HONOREE SIZE & INDUSTRY: Enterprise  – Financial Services

COMPANY OVERVIEW 

Citi, a leading global bank with ~10,000 colleagues in Texas, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments, and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. Given their global footprint and role in financing economies around the world, Citi has an important part to play in sustainable development. From financing $164 billion in environmental activities from 2014 to 2019, to their focus on sustainable forestry standards, Citi is committed to driving positive social and environmental impact through their products and services as well as through their work with clients.

SUSTAINABLE BUSINESS STRATEGY 

Citi finances and facilitates billions of dollars in transactions worldwide for a wide variety of clients and projects, many of which have potential environmental and social impacts. The financing decisions Citi makes along with their assessment and management of environmental and social risks are integral to acting responsibly for both colleagues and clients. As such, conservation innovation has an inherent role in Citi’s efforts to manage risks. Integration of conservation into Citi’s organization is described through their new 2025 Sustainable Progress Strategy, which consists of three primary pillars.

Pillar 1: Low-Carbon Transition

Under Citi’s new $250 Billion Environmental Finance Goal, they aim to finance and facilitate climate solutions that meet their environmental criteria. Included within this criteria are water quality & conservation (e.g. conservation of freshwater resources) and sustainable agriculture & land use (which includes afforestation/reforestation and preservation or restoration of natural landscapes). Additional criteria include renewable energy, clean technology, sustainable transportation, energy efficiency, circular economy, and green buildings. In 2015, Citi made a bold, 10-year commitment to finance and facilitate $100 billion in environmental finance activities. They exceeded that goal in 2019, more than four years ahead of schedule. A total of $164B was spread across solutions: 

• $8.4B in sustainable transportation 
• $122.1B in renewable energy
• $24.3B in green bonds
• $22.1B in public finance
• $4.6B in green building
• $13.1B in water quality and conservation

Pillar 2: Climate Risk

Citi’s commitment to managing climate risks involves policy development, client engagement, and portfolio analysis and measurement. Citi practices Environmental and Social Risk Management (ESRM) by carefully evaluating and considering environmental and social risks when making financing decisions for individual or project-related transactions, during annual company reviews, and when assessing entire portfolios. Citi recognizes that protecting and conserving areas of critical habitat, significant biodiversity and/or high conservation value, including legally protected areas, is key to high-quality environmental and social risk management. As such, Citi considers these “Areas of High Caution” under their ESRM Policy, or areas that require special attention, focus, and respect. Citi only proceeds with transactions that impact these areas after a thorough and judicious assessment of impacts and risks, and confirmation that mitigation measures have been or will be designed to comply with Citi’s policies and standards. In these cases, Independent Review of social and environmental assessment documentation by a qualified independent consultant with the relevant expertise may be required, as determined by the ESRM unit, to evaluate whether risks and impacts are being appropriately managed. Climate-related areas include critical habitats and areas of high-conservation value. Citi’s ESRM Policy covers a range of products, in addition to bank lending. Under Citi’s ESRM due diligence processes, they distribute an agribusiness questionnaire to all clients in the forestry, palm oil, soy and beef sectors, regardless of the products/services provided.

• For example, Citi is one of 17 international banks piloting the Paris Agreement Capital Transition Assessment methodology for climate scenario analysis of corporate lending portfolios, developed by the 2° Investing Initiative. This methodology allows banks to study the alignment of their corporate lending portfolios with different 2°C and below benchmarks based on the assets, technologies, and capital expenditure and production plans of companies in their portfolios.

