Between June 10 and Sept 5, Citigroup helped arrange about US$4.2bil of bonds for clients. — Bloomberg
NEW YORK: Citigroup Inc is stepping up its dealmaking in the underwriting of bonds for fossil-fuel companies, a development that coincides with intense climate protests outside its Manhattan office.
Between June 10, when the protests started, and Sept 5, when climate activists wrapped up their campaign, Citigroup helped arrange about US$4.2bil of bonds for clients including Saudi Aramco and Abu Dhabi’s main oil producer, Adnoc, according to data compiled by Bloomberg.
In the same period last year, the bank arranged US$2.8bil. The last time Citigroup’s bond underwriting for oil and gas exceeded levels seen this summer was in 2020, the data showed.
As those bonds were being sold to investors, Citigroup’s Manhattan headquarters was the scene of what protesters called the biggest climate campaign to target a Wall Street firm.
Organisers estimate as many as 5,000 people participated, in all, with hundreds of protesters arrested outside Citigroup’s office and the apartment building of the bank’s chief executive officer, Jane Fraser. New York police didn’t respond to requests for comment to confirm the numbers.
Video footage showed some employees getting drawn into skirmishes with protesters, prompting Citigroup to ask staff to stay calm and not engage. Formal dialogue between the bank and the protesters has been limited.
Inside Citigroup, bankers were mostly able to do their work uninterrupted. The protests were viewed with little more than irritation, according to a person close to the situation who asked not to be identified discussing private conversations.
Another noted that Citigroup employees mostly just felt inconvenienced by the campaign. One Citigroup banker said protesters were judged to be ignorant of the facts.
One of the people also said there’s awareness within the bank that it needs to ensure it doesn’t suffer any reputational damage due to the attention its fossil-fuel business received as a result of the protests.
“We are just as committed to supporting our clients in an orderly transition to a low-carbon economy at the end of the summer as we were at the beginning,” said Ed Skyler, who oversees sustainability, real estate and public affairs at Citigroup.
As far as what the protests accomplished, “they made people late to meetings and wasted taxpayer dollars when the New York Police Department had more important things going on,” he said.
Inconvenient, disruptive
Shawn Patterson, a research analyst at the University of Pennsylvania who co-authored a report with Michael Mann on public responses to “disruptive climate change protests,” said his research found that people are more likely to say climate protests actually reduce their support for efforts to address climate change.
“That shouldn’t be surprising; they’re disruptive and people don’t like being disrupted,” Patterson said.
Still, such responses don’t take into account what the longer-term effects of these protests may be, he said.
“The greatest threat to public health is the world’s continued failure to address climate change,” Patterson said.
“Just as civil rights protesters were viewed unfavourably at the time, it’s possible we will look back on these disruptive climate protesters’ efforts and similarly view them as heroes.”
Activists behind the climate protests against Citigroup say one of the reasons they’re singling out the bank is because they think they’re more likely to make an impression on the lender than on peers like JPMorgan Chase & Co.
Citigroup has vowed to align its business with net-zero greenhouse gas emissions by 2050, a commitment Fraser made on her first day as CEO in early 2021.
With the US$4.2bil in fossil-fuel bonds that it underwrote between June 10 and Sept 5, Citigroup became the fourth-biggest arranger for such deals in the period after JPMorgan, Mizuho Financial Group Inc and Royal Bank of Canada.
Unrealistic, harmful
Bank executives have broadly argued that calls for immediate halts to fossil-fuel financing are unrealistic and potentially harmful to economic growth.
They say efforts to bring about the energy transition require huge funds and that working with fossil-fuel companies to push that change will be more effective than trying to starve them of capital.
They also say a lower-carbon world won’t ever happen without appropriate government policies and regulatory frameworks to support it.
For example, Morgan Stanley said earlier this month that there could be “unintended consequences” from withdrawing financing too quickly from high-carbon clients that plan to decarbonise.
Banks need “to balance climate considerations with real-time energy security needs,” the company said.
Citigroup’s Fraser said in March that the bank is “working side by side” with clients to help them achieve their climate goals, while also “remaining highly mindful of near-term energy needs and related economic impacts.”The bank said in a statement last Friday that it remained committed to helping support the growth of renewable energy and clean technology through its US$1 trillion sustainable-finance goal and its target for net-zero emissions by 2050.
So far this year, Citigroup has arranged US$16bil of green bonds, where proceeds are earmarked to fund clean energy or energy efficiency projects, Bloomberg data showed.
In the period since the end of 2015, when the Paris climate agreement was struck, Citigroup ranks as the sixth-largest provider of loans to oil, gas and coal clients, Bloomberg data show. Its fossil-fuel lending has receded in recent years and, so far in 2024, it’s moved down to 10th place.
When it comes to fossil-fuel bonds, Citigroup is the third most-active underwriter this year, after JPMorgan and Bank of America Corp, according to Bloomberg data.
But since the end of 2015, it stands out as the world’s second most active underwriter, after JPMorgan.
According to Alec Connon, one of the main organisers of the climate protests, he and his colleagues were under no illusion as to how much change they might bring about in three months. He says the goal was to draw attention to the issue and attract more supporters.
“Banks like Citi should know that, as the climate crisis grows worse, they can only expect larger and more disruptive protests next year and every year,” Connon said.
That is, of course, “unless they change track, stop financing fossil-fuel expansion and massively scale up their financing of renewable energy.” — Bloomberg
