Bank giant takes tough environment stand

NEW YORK - Citigroup, the world’s largest financial institution, announced Thursday that it is adopting a corporate policy to carefully evaluate requests for project financing that could adversely affect the environment.

It also bans funding for illegal logging operations and commits Citigroup “to invest in sustainable forestry and renewable energy.”

The initiatives come after four years of anti-Citi demonstrations by the Rainforest Action Network, a group whose latest campaign targets Ford Motor for lobbying against higher fuel-efficiency standards for vehicles.

Activists applaud initiative
Ilyse Hogue, global finance campaign director for the San Francisco-based environmental group, said Citi is the first American bank to adopt such a comprehensive policy.

“We think this is the most significant environmental commitment to date in the financial services sector ... and perhaps in the corporate sector, because of the potential ripple effects,” Hogue said.

She spoke in a joint announcement with Pam Flaherty, head of global community relations and environmental affairs for Citigroup.

Flaherty said the new initiative builds on voluntary guidelines that 18 global financial institutions have signed since last June. The principles require the banks to adopt procedures to evaluate the social and environmental impacts of infrastructure projects that they finance.

“What we’ve done is moved beyond that, building on it and making it more comprehensive,” Flaherty said.

Renewable energy incentives
The bank said the new policy’s main points are:

• Putting in place additional screening of financing requests for projects Citigroup determines could adversely impact a critical natural habitat. Included will be a ban on lending for commercial logging in primary, tropical forests.
• Refusing loans to companies engaged in illegal logging.
• Developing a program to invest in sustainable forestry and renewable energy, including financing for solar panels, residential wind turbines and fuel cells.
• Reporting “greenhouse” emissions — gasses linked to global warming — from power projects in its portfolio.

Flaherty said the policy had been discussed companywide — and with clients — to ensure cooperation. Citigroup has operations in 100 countries.

The Rainforest Action Network described Citigroup as "the first multinational bank to prohibit investment in any extractive industry (e.g. oil and gas, mining, logging) in primary tropical forest and place severe restrictions on destructive investment in all endangered ecosystems worldwide."

Of note, it added, is "the finance industry’s first illegal logging policy, requiring documentation of legality prior to investment in any logging or logging-related projects."

It is not the first time Citigroup has changed its policies after public protests.

The bank adopted reforms to eliminate practices that took advantage of low-income borrowers after community groups bitterly protested its 2000 purchase of Associates First Capital Corp., which specialized in loans to high-risk borrowers. Associates was later merger into CitiFinancial.

Citigroup's new policy is online at www.citigroup.com/citigroup/environment/initiatives.htm.

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