Pillar 3: Sustainable Operations

Citi has been working towards operational footprint goals since 2007 and remains committed to reducing the environmental footprint of their facilities around the world. The company has approximately 200,000 employees globally, working in about 7,000 facilities across 97 countries. Citi’s own sustainable operations are an opportunity to put their principles into practice. This allows the company to speak from a position of experience when their clients need support and also positively impact the communities where they live and work. Citi is currently tracking progress against their third generation of their operational footprint goals (as measured against a 2010 baseline), which include the following targets: 

• 45% reduction in location-based GHG emissions
• 40% reduction in energy consumption and maintaining 100% renewable electricity sourcing
• 30% reduction in total water consumption and 25% of water consumed to come from reclaimed/reused sources
• 50% reduction in total waste and 50% of waste diverted from landfill
• 40% of floor area to be LEED, WELL, or equivalent certified

All Citi employees are incentivized through Citi’s performance appraisal system to demonstrate support of their Mission and Value Proposition to responsibly provide financial services that enable growth and economic progress. In support of this mission, Citi sees sustainability as a critical part of how they do business. Citi organizes their efforts within the framework of their Sustainable Progress Strategy, which holds the company accountable to specific goals within the areas of Environmental Finance, Environmental and Social Risk Management, and Operations and Supply Chain. Furthermore, Citi’s Code of Conduct makes a note that the financing decisions they make, and their assessment and management of environmental and social risks, are integral to acting responsibly and being the best for their clients. 

EMPLOYEE LEADERSHIP

Citi’s Sustainability & ESG team, led by their Chief Sustainability Officer, is responsible for developing Citi’s sustainability strategy and key initiatives in collaboration with partners across the company, and for coordinating and monitoring its implementation. This team works across Citi’s businesses and regions to provide expertise for sustainable finance products and client advisory, facilitate cross-business learning and coordination, engage with stakeholders, and report on progress. As the primary team directing the criteria towards Citi’s $250 Billion Environmental Finance Goal, the Sustainability & ESG team is instrumental in directing increased investments in conservation projects and efforts. 

Additionally, Citi’s Green Teams held 223 volunteer and educational events, resulting in 16,200 volunteer hours dedicated to helping communities in 2019. The company encourages employees to use video and web conferencing technologies rather than traveling, whenever possible. In 2016, Citi employees in Bogotá, Colombia, launched the Citi Mobility program, which focuses on transportation solutions that benefit the environment, the company, and the city. The program provides the bank’s employees with rapid, safe, and convenient ways to get to and from work. At the end of 2019, it has led to more than 46,000 carpooling trips; more than 7,300 trips by bicycle; and more than 3,900 commutes by walking. Citi’s colleagues are also saving water! Based on the amount of water dispensed via the bottle fillers, Citi estimates that they have helped employees avoid the use of nearly 3.2 million water bottles in the U.S. and close to 3.8 million in Mexico between the program’s inception in 2016 and the end of 2019.

CONSERVATION PROGRAMS

Sustainable Forestry Standard 

Deforestation is a key environmental concern globally, as it leads to habitat loss, biodiversity impacts and climate-related risks, among others. Stopping the spread of deforestation and illegal logging is a critical challenge in the global fight to preserve global biodiversity and combat climate change. In 2019, Citi conducted a portfolio review of their agribusiness clients with a focus on the impacts of deforestation. They developed a questionnaire to gather information about how their clients manage deforestation risks in their operations in the global tropics, including the tools they use to track deforestation and the certifications they use to ensure sustainable practices and processes.

 Citi found that one of the most effective ways to decrease deforestation risks is through quality sustainability certifications, such as the certification of plantations by the Roundtable on Sustainable Palm Oil, the Forest Stewardship Council (FSC), and the Round Table on Responsible Soy. Some of the practices that these certifications ensure include the preservation of high-conservation and high-carbon-stock forests, the restoration of forests cleared after 2009, and a prohibition on using fire to clear lands.

To address the risk of deforestation of high conservation value (HCV) or high-carbon-stock forests, Citi’s Sustainable Forestry Standard requires robust environmental and social risk assessments for all forestry clients annually. Citi’s Sustainable Forestry Standard applies to all clients that are directly involved in logging or primary processing of timber from either natural forests or plantations, regardless of the banking relationship, transaction type or amount. Citi reviews clients’ policies, practices, and track record on forestry management to evaluate alignment with industry best practice, including labor, community engagement, systems to avoid impacts to HCV areas (such as peatlands), and proper prevention and management of fire risk. Forestry clients operating in countries deemed high risk for HCV deforestation and illegal logging must follow a time-bound action plan (monitored annually by Citi) to achieve independent Programme for the Endorsement of Forest (PEFC), Sustainable Forestry Initiative (SFI) or FSC certification. Citi has a long-standing public commitment not to engage in business with companies that they know to be in violation of local or national forestry and logging laws. 

Citi’s clients’ adoption of certifications in the areas of palm oil, forestry, and soy in tropical countries has increased in recent years, as has the total area of their plantations certified. In addition, more companies are actively employing new technologies that enable transparent traceability of their supply chains. These are positive developments, and Citi is now analyzing the results of this portfolio review to inform continued improvement in their Environmental Social and Risk Management approach to the agribusiness sector.

Sustainable Operations Progress

To further quantify Citi’s third pillar (sustainable operations), at the end of 2019, they had made 35% progress on their 2020 goal of 30% reduction in water consumption (compared with 2005 baseline) and 6% progress on their 2020 goal of 10% of water used coming from reclaimed or recycled sources.

The renovation of their global headquarters in New York, which is LEED Platinum, is on track to be completed in 2020. Water retention tanks on the building’s roof will capture 2 million gallons of rainwater annually, which will be used to irrigate plants on the building’s plaza and terraces. During construction, approximately 98% of all concrete, steel, and glass demolition material was transported to recycling facilities, where it was converted back into new building products. 

At the end of 2019, Citi had made 63% progress on their 2020 goal of 60% diversion rate of waste to landfill (compared with 2005 baseline). Additionally, 86% progress on their 2020 goal of 100% use of renewable electricity for facilities globally was made at the end of 2019, with 35% progress on their 2020 goal of 30% reduction in energy consumption (compared with 2005 baseline). Citi has also completed lighting retrofits at 378 banking branches with an additional 144 to be completed in 2020. They expect this retrofit, once complete in 2020, to reduce their energy consumption related to lighting by up to 50%.

BUILDING A SUSTAINABLE FUTURE 

Recognizing the urgency of climate change, Citi envisions increased focus on industries that are heavily dependent on land use, such as palm oil, forestry, and soy. They anticipate greater adoption of sustainability and risk mitigation practices such as the certifications mentioned above, which hold companies involved in these industries to higher standards of conservation in their own operations. 

As a global financial services firm that finances these industries, Citi has an important role in the upward trajectory of conservation efforts, including due diligence in financing only projects that present minimal risk, directing financing towards more conservation efforts (through their $250 Billion Environmental Finance Goal), and working with clients in land-use intensive industries to further mitigate their environmental risks. 

TEXAN-LED CONSERVATION

Citi provides financial services for some of Texas’ largest employers, middle market businesses, municipalities, local affordable housing developments, and school districts. As a proud member of the Texas community, Citi leverages its footprint to serve prominent energy and power clients through their multiple businesses in the state. Citi’s Global Energy franchise serves the world’s leading energy companies, many of which have headquarters in Texas. Additionally, Citi’s Energy and Power groups, in partnership with their Global Alternative Energy Finance team, are helping to drive progress towards their sustainability goals.

The Americas regional headquarters of Citi’s commodities business is based in Houston, and Citi’s ~10,000 colleagues in Texas support their North American and Latin American operations, as well as certain global functions. Citi Private Bank has been in Texas for 35 years, specializing in providing investment and wealth management advice to their clients. Citi is dedicated to providing these services, along with Credit Cards and Mortgages, throughout the state, and looks forward to continuing their partnership with the people and institutions of Texas to enable progress and to create greater opportunities in Texas.

Learn more about how Citi is supporting financial investments in sustainability. 

Definitions

– LEED or Leadership in Energy and Environmental Design is the most widely used green building rating system in the world.