Citigroup announced it’s cutting financing of coal mining projects, part and parcel of the multinational banking and financial services group instituting an updated Environmental & Social Policy Framework. Citi as recently as 2013 was one of the top providers of financing for coal mining companies and projects that have resulted in extensive, long-lasting environmental and ecosystems destruction and degradation, such as mountaintop removal mining.
Citigroup’s announcement follows in the wake of a similar, yet more dramatic, move by Bank of America (BoA), the largest US bank group, as well as France’s Credit Agricole, the third-largest in Europe. BoA announced it was cutting off funding for coal mining projects completely this past May.
Cutting back, or eliminating, funding for coal mining projects and companies comes amid public pressure from prominent environmental groups, including the Sierra Club and Rainforest Action Network (RAN). The EPA following through with efforts to institute President Barack Obama’s Clean Power Plan is another principal factor leading banks and other financiers to rethink their lending and investment policies and decisions, particularly with regard to mineral, energy and natural resources more generally.
Banks Cutting Back on Coal Financing
Citi noted that its involvement in financing of and exposure to coal mining has been on the wane since 2011, Bloomberg Business pointed out in an October 5 news report. The trend will continue as the money center bank continues to reduce financing of coal mining companies that employ mountaintop removal, as well as subsidiaries of diversified mining group companies, bank management stated.
“We are encouraged to see Citigroup begin to move away from lending to coal mining,” environmental advocacy group RAN’s executive director Lindsey Allen was quoted in a news release. “With Bank of America, Crédit Agricole, and now Citigroup withdrawing support for coal mining, this announcement shows major momentum away from financing coal by the banking sector-”
Allen added a caveat, however. “Reducing credit exposure is only a partial step forward. We urge Citigroup and Wall Street laggards such as Morgan Stanley to cut all financing ties to both coal mining and coal-fired power.”
Citigroup’s ¨Green¨ Sustainability Drive
Citigroup’s sustainability policies are being applied inside as well as outside the organization. Citi first announced establishment of a set of greenhouse gas (GHG) and water reduction goals in 2007. Since then, it has been reporting annually on global energy use, GHG emissions, water use, waste-to-landfill, and green building initiatives.
These were updated in 2015 when the New York-based multinational banking and financial services group announced new operational performance goals relative to Citi’s 2005 baseline:
- GHG emissions:
2020 goal — 35% absolute reduction
Annual carbon intensity reduction rate of 9.67% year over year (normalized by contribution to global GDP)
2050 goal — 80% absolute reduction
30% absolute reduction
30% absolute reduction
10% of water from a reclaimed or recycled source
60% absolute reduction
33% of our real estate portfolio LEED certified
With regard to green building, Citi has a global portfolio of LEED-certified office buildings, data centers and retail branches. Management highlights that Citi was the first bank in the world to build a LEED Platinum data center (in Frankfurt, Germany). In addition, it was also the first bank group to finance construction of 200 LEED-certified projects.
More broadly and fundamentally, Citi’s sustainability initiatives and E&SR policy framework is based on:
- Equator Principles
- Green Bond Principles
- International Labor Organization’s Declaration on Fundamental Principles and Rights at
- Natural Capital Declaration
- United Nations Environment Program Finance Initiative
- United Nations Global Compact
- United Nations Guiding Principles on Business and Human Rights
- United Nations Universal Declaration of Human Rights
Stemming Runaway GHG Emissions and Ecosystems Degradation
Contributing to the global effort to mitigate and adapt to climate change, as well as slow down runaway ecosystems destruction and degradation, were prime motivating factors in the banking and financial services’ groups decision to continue to reduce coal mining financing, Bloomberg quoted from Citi’s Environmental & Social Policy Framework.
Citigroup’s announcement comes in the wake of the launch of the Paris Pledge this summer, an initiative in which a global coalition of over 130 organizations joined to call on the world’s banks and investment companies to cease support for coal mining and coal-fired power generation to the UN Framework Convention on Climate Change (UNFCCC) Conference of Parties to take place in Paris in December.