Citi creates investment-banking unit in sustainability drive
Led by new chief executive officer Jane Fraser, who took over on March 1 vowing to achieve net-zero greenhouse gas emissions in financing activities by 2050, New York-based Citigroup Inc. is combining three of its investment-banking groups as part of this sustainability push.
In a memo sent to staff from Tyler Dickson and Manolo Falco – global heads of Citigroup’s banking, capital markets and advisory unit – Steve Trauber and Sandip Sen will oversee a new natural resources and clean energy transition group.
Trauber will mainly focus on investment banking, while Sen will oversee corporate-banking relationships.
“Energy transition, structural changes underway in global energy systems to drive toward low and zero carbon solutions, will unfold and accelerate over the next decade,” the memo said. “Our chemicals, energy, and power clients, ranging from multinationals to fast growing alternative and clean-energy companies, are at the heart of energy transition, helping to drive new products, services and technologies.”
Banks are somewhat exposed when it comes to achieving sustainability targets as they need to consider the activities of all of the businesses they finance. Last year, Citigroup was the third largest provider of financing to fossil fuel companies. As a result, the bank has identified sectors like energy as requiring extra attention as they aim to reduce emissions by 2030.
Citigroup is already working hard to address climate change and carbon emissions – last year it raised US$1.5 billion with its first dollar-denominated green bond. It also created a new unit known as the sustainability and corporate-transitions group led by Keith Tuffley and Bridget Fawcett.
Citi boss Fraser outlines agenda
Making a bold commitment to net zero greenhouse gas emissions when she was appointed CEO on March 1, Fraser pledged:
- To publish Citi’s initial Net Zero by 2050 plan
- To include within the plan emissions reduction targets for carbon-intensive sectors that also have low-carbon transition opportunities, including interim emissions targets for 2030 for Citi’s Energy and Power portfolios
- To report on progress made “as we’ve done in our efforts to advance pay equity, racial equity and our previous sustainability goals”.
- To review, after an initial implementation period, the scope of the net zero plan to assess which additional sectors to include and how best to incorporate additional areas of the business in a way that achieves meaningful emissions reductions in the real economy as part of a just transition.
- To target net zero greenhouse gas emissions in Citi’s own operations by 2030.
Charting the rise of the chief sustainability officer
There has been a dramatic increase in the hiring of the chief sustainability officer (CSO) role among Fortune 500 companies, with demand for CSOs growing 228% in corporate America over the last decade, according to the latest report from CSO recruitment firm the Weinreb Group.
There were more first-time CSOs recruited by Fortune 500 companies in 2020 than the previous three years combined, with numbers of CSOs in corporate America soaring from just 29 in 2011 to 95 today, demonstrating the importance corporations are placing not just on reducing their environmental impacts, but also in supporting issues of social justice.
Businesses are increasingly under pressure to assume more responsible practices with customers, regulators and investors demanding increased transparency of business ESG performance.
And the past year in particular has been seen great upheaval, with increased new attention brought to “social justice, climate change, and an ever-widening political divide”, according to Ellen Weinreb, founder and CEO of the Weinreb Group, which has tracked the rising role of CSOs over the past decade.
CSO role is expanding and shifting
But it’s not just the number of CSOs that have changed, sustainability teams are getting bigger, with the average team size increasing from five professionals in 2011 to 15 today, according to the report.
This is in part due to the fact that the CSO role has expanded beyond simply ‘sustainability’ to incorporate social justice too. Sustainability isn’t exclusively about the environment anymore. The role has also come to incorporate social justice, especially with the rapid growth of, and increased attention on, environmental, social, and governance, or ESG.
And many roles recently have been renamed as such with Head of ESG or ESG Officer becoming increasingly prominent.
Women make up over half of CSO roles
What's also changed over the last decade is the percentage of women holding the title of Chief Sustainability Officer.
A decade ago, in 2011, the majority of CSO roles were held by men (72%), with just 10 of the 29 then CSO roles held by women. A decade on, in 2021, the percentage of women in CSO roles has almost doubled, now accounting for more than half (54%) of CSO positions.
However, according to the report ‘The Chief Sustainability Officer 10 Years Later’, despite the movement toward gender balance within the role and its expanded focus on social justice, in particular, in 2021 the CSO position remains overwhelmingly ‘white’.
Probably not surprising considering there are just three black CEOs at Fortune 500 firms.
How the chief sustainability officer role has grown
The first-ever named chief sustainability officer in a US publicly traded company was Linda Fisher for Dupont, who joined the chemical giant in 2004 as CSO, just at the time when innovative companies were looking at sustainability as a driver for business growth. Joining from the Environmental Protection Agency where she spent 13 years, Fisher was a corporate sustainability trailblazer, spending more than a decade as CSO here, and leading DuPont’s efforts to establish its first set of market-facing sustainability goals.
By 2006, a slew of firms had joined the CSO movement, including Mastercard, Nissan and Microsoft; and Kellogg’s became the first firm to replace a CSO with Dianne Holdorf taking over from Celeste Clarke. And by 2011, a decade ago, Coca-Cola, Verizon, AT&T and P&G had appointed their first CSOs.
In fact, it was in 2011 when Virginie Helias invented her idea of the perfect CSO job – to make sustainable consumption not only possible, but ‘irresistible’ – and pitched it P&G’s then CEO. A decade later, in 2021, and Helias is still in the job she first created.
The majority of CSOs have been internal hires, such as Peter Graf of SAP, who joined the software giant in 1996, and served as EVP for Marketing before being named CSO in 2009. The same is true at UPS, whose first-ever CSO, Scott Wicker, started at the package delivery giant 34 years before being named CSO in 2011. Increasingly, however, external hires are being made with organisations increasingly searching for more high-profile leading voices in the ESG forum.
In February 2021, JP Morgan hired former British high-profile Labour politician Chuka Umunna while just last month hotel chain Accor hired high-profile French politician Brune Poirson, who has previously championed the anti-waste law within the French government and was secretary of state for the environmental transition for three years.