A group of six leading global financial institutions, including Bank of America, BNP Paribas, Citi, Crédit Agricole CIB, Societe Generale and Standard Chartered, announced today a new partnership with RMI’s Center for Climate-Aligned Finance, aimed at helping to decarbonize the aviation sector through the creation of a new Aviation Climate-Aligned Finance Working Group.
The aviation industry has come under scrutiny as a significant source of greenhouse gas (GHG) emissions, responsible for 2-3% of global emissions, with that figure potentially rising dramatically over the coming decades if no action is taken. Addressing the climate impact of the sector will require significant investments over the next several years, with ongoing initiatives including efforts to improve aircraft efficiency, develop sustainable aviation fuels, or create aircraft utilizing low or zero carbon propulsion systems.
Munawar Z. Noorani, Global Co-Head of Aviation at Citi, said:
“Despite the numerous challenges facing the global economy, we must keep up the strong positive momentum in addressing climate risks, especially in hard-to-abate sectors such as aviation.”
The new working group aims to create a climate-aligned finance (CAF) framework to define common goals for action to decarbonize the aviation sector. The framework, targeted for launch by the end of this year, is aimed at creating consistency and transparency in reporting, and establishing a level playing field for measuring progress against climate targets, enabling financial institutions to assess the emissions of their aviation loan books, work with clients to report emissions, and fund low-carbon solutions and new technology investments.
José Abramovici, Global Head of Asset Finance Group at Crédit Agricole CIB, said:
“We are very pleased to be a founding member of the Aviation Climate-Aligned Finance Working Group with RMI and other leading aviation banks. Our intention is to propose a robust and effective framework for the benefit of all stakeholders in aviation finance including banks, investors, airlines and lessors. We firmly believe that decarbonization is key to ensure the long-term future of the aviation industry.”
The working group, comprised of senior aviation-focused team members from each institution, will develop measurement methodologies, emissions benchmarks, data pathways, reporting and governance structure of the framework, helping to set global best practices on climate for aviation finance, and inviting other financial institutions to adopt the framework.
Bertrand Dehouck, Head of Transportation Capital Markets at BNP Paribas, said:
“We are conscious that aviation is a sector for which greenhouse gas emission will be difficult to abate. We are keen on working with RMI and our Aviation Climate-Aligned Finance Working Group partners towards establishing a solid framework to measure the carbon intensity of our aviation finance business and to set climate alignment targets. Our aim is to help foster a framework for our Net-Zero Banking Alliance commitment in view of providing support to our clients towards their own transition.”
RMI founded the Center for Climate-Aligned Finance in July 2020, aiming to enable financial institutions, corporations, and experts overcome practical obstacles to climate alignment. The Center works across industries to shape sectoral climate alignment initiatives for high-emitting industries and contributes to the development of global solutions, practices, and frameworks, aligning financial decision-making with the decarbonization of the real economy. The new aviation initiative follows the launch of a working group aimed at helping to decarbonize the steel sector, and RMI’s work in developing the Poseidon Principles for the shipping sector.
James Mitchell, director at the Center for Climate-Aligned Finance, said:
“Our work across shipping, steel and now aviation shows that collaboration is key to meeting climate commitments and to decarbonizing the hard-to-abate sectors. We commend the Working Group banks for taking this important step toward creating a global platform for accelerating the decarbonization of the aviation sector. The hard work begins now.”