Revolutionizing Aluminum Finance: Climate-Aligned Framework

COP28 Aluminium
COP28 AluminiumImage Source: Constellium

Synopsis:

During COP28, RMI and leading banks introduced the Sustainable Aluminum Finance Framework. This pioneering approach aids banks in aligning financing decisions with a 1.5°C climate scenario for aluminum production. The framework enables measurement and disclosure of lending portfolios' emissions, vital for steering the aluminum industry towards climate goals.

 

Article:

At the COP28 conference in Dubai, the Rocky Mountain Institute (RMI) unveiled the Sustainable Aluminum Finance Framework, a groundbreaking initiative aimed at transforming the aluminum sector's financial landscape. This framework marks a significant milestone in aligning financial decisions with climate objectives, specifically tailored for aluminum production.

The Sustainable Aluminum Finance Framework represents a collaborative effort between RMI and four leading banks—Citi, ING, Société Générale, and Standard Chartered—to enable banks to measure and transparently disclose the climate alignment of their lending portfolios linked to aluminum production.

Jon Creyts, CEO of RMI, emphasized the framework's importance at a Dubai event, calling it a pivotal tool in steering the aluminum industry towards meeting crucial climate goals. This initiative seeks to address the complexities of aluminum-related emissions, considering diverse intensities across the sector.

Aluminum production, contributing about 2% of global GHG emissions, faces a pivotal moment requiring immediate decarbonization efforts. As demand for aluminum rises in low-carbon transition applications, financing becomes critical for fostering cleaner production methods.

Louis Langlois of Alcoa Corp highlighted the importance of collaboration in driving decarbonization efforts within the aluminum industry, emphasizing RMI's leadership in bridging gaps between banks and producers for lower-carbon solutions.

The Sustainable Aluminum Finance Framework provides tailored benchmarks, allowing financial institutions to evaluate emissions from different aspects of aluminum production. It enables the separate assessment of electricity and other emissions and distinguishes between primary and recycled aluminum processes to support improved emissions intensity.

Estefania Marchan, RMI Director, praised the comprehensive tool for its harmonized approach, facilitating better engagement between finance and clients to create new economic opportunities.

Conclusion:

The Sustainable Aluminum Finance Framework stands as a pioneering initiative poised to reshape the aluminum industry's financial landscape. Its transparent, comprehensive approach provides a robust foundation for financial institutions to support and incentivize the sector's transition towards sustainable, low-carbon aluminum production.

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