime shipping. Developed through multi-stakeholder collaboration between major shipping lenders, industrial corporations and experts, the Principles set the stage for a similar framework in other sectors.

This effort is part of the Mission Possible Partnership (MPP), an alliance of leading nonprofit organizations and 400+ businesses working to accelerate industrial decarbonization across seven sectors, including steel. Within MPP, the Working Group is part of the Net-Zero Steel Initiative (NZSI), comprising some of the world's largest steel producers and suppliers. The RMI Center for Climate-Aligned Finance will facilitate engagement between the Working Group and NZSI to ensure the objectives of steelmakers and 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.