A group of banks including Citi, Goldman Sachs, ING, Societe Generale, Standard Chartered, and UniCredit announced the launch of the Steel Climate-Aligned Finance Working Group, aimed at helping decarbonize the steel sector.

Steelmaking is one of the biggest emitters of CO2 globally, with total greenhouse gas emissions (GHG) from the sector accounting for 7% – 9% of direct emissions from the global use of fossil fuels. Given steel’s heavy dependence on coal, it is also one of the most challenging sectors to decarbonize. While several initiatives have emerged recently to help address the impact of steel, most commercially viable alternatives are still at an early stage.

The new working group, led by ING and co-led by Societe Generale, aims to define common standards of action for decarbonizing steel, with the goal of crafting an industry-backed climate-aligned finance agreement before the United Nations Climate Change Conference in November 2021 (COP26). The agreement would set global best practices on climate for financial institutions that facilitate steelmaking, create a level playing field for measuring progress against steel sector climate targets, and a platform for supporting the sector’s decarbonization.

Arnout van Heukelem, global head of Metals, Mining and Fertilizers at ING, said:

“The challenge for the steel sector to decarbonise is significant, with alternative technology paths unproven and not yet commercialised. By leading this working group, we signal our commitment to help define what the energy transition means for the sector and our clients. It will also help us to define our expectations for change and define an ambitious yet realistic trajectory to meet those ambitions.”

The new working group will be facilitated by non-profit clean energy organization RMI’s Center for Climate-Aligned Finance. Founded in 2020, the Center aims 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.

James Mitchell, director at the Center, said:

“The formation of the steel finance working group is just the first step on the journey to a climate-aligned steel sector.”