A unique opportunity for change in the energy sector

A unique opportunity for change in the energy sector 5 and the balance sheets of local companies, including the NOC, are responsible for the financial commitments being made. NEOM city aims to have the first at scale fully renewable energy system, including green hydrogen. Indeed, many NOCs, both large and small, are taking positive steps towards a sustainable future by building structural resilience and increasing investments in energy efficiency and renewable projects. Even smaller NOCs and emerging economies are under pressure to balance monetizing national hydrocarbons whilst responding to societal pressures to invest in environmentally friendly projects. This is a challenge when large percentages of cash flows come from more traditional energy. Across all sectors of the industry, innovation and digitization will play a key role in capturing the benefits across the value chain and to support newly evolving business models. Yet in a post-COVID world, paradigms are being revisited to ensure new forms of energy are considered as part of the future energy mix. Again the challenge is how best to maintain current cash flows which may be the result of more traditional energy while responding to the need to invest in environmental strategies. The new banking landscape Banks have an important role to play collaborating with clients under the continued pressure to meet current financial targets whilst making critical investments which often have a longer financial benefit horizon. At Citi, we are seeing an increased use of traditional trade solutions such as bills of exchange as well as renewed interest in supply chain financing and portfolio-driven accounts receivable structures — solutions used in other industries to support the working capital cycle but not as readily seen in energy. These solutions can serve a dual purpose of supporting financial objectives while encouraging environmental initiatives. Citi’s solutions in green bonds, ESG linked loans, ESG deposit solutions, and green project funding can enable funding while supporting ESG goals. Our digital treasury and trade solutions are often a “triple crown” of enhancing business continuity, supporting plans for a reduced business footprint, and enabling companies to access the financing they need efficiently and with greater visibility and risk control. A Sustainable Supply Chain Finance Program Can provide financial incentives aligned with targets to help smaller and medium-sized suppliers make an impact. Complements traditional supplier finance programs which can run in parallel. With progress-based programs which incentivize performance, suppliers can participate no matter where they are on their ESG journey. “With the COVID-19 pandemic exposing vulnerabilities within balance sheets and supply chains, banks have an opportunity to play a vital role in supporting clients in transition.”