Citi Rebuffed Clients 11 Times After Revamping Policies on Coal

Citigroup Inc. said it declined 11 transactions related to coal power or mining last year as it revamped its policies for financing such activities.

The firm walked away from the deals after it promised that it would stop providing financial services to thermal coal-mining companies by 2030. Citigroup has also vowed it will not provide acquisition financing or advisory services related to coal-fired power plants or bring on new clients who get 20% or more of their power from such plants after this year.

“Citi has been increasingly focused on reducing the environmental impacts and portfolio risk related to thermal coal mining and coal-fired power generation,” Citigroup said in its annual environmental, social and governance report, released Monday.

The moves show how far the bank and its rivals will have to go to fulfill promises they’ve made to be more sustainable in both their operations and their lending. Citigroup, which was the third-largest financier of fossil-fuel companies last year, has promised to achieve net-zero greenhouse-gas emissions in its financing activities by 2050.

In another example, Citigroup said in 2020 it began reviewing clients that trade metals sourced from Central and Western Africa, where small-scale mining operations have proliferated in recent years. Such mining is often unmechanized and can occur without proper permits or safety standards, the firm said.

“We were able to approve trade financing of metals sourced from the mines we determined had adequate controls while excluding mines we determined not to have satisfactorily addressed safety and security concerns,” the bank said in the report.

Citigroup said its team that manages its environmental and social risk policy screened 636 total transactions last year and declined to participate in two project-related financing opportunities due to human-rights concerns.

“These included a mine expansion with community opposition that subsequently led to violent protests and an infrastructure project expected to cause large-scale resettlement and impacts to cultural heritage sites,” the firm said.

Citigroup also detailed another incident involving an oil-and-gas client in South America’s Amazon region, where the client’s business practices were generating resistance from local indigenous people. The bank said it made its participation in the transaction contingent upon the client developing a policy that included community consent and making the policy public.

“The client has since begun exiting operations in locations where they deemed it was not possible to achieve free, prior and informed consent,” Citigroup said. “This example highlights the opportunity we have to use our influence to raise awareness and improve client practices for the purposes of better protecting the human rights.”

©2021 Bloomberg L.P.

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