Ventures

How V&E Helped a Global Financial Institution Share Insights on Climate Change

With V&E’s help, Citi released its first climate disclosure report, “Finance for a Climate-Resilient Future,” in November 2018.

How will different parts of the global economy fare in a warming world?

When Citi sought to answer this question, the global financial institution turned to V&E for help in sharing its findings with its investors and the public. With V&E’s help, Citi released its first climate disclosure report, “Finance for a Climate-Resilient Future,” in November 2018. The report is a review of the potential financial impacts of climate change-related risks on the utilities and oil and gas companies in Citi’s lending portfolio.

Maggie Peloso, a partner with the Environmental and Natural Resources group, led the V&E team charged with drafting the report; the team also included Sarah Fortt, a senior associate whose practice areas include corporate governance and disclosures, and Travis Hunt, an associate in the Environmental and Natural Resources group. The cross-practice team is part of a unique taskforce at V&E that focuses on assisting clients with environmental, social and governance strategies and disclosures, and pulls in environmental, labor and employment, cybersecurity and governance and compliance expertise.

The goal of Citi’s report, broadly speaking, was “to provide enhanced climate change disclosures and share results of their climate scenario analysis,” Peloso said. The report was based on Citi’s participation in the 2017 United Nations Environment Finance Initiative Banking Sector Pilot Project (UNEP FI). Through the project, Citi and 15 other financial institutions designed methodologies and models aligned with recommendations from the G-20 Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD). While Citi had assessed and reported on various climate change-related risks in the past, “Finance for a Climate-Resilient Future” is the first report Citi has released that includes climate scenario analysis, which tests the potential business impacts of future events using key assumptions regarding public policies, technologies, demand and various other macroeconomic factors.

Over the course of three months, the V&E team analyzed several data sets and conducted multiple interviews with members of Citi’s sustainability and environmental and social risk management teams as well as other Citi teams. Citi’s report comes at a time of increased interest in climate change from investors, regulators and stakeholder groups. “Citi, in choosing to participate in the UNEP FI pilot project and produce this report, recognized these developments and decided to be a leader in the space,” said Peloso